"Yes, Virginia, There Will Be a'1975."

By H.M. "Pete" Niebling Western Manager North American Wholesale Lumber Assn.

HE current plight of the U.S. housing industry, coupled with world-wide financial uncertainties, has resulted in a level of pessimism in the forest products industry like we have never seen before.

Is this pessimism warranted? At this moment, November 1974, things aren't so hot out there in the marketplace. Nevertheless, we think there has been a little too much "gloom and doom" that is not based on realities. It is our view that the nadir of this forest products industry decline has been reached.

In making that statement, we are not overlooking the serious near-term and long-term problems our industry faces along with the home builders. While the savings account tax exemption is not the entire answer to the volatility problems of housing, the concept of rewarding savings and penalizing over consumption is surely the way for this country to go. And it will help. When will these (and probably other) actions turn housing activity up? It will not be until the third quarter of 1975 before we see anything substantial.

However, it is reasonable to assume that within 90 days or sooner we will see a firmer market. There has been substantial curtailment of production in the West, in the South and in Canada. This curtailment of production has a time lag, just like the one that exists between mortgage money availability and stud walls actually going up. Thus, the curtailed production of the past 60 days should start showing up in the next 30 days.

By early spring of 1975, buyers should be convinced that there is little or no downside risk in prices. At that point, inventories by the "smarts" will start being built. Without doubt, there will be less production immediately available when housing does begin to substantially improve. Our premise is that you will then see some real price increases in all wood products.

Thus, we subscribe to the thought that there is, indeed, "light at the end of the tunnel." Our one word of caution between now and mid- 1975 is that receivables and company liquidity mean survival. Going out on a limb to maintain volume or increasing debt can mean disaster.

Our final suggestion:

Switching from imported Scotch to a good California wine for the next few months won't be the end of the world. Buy by the case and pay cash!