Marketplace Demands

By Tim Lindgren President

United Wholesale Lumber Co. Montebello, Ca.

Edecent

I lweeks seem to retlect notes of optimism for the lumber industry, as well as the economy in general. Emerging from a very difficult year, one must be critical in evaluating any type of bullish indications to determine their true significance. Certain traditional indicators are, however, in evidence which should signal economic strengthening in early 1976.

Perhaps of greatest significance is the modest turnaround in housing starts. While 1975 started out well below 1974 levels with the first four months below the 1,000,000 unit mark this situation reversed itself at midyear with '75 starts now exceeding '74 starts and approaching the 1,300,000 unit level. If this trend continues, 1976 could well see housing starts in excess of 1,400,000 which would exceed both 1974 and 1975.

Within our own industry a rather recent phenomenon has developed whichhas created a new set ofvariables at the distribution level. This is the ability of prciducing mills to read and in many cases predict market conditions in a much more rapid and precise manner than has been historically possible.

In past years many producers continued to maintain high production levels in the face of weak markets, thereby creating vast oversupply and inventory glut. Such has not been the case this past year, as producers have reacted decisively to reduce production in weak markets. The resultant effect at the distribution level has been shortage of material even during weak markets.

This is acutely the case at the present time, due to the fact that producers prepared for very limited winter production based upon market condi tions. Since the market has strengthened significantly the producers are limited in their ability to react and the industry may face sizeable shortages

Story at a Glance

Distributors must do a better job of reading the market to prevent inventory shortages as it turns up . market conditions due for significant improvement.

of product in the fourth quarter of this year and first quarter of 1976. lt is expected that this type of adjusting will continue which will in turn require distributors to become even more facile at predicting market conditions and inventory management.

In conclusion, indications are that 197 6 wtll show significant improvement in market coSrditions. The marketplace will, however, require increasing planning, knowledge and dexterity at the distribution level to keep pace with the marketing technology developed by the producers.

of these deals will be guaranteed by Washington so in effect we can look forward to the privilege of picking up the tab for this largesse via our taxes.

Justification for these self serving actions will be the usual cliches: "Business is business. The Cold War is over. If we don't some one else will. Trade means peace."

1976 will break all existing world records by American business in supplying indispensable sinews for Communist development.

If we can assume for the moment no crisis in Spain, that the Mid East won't explode, that the Arabs will be unwilling or unable to increase our energy costs, then, so much for the bad news.

Good news for 1976. Sure.

A11 economists tell us we have "bottomed out". Possibly not too much improvement but perhaps as Fortune avers recovery in 1976 could be of a magnitude that it would threaten a bust in'77. More building likely but nothing remotely resembling the Nixon "normal" of 25,000,000 starts in a decade. Then (to transpose Churchill's wise observation) our condition is bad but it happens to be the best available in the world. Who inhis right mind would trade places with an Englishman, Frenchman, Italian, Swede. This in the context of economics, taxes, government bureaucracy, infla tion. Nowhere in the world do we find the combination of the free enterprise system, the resources, the skill of the people, the almost unlimited potential for problem solving we have here at home.

Energy shortage? Hardly.

We have rnassive energy problems and should we fail to solve them or bontittu,ed on page 46 )