Less National Lumber Distribution Seen

Richard P. Neils Divisional Director of Marketing Lumber & Plywood Division St Regis Paper Co.

Iooinion business conditions for 1977 will have a steady improvement over 1976. We don't feel that it will be a fantastic increase, but just a good steady increase over what we have experienced so far in 1976.

The strength of the single family unit that was so strong in 1976 will continue on n 1977 which should help the sale of lumber and plywood as it did this year.

We look for a good demand for the single family units to continue for several years yet.

The remodeling business, which we estimate uses about 2O% of the total consumption of lumber and plywood, will continue on through 1977 which

Story at a Glance

A steady increase in '77 . . single family housing starts to continue strong for several years.. .. increasing freight rates will cause more lumber to be sold closer to where it is produced, which is happening more and more in the West.

mortgage rates. All of this bodes well for the general housing industry and it also bodes well for the general building materials industry.

(3) Interest rates. Interest rates have also been working slightly lower for some time. The prime rate, currently at 6-112%, is lower than it has been in almost four years. It ran at 9-11% all during 1974, and even reached 12% in that year. I doubt very

Story at a Glance

Another good year for distributors, but with a possible 4th quarterslowdown inflation will stay about the same, mortgage rates stable lower prime rate unlikely . some flattening in Alaska business.

much that it will go much lower than its current level. Most crystal ball gazers expect to see it higher by the end of 1977, but probably not much higher than 8%. This is still a very favorable rate compared to those horrendous rates of a few years ago.

(4) Housing starts. They are currently running at an annual rate of about 1.5 million for 1976. At this point in time, the economists are predicting starts of approximately 1.65 ( Please turn to page 46 ) will give the wood industry a good boost. This is good steady business for the retailer, the distribution yard and the manufacturer as it is a steady volume with good continuity of species, sizes and grades.

Increasing freight rates are causing more and more lumber to be sold closer to the producing area. We are finding that more of our Western produced lumber is being sold in the West, and there is a decided increase in the volume of lumber being produced in the South that is sold in the S0uth.

We are finding that the amount of Western lumber sold in the Southeast has diminished considerably. I am sure we will find more lumber being produced in the Northeast as time goes on as the consumer cannot afford to pay the freight from the West Coast to the Northeast.

All in all, I feel that 1977 is not going to be a run away year, but should be a good year for the wood industry.