198O Western Lumber lndustry Forecast

By H. A. Roberts Executive Vice President Western Wood Products Association

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state of the nation's economy makes it no easy task to determine what's in store for the wood products industry in the short run.

Farther down the road. into the early and mid-80s, the picture begins to clear and we exPect demand for wood and wood products to grow and this industry to prosper.

For the short-term, factors shaPing the United States' economy are, at the moment, confusing. Frontpage stories and economic experts have been talking recession for about two years now. NobodY

Sfory at a Glance

Lower interest rates no later than Spring. still, it's prudent to prepare for tough sledding in 198O... repair & remodeling will continue to grow 1 Oo/o -12olo. . . the next decade will be extremely good.

near future, and my personal oPinion is that this will happen no later than next spring. However. since we can't definitely count on this, I think that it's prudent to prepare for tough sledding in 1980. Playing it close to our belts will be good policy in '80.

While housing starts will definitely be down in 1980, we're confident that the repair and remodeling market will continue to grow at the same rate of l0-120ft that it has

(Please turn to page 118) for housing will continue to be strong with the baby-boom generation entering the home-buYing market. knows if a recession began in February or April of 1979, is starting now, or will begin in early 1980. But there is no question that we're in an economic slowdown. Inventories are edging back, orders for goods and services are sluggish, at best. Retail sales are off and recent actions by the Fed to control this country's worst enemY, inflation, will no doubt slow the economy further. Whether or not this action will slow inflation, too. is yet to be determined.

Looking for the same indicators today that helped forecast the 197374 recession, namely housing starts, would be a mistake. Certainly housing will be affected bY the tightening of money, but as of this writing not to the point it was in 1973-74. Housing is not overbuilt as it was five years ago and demand

Throw in the fact that those who invested in real estate and purchased homes during and right after the last recession saw their assets keep pace with inflation and in manY instances increase in value. The American public learned that housing might be a hedge against inflation.

At this time. we continue to forecast housing starts to approach

Story at a Glance

1.75 million housing starts in 198O. total consumption of lumber will be about the same as this year. the West will Pro' duce about 51o/o of U.S. sof twood. . the West should feel the recession less than any other region.

the 1.75 million level in 1980. That would bc l 50.000 unit incrcase over the 1.7 million figure we predicted for 1979.

We see nrulti-family dwellings increasing to over 30'1, of total construction in 1980. Exports of lunrber should climb three (% lrom this year to 1.65 billion board f'eet in 1980. Total consumption of'lumber for 1980 will be 38.4 billion board feet. about the same as we forecast for 1979. The West (including the Redwood region) should produce about 19.7 billion board feel or 51()lr of the nation's softwood consump1ion.

This past year it appears nrany homeowners sidestepped the gas lines or the increasing cost of fuel. and instead invested the money saved in expanding and remodeling their homes.

If the recession is comine (or is here now). the West shoulcl leel the pinch less than other geographic areas of the country. The population of the western stales is growing faster than other areas of the country and should continue to do so throughout the '80s. These people will need shelter. The fact that the West is the western lumberntan's best customer is also a plus for "our side. "

We are also seeing a nrove to become self-sufficient in the production of energy. Most of this energy development will be in the West. Again, another plus.

Another factor to consider. especially in the short run, is that 1980 is an election year. Politics has played a part in the freeing of' mortgage ntoney already. There will probably be more politics in economic considerations during the next year.

Ol all the tough problems we face moving into the '80s, timber supply is the most tryingl the potential imbalance between supply and denrand. The RARE II issue and the fate of the 62 million acres that are being studied for inclusion into the wilderness syslent certainly weighs heavily in the planning processes of lunrbermen in the 12 western states. congress is expected to act some time next year on the issue. What most are afraid of is more further studies and other holdups that won't allow for a reasonably prompt setllentent of the issue.

Barring the RARE II issue and the very near future, which seems to be a tinrc of confusion. we urc optinristic about the future o1' the lunrber business in the l2 western states.