Crisis Expands An Opportunity For Lumber, Building Material Dealers

by John M. Martin Erecutivc Vice Presiclent National Lunrber & Buildine Matcrial Dcalcrs Association

FT ROJ ECT- f IONS for any industry which nrust actively relate to the money market are extremely difficult even for the most as- tute, most k nowledgeable economists.

Lumber and building material dealers in general look to a strong, posilive nrarket for 1980. with a wary eye, however, to what interest rates might do to their home builder customers. Can a builder "live with," "get by," tolerate interest rates matching those paid by department store credit shoppers?

While the dealer-builder sales volunre will face a period of tough times, there will be a very dellnite growth in building material sales to the home owner. The home owner market will set the pace for a good year for the retail dealer.

There will undoubtedly be "rearrangemenls" in the credit relationship between dealers and their contractor customers. There will also be nrore selective selling by the dealers, with customer relations and satisfaction emphasized with those local builders who are surviving the financial tug-of-war.

Of necessity, dealers nrust keep in mind that a long period of high interest rates can be damaging to the business if too much credit is extended to buyers who have not previously demonstrated a consistent. successful track record.

Moving into the eighties will be a positive step for lumber and building material dealers. While eslimates for housing starts for 1980 have swerved all over the field. fronr 1.3 nrillion to 2 million. the path is straighter for do-it-yourself. renrodeling, "let's fix up this place and keep it" attitudes.

The crisis for new home starts actually provides an opportunity for the retail dealer. With more and more people unable to get or qualify for mortgages, more concern over keeping a little "rainy day" cash handy, and an obvious increase in the number of two fanrilies in a home. the products available through the local dealer will help him pick up the sales slackening caused by a slow down ln new starts.

One ol the unfortunate things that happens in home building economics is that the numbers game becomes a political football. Some numbers from government might look better than reality while some industry nunrbers are prepared to demonstrate a business poverty. Neilher approach should be folIowed. The potential home buyer is confused, the builder only relates to his own nrarket and probably ignores both sets of nunrbers, and the manufacturer of component products has to do his own projections because everyone else's numbers provided no creditable pattern.

Someday. forgetting motives. nraybe the numbers people can get together, discuss the variables, and come up with more consistent estimates on what the industry faces in the year ahead. Sure, forecasts are based in part on proprietary information but it seems that pooling that knowledge in joint forecasting would really be of nrore service to

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