Plywood's Home lmprovement Market Heats Up While Housing Cools Off

By Bronson J. Lewis Executive Vice President American Plywood Association

T HE PLY.

I WOOD industry is closing the ledger on the 1970s with four straight solid production years and is looking forward to the decade ahead as a time tunity.

of greal oppor-

New home building slumped in the latter part of 1979 and prevented plywood manufacturers from reaching their fourth consecutive record production year.

Total production will be slightly less than the record 19.96 billion so. ft. manufactured in 1978, according to preliminary projections by the American Plywood Association (APA). Even so. 1979 should be one of the best production years in the industry's history.

The housing downturn will have an adverse effect on plywood demand during at least the first part of 1980, however strong demand from nonhousing markets, particularly the home improvement do-ityourself sector, is expected to keep production at a respectable level.

The association will kickoff four special promotional projects in 1980 aimed at increasing demand in each of the four major domestic plywood markets: in residential

Sfory at a Glance

Housing downturn temporary... annual plywood demand 1982-84: 22 ballion sq. ft.. timber supply problems will continue .. unveneered structural panel products will not replace plywood. four special promotions planned for 1980.

construction, the "APA Build a Better Home" series of house plans; in nonresidential construction, a "Roof Systems Seminar" in California to familiarize 50-100 key contractors from east of the Rocky Mountains with plywood roof decksl in industrial. a "Computerized Plywood Pallet Design Service": and in home improvement/do-it-yourself, an "APA Qualified Dealer" program to help retailers merchandise plywood.

The Qualified Dealer program is a vehicle to strengthen the close ties between retailers, APA and plywood manufacturers; and a way, of course, to stimulate retail plywood sales.

Participating dealers will agree to train their personnel. not only with a new 56-page APA "Plywood Basics Correspondence Course," but also with on-the-job instruction from our field representatives in ways to improve plywood merchandising.

We will also help participating dealers hold clinics to show their customers how plywood can be used in home improvement projects. Qualified dealers will also be given materials they can use in local advertising efforts and they will be well stocked in APA's consumeroriented plans and literature.

In addition, the association will continue to promote the "Profit With Precut" point-of-purchase display rack of plywood cut to convenient sizes as well as other established programs for building material dealers.

Despite the temporary housing downturn as we enter the 1980s, the future looks good for the plywood industry. Our market analysts are predicting an average plywood demand of 21.8 billion sq. ft. annually during the 1980-84 period. Next year will represent the low end of the demand spectrum, while annual demand 1982-84 is expected to be about 22 billion feet.

In addition to consumption of conventional plywood, we project demand for structural unveneered wood panel products to reach 1.4 billion sq. ft. by 1984.

A number of promising opportunities in the marketplace at home and abroad leave little doubt that demand for plywood will continue to grow in the future, provided the industry maintains its strong promotional efforts.

At the same time, the wood products industry faces basic timber supply problems that have been well-publicized in the national media. The timber supply situation brings up an obvious question: how can the plywood industry meet

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Railroad Bullish for 198Os

By Thomas J. Lamphier President Transportation div. Burlington Northern

l'I ATURALLY.

llwe at Burlington Northern are concerned by pro- jections of a sharp decline in home building in 1980. Our sources indicate that high interest rates and tight mortage money will contribute to a l5oft2001r decline in housing starts next year. This is down from the 1.7 million estimated for 1979 and the record 2 million new homes begun in 1978.

A significant part of Burlington Northern's business is tied to housing construction. We are a timber producer, a lumber, plywood and

Story at a Glance

15o/o-2Oo/o decline in housing construction - commitments being made for more forest products rail hauling capacity. fiberboard manufacturer and a railroad hauler of forest products. More than 40%r of U.S. lumber produced ends up in home construction so we expect a slight setback next year. But there is cause for optimism. Another 2001' of the lumber production is used for home remodeling and repairs and when people stop buying homes, they often look for ways to improve the home they have.

Looking beyond 1980, although high mortgage rates will put a damper on home buying in the short term, they won't reduce long term need for new homes.

The construction industry is riding on the crest of the post World War II baby boom. Children born in the early 1 950s are just beginning to reach the age and financial maturity to want to purchase homes of their own. lt has been estimated that the most important home-buying market-young adults between the ages of 24 to 34- will increase by 660,000 persons per year over the next l0 years.

It is also significant that these potential home owners are pulling in good salaries. More often than not, young married couples today command two healthy incomes. Although the cost of construction continues to risc and interest rates may never return to the levels of the I 960s, it's apparent that young people today are willing to make the sacriflce necessary to own a home.

Right now mortgage money is scarce and very expensive. Some analysts expect mortgage rates to increase to l40l' before eventually dropping off sometime late next year. But today's slow home-buying market is not due so much to high interest rates as to the large percentage banks and lending institutions are requiring buyers to put down on a home. Lenders are asking for downpayments as high as 25t\,. Most of the buying today is being done by couples or individuals with equity in another home. Those in the market for a flrst home are holding off while their savings accrue. Meanwhile. demand for homes is piling up.

All indications are that when mortage money becomes more available, housing construction will pick up. The National Association of Home Builders has projected that new home construction will average 1.9 million units per year through the 1980s and beyond. Growing population in western states will assure forest products

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