Industry Conditions and World Factors

by Ralph Lamon Lamon Lumber Co San Francisco. Ca.

|lrALTFOR- ordinarily ticketed for housing construction simply have been attracted to higher yielding money market certificates. Savings and loan associations themselves are now investing a significant fraction of their funds the same way.

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in 1980, what will be the story? The future of California is solid, there are simply no grounds for pessimism. All systems go.

To run off a few ingredients of what is ahead, let's start with climate, let's mention a super abundance cif natural resources. let's not overlook a higher education system which indirectly has created a technological/industrial complex second to none in the world, let's even throw in scenic beauty which attracts an increasing (and rewarding) number of tourists.

California has room for expansion. California has (overall) a benevolent labor climate. It is a huge market area. In migration to California may fluctuate but the flow of new residents can be depended on. And lots of them. We are in a bull market in the building area and nothing can really alter this in the coming decade.

Unfortunately this does not mean California will have a good building year in 1980.

I can't think of any important industry that has profited more from inflation and easy easy credit than the building industry.

Story at a Glance

One man's look at world conditions. a highly personalview of inflation, politicians, foreign oil, en€rgy, foreign policy, SALT ll, and the Russian threat to peace. Inflation (as these words are written) has become the number one target of the Carter administration. Unfortunately an early casualty of this highly commendable effort will be the building indusrry. There is every reason to think the restrictions we have seen recently on government printing presses (creating money) have resulted in sky high interest rates. Disintermediation is back. Funds

We haven't seen the impact of this until just recently. New housing will be sharply reduced. You and I will not have to take an economist's word for the change. We will tell the economists about itt a near term set back which will persist until interest rates drop and traditional sources can operate profitably in the areas of new home financing. This could be enough time to cut heavily into the winter's planning stage-without which spring and summer building wouldn't make out too well.

Lumber prices will respond to reduced building by dropping. Mills will have to saw logs which are higher cost-will have higher labor, financing and energy costs-will have to curtail production which increases cost per thousand numbers. Sawmills have made handsome profits for the past few years so collectively they are healthy. Sawmills can lose a ton of money on a bad market cycle. Sawmill people are not looking forward to 1980. However, not to worry too much. Housing in California is badly needed and politicians require votes. 1980 is an election year. Solutions which will ease the money crisis will be forthcoming in

(Please turn to page I 14)

Optimism For West

(Continued from page 9) that the South and West will lead other areas in housing starts.

Even for 1980, F.W. Dodge predicts residential construction (in terms of dollars spent) in the West willrise five 0/o over 1979. This contrasts with three o/o in the South, minus one o/o in the Midwest and plus two o/o in the Northeast.

In spite of economic troubles of the moment, Simpson is aggressively positioning itself to continue to serve our markets with wood products.

At Shelton. Wa., a new l0-year plan for the Shelton Cooperative Sustained Yield Unit has been approved. It's one ofthe best forest management success stories in the nation, dramatic proof that intensive forest management works.

At Shelton, I 13,000 acres of U.S. Forest Service land and 238,000 acres of Simpson land have bedn jointly managed since 1947. The allowable cut for the new decade will be 227 million board feet, compared to 100 million the first decade!

We're starting to harvest our mature young timber. In response to the increased cut, we opened a new sawmill at Shelton last Spring. We're producing one million feet of lumber a day at Shelton, making it one of the foremost lumber manu- facturing centers in the West. We're also improving our panel door plant at McCleary, Wa., with a $1.5 million capital expenditure program. ln California's Redwood Region, we're committed to spend $33 million during the next two years to modernize and realign our plants to efficiently handle a changing timber resource. As at Shelton, we're starting to harvest young growth timber.

The $33 million comes on the heels of another $24 million Simpson has spent to acquire additional land and timber in the past two years and $5 million annually in intensive forest management.

To sum up, we're optimistic about the West in the 80s. It's where the action is!

... the completc linc ol golgcously $ylcd, Any of thc hundrcdr of Woodltock door cnctgy cfficicnt and allordably priccd rtyler can bc chorcn with a 2O-minutc solid wood doors.

Just about any sourcefrom just about anywherecan offer you stylish entryways. And fancy exitways. Plus, standard Colonial or Soanish carved panel doors are everywhere you look. But only one sourcefrom only one placecan offer you the exclusive new Woodstock Security Doors. That source is Alpine International, and these doors are really special

Here's why: They boast bold vertical lines and thick fluted or ribbed panels. You can have decorative glass, too. And they're solid, dependable, so ruggedly built they won't split on impact. These doors willstand up to a burly intruder's kick or a runaway cart's full speed smash. These all wood doors are tremendously energy efficient, too, and will keep your heating bills down by keeping the heat insidewhere it belongs. Available exclusively lrom

fire rating!

There's an extremely wide variety of door stylings f rom Woodstock, and for a modest additional charge, you can obtain any door with a 20-minute fire rating (as certif ied under UBC 43-2 and the l.C.B.O. acceptance criteria by Warnock Hersey Professional Services). You'll love these solid wood doors.

Woodstock Security Doors have heavier construction with extra-wide f raming over-sized tongues on panels and rails massive square sticking. You won't f ind any weak mouldings around the panels. There aren't any. And these doors are made even more sturdy by using hardwood dowels in assembly.

These doors are like no others. Anywhere. Choose a Woodstock Security Door to keep the heat inside, the outsiders outside, the fires away, and to look wonderf ul in the bargain. Best of all, these beautif ul new doors are beautifully priced Rioht now.

Woodstock ir thc complcte linc ol solid wood doorr that ollct you pcace ol mind, reculity, and rcal wood clegancc lor olfi ce;tr apartmcntl, $olcl, and youl oun homc.

HERE ARE A FEW REPRESENTATIVE WOODSTOCK DOOR STYLES:

NOTE: Any door pattern is available with panels flat raised on both sides; f lat raised one side and f luted on the other; f luted both sides; or in any other combination of flat raised and fluted.

Speclficatlons

Woodslock Securlty Doors (Solld Wood Throughout)

Specles: Clear, vertical grain Western Hemlock lumber

Grade: Selected grade only

Standard slzes:Width2'6" to 3'; Thicknessl3Z"; Height6'8" (NOTE: Other sizes available on special order.)

Avallable excluslvely f rom -z

Any panel or panels can be left out at time of manufacture, so decorative or see-through glass may be installed as is shown above.

NATIONAL OUTLOOK: 80

(Continued from page 29) economy, only to watch futilely as the inflation tiger roars off after the initial recovery is completed? Or will the Fed keep restraining growth in bank reserves regardless of the level of interest rates? And what of fiscal policy? Will Congress stress demand stimulation or will it favor savings formation ?

Our view is that Chairman Volcker carries the clout necessary to restrain monetary growth while pushing for investment-savings programs. This implies a rather mild recovery during the latter half of 1980. The alternative is policyas-usual, which means another turn in the spiral of higher inflation, higher interest rates, and lower productivity.

There are some indications. fortunately, that Congress may be willing to contribute a non-inflationary fiscal policy. First, the effort to restrain expenditures has been moderately successful. The budget resolutions are adhered to; they hold the respect required to kill big spending bills. Second, there is an increasing awareness that the saving-investment mechanism is out of sync.

In an era of rising housing demands and slackening productivity, saving must be stimulated to raise investment funds for both residential and business capital investment. Support is strong for the phasing out of the ceilings of interest rates paid on consumer savings deposits, which would allow small savers to get going rates for their savings; it is possible that small savers will also get a tax deferral on some interest income.

Current proposals for anti-recession tax-relief are strongly skewed towards accelerated depreciation and other incentives to spur investment rather than personal tax breaks to boost consumption: most radical of all, Representative Ullman has intoduced a bill to replace progressive income taxes with regressive consumption taxes (the value-added tax).

The darkest cloud remains energy. Marginal oil supplies lie under the control of radical and/or unstable governments; solutions to the problem of nuclear reactor safety are complicated by emotional fears; coal presents hard choices due to impacts on the environment; and the U.S. natural gas supply will increasingly be coming from highpriced foreign sources.

On the positive side, natural gas and crude-oil prices are now being freed, though decontrol of gasoline prices has been set back due to popular protest over oil company profits.

Unfortunately the American people must come to the realization that they will have to shave the growth in their standard of living in order to pay for energy. To deny this fact means more inflation, less investment, lower productivity, and ultimately an even slowergrowing standard of living.

Reduced Demand

(Continued from page 15) to control their product from stump to end use will continue with futher expansion into the distribution arena.

Energy consciousness by home buyers or remodelers can only increase the popularity of wood. The acceptance of the all-weather wood foundation and the promotion of the plenum system will also be a plus.

We see the threats to wood building products manufacturers to be timber availability, manufactur- ing efficiencies and the money market manipulations.

DOORS SHOWN ARE SOLID MAHOGANY ENTRY DOORS. ALL PRODUCTS ARE IN STOCK READY FOR SHIPMENT.

Trestle Ready to Go

Operating capacity of the Trestle, all-wood electromagnetic pulse simulator at Kirkland Air Force base, near Albuquerque, N.M., is in the check-out phase in preparation for testing the first plane on March I, 1980.

The Trestle is the largest glued, laminated wood structure in the world, according to Lt. Col. Doug Merkle, program director. (see The Merchant, Jan., I978, p. I 2) Built at a cost of $58 million, the facility was begun in April, 1973, and is the only one of its kind on earth.

About six million board feet of Douglas fir were cut to build it. The structure has enough wood to build 4,000 frame houses. Even the 250,000 bolts used to hold it together are of wood in 100 different lengths ranging from 12"-77".

At present planes are being used to test the facility, rather than the facility being used to test planes. When it is in operation, the pulse effect of a nuclear blast will be simulated by creating an electromagnetic field around a plane to test resistance and reaction.

The Trestle differs from other EMP (electromagnetic pulse) simulators at the base in that it lifts the planes ll8 feet offthe ground and is capable of testing the largest aircraft in the U.S. defense arsenal. Wood was used in the construction because of its non-conductive qualities.

Suppliers for the project include Standard Structures, Santa Rosa, Ca., McCormick & Baxter Creosoting Co., San Francisco, Ca., a licensee of Koppers Co., and Permali, Inc., Mount Pleasant, Pa.

INDUSTRY OVER.REACTION

(Continued from page 29) market and the plywood market. With our pre-occupation about the housing situation, are we dis: counting a fair to good market in industrials and export? Do we forget about the excellent home improvement market that seems to indicate even better activity for 1980?

There will be a 1980 housine recession. The forest productl industry will not enjoy the same level of volume activity next year as they did in 1978 and 1979. Having recognized these facts, the forest products industry is not facing an Armageddon. We seriously doubt the published prediction that "lumber producers are facing one of the worst markets in 30 vears."

New Oregon Reman Plant

A remanufacturing plant in WhiteCity, Or., is currently being rebuilt by John Weaver of Weaver Forest Products, which has its general sales offices in Medford, Or., as well as a mill and distribution center in White City.

The new company, called M. & W. Milling Co., will be managed by Bruce Monson, whose brother Brad is in saleS for Weaver. The two brothers are the sons of Bob Monson.

Sales for M. & W. Milling will be handled exclusively by Weaver Forest Products. Inc.

RF Equipment Registration

Plywood mills and lumber mills using radio frequency (RF) equipment should have it certified and registered with the Federal Communication Commission immediately.

Implementation of stringent FCC radio interference limits may come as soon as January, 1980. Equipment registered before that time will be exempt from the revised regulations for at least l0 years.