Railroad Sees Better Times

By Thomas J. Lamphier President Transportation Division Burlington Northern

A S THE naFtion's largest rail carrier of forest products in terms of revenues and sales, Burlington Northern has a keen interest in the lumber and building materials markets. Forest products are our third-largest rail commodity. and we link the timberlands of the Pacific Northwest with the markets of the United States and Canada.

We also have extensive forest products activities of our own that heighten our interest in the state of the building materials and lumber industries.

In l98l we foresee a strong improvement over this year's rather bleak market for these commodities. Our estimates and information from other sources indicate that housing starts will be about 1.2 million in 1980, well below 1979's 1.7 million. Inflation, high interest rates and scarce mortgage money confributed to the decline.

Story at a Glance

Much better year for lumber and building materials . . freight car supplies should remain adequate even with the anticipated upturn . new financing innovations are a long term plus.

Next year should see a greater supply of mortgage money, which is expected to increase housing starts to between 1.5 and 1.6 million. More conservative estimates place the range between 1.4 and 1.6 million, but we believe thev fail to take into account the 80,000'to 100,000 housing starts that the Housing and Com- munity Redevelopment Act of 1980 should stimulate. Of course, a significant increase in interest rates or the rate of inflation could dim this bright outlook.

At Burlington Nor.hern, we expect freieht car supplies for forest products to rEmain adequate even with the anticipated upturn in the l98l housing market. This year we added 400 widedoor boxcars, which are used to ship a variety of commodities including forest products, and 300 bulkhead flatcars. used exclusivelv for forest products. We will add inother 150 bulkhead flatcars to our fleet in 1981.

This year's depressed housing market produced a side effect that we believe will have positive, long-range effects on the market. Because housing is more expensive and the future state of the economy harder to predict, consumers, lending institutions and the real estate industry have developed alternatives to the traditional means of house financing. We believe that plans involving innovations such as variable mortgage payments and land leasing will enhance growth in the housing market over the long term.

In summary, l98l promises to be a much better year for the lumber and building materials industries and the forest products customers Burlington Northern serves.