1982: a hard year to call

By Bronson J. Lewis Executive Vice President American Plywood Association Tacoma. Wa.

rlHE PAST

I 12 months have been a period of early promise and subsequent disap-pointment for plywood producers throughout the west and nationwide, as well as for many others.

In common with most forecasters across the country, the American Plywood Association's initial view of l98l was for a reasonably upbeat year predicated on the start of a home building recovery within the second half.

Our hopes for a gradual resurgence in demand were abruptly ended by the rapid escalation of interest rates through the summer and early fall to levels that again had a severe impact on the long-suffering home builders and all their suppliers.

Typical ofthe havoc created in the plywood marketplace by the further deterioration of the traditional No. I market, new residential construction, was the depressed state of the industry in the week ending October 31. Of 176 mills nationwide making plywood and other structural panels, 44 were closed and 6l were operating on a curtailed basis.

In the West, 33 mills were not operating and 44 were curtailed out of 108. In the South, I I mills were closed and l7 curtailed.

In more human terms, these closures and curtailments entailed layoffs for 6800 plywood production workers in the West and 3300 in the South. Even larger numbers of sawmill workers were also jobless.

When will housing start to recover? The answer lies largely with Congress, in our view. We feel that the Administration has the right objectives in its bold proposals to curb inflation and offer incentives for economic growth. The major roadblocks preventing President Reagan from implementing his promise of restoring a prosperous America have been the political infighting of recent months, a lack of total Congressional dedication to the Administration's program, and the uncertainty created by some new legislation on banking.

It's hard to be specific at this time on the likelihood of a housing comeback starting in the second quarter of

Story at a Glance

Housing comeback in the sec. ond quarter is possible. next six months look pretty bleak continued relative plywood strength in non-housing markets more dealer pro. motion in'82.

1982, but such a welcome development is at least possible. Provided the Reagan economic program holds firm and can be put to work, we think there is some chance of a gradual home building revival beginning in the late spring. Unsatisfied demand for housing continues to grow, and must eventually be met.

As it picks itself up from the floor, the housing industry could reach anywhere from 1.36 to 1.4 million starts next year, again, subject to the availability of more affordable mortgages and the generation of some momentum by the spring. If this happens, there would be a progressive improvement in the business climate for builders, building material dealers and distributors and all building material manufacturers.

Another way of expressing it is that the next six months still look pretty bleak-with some relief for the plywood industry in the continued relative strength of numerous nonhousing markets.

These markets-including home repair and remodeling, nonresidential construction, industrial, and exports to Europe-have prevented a bad l98l for most producers from becoming a total disaster for everyone.

The plywood industry normally relies on housing for between 40s/o-5os/o of its total market. When housing is down 3590 (as it has been this year) then plywood volume

(Please turn to page 4 I )