Pick your Pac-Man machine and expect a better 1983

By Pete Niebling Executive Vice President North American Wholesale Lumber Association

lN the fourth I quarter of 1982, the dialogue, discourse and rhetoric re- garding our economyandour forest productsindustry increases with each passing day. Left-handed economists disagree with the righthanded while politicians do those interesting things related to election years. It results in a good news-bad news environment everv minute of every day.

Story at a Glance

A 20% increase in housing starts in'83. . a 10%.15 o/o improvement in industrial mar. kets possible . . remodeling and d-i-y "soft" in the early months of next year.

The ubiquitous video star PacMan says it all: If you are persuaded that inflation and low productivity rates must be corrected, the little "chomper" is the federal and local governments going merrily along with their overspending. If your view is that high interest rates and unemployment are more serious matters, then Pac-Man is the Fed, the supply-siders and those politicians who lack "compassion."

Looking at the total economy, one can only conclude that pure Reaganomics won't work. In the first place, it has failed because pure Reaganomics was never attempted. Adulterated Reaganomics has assisted in moderating inflation and now seems to be less of a barrier to interest rates. It could also be suggested that productivity is getting better if for no other reason than our current unemployment problem. Unemployment is and will be the problem in the coming months. If North America is to arrive at a robust economy, the unemployment picture must improve.

We think that there is every possibility for surprisingly better times in 1983 if our leaders in government, industry and labor point their efforts in the right direction. Our view is that "smoke-stack America" will not be able to provide what we need until there is a further shake-out in autos, steel, heavy equipment and even our own industry. These industries have either over-capacity or obsolete plants or both. Until the "survivors" can obtain the proper return on investment, the "world class" new plants will not be built and our economy will not surge until there is a substantial increase in capital spending.

Yet we are optimistic. Why?

It is clear that one of the biggest chores of the '80s will be the repair of our infra-structure. We are talking about roads, bridges, transportation terminals, waste disposals, pipelines, pnsons, etc., etc.

That's where the action will be. While these industries will require experts, computer programmers and engineers, it is also true that truck drivers, laborers, flagpersons and others will also be needed. We would suggest that here is where the answer lies as opposed to the growing idea of protectionism in the marketplace.

How does this all relate to forest products and housing for 1983?

The desire and demand for housing is out there. It is not 2 million starts a year and hasn't been for some years. Nevertheless, we see a 20s/o increase in housing starts next year to 1,175,000 units.

Industrial wood markets should also be better. As interest rates decline and industry slowly recovers, we think improvement of 10-1590 over 1982 is both logical and possible.

The important remodeling and doit-yourself market may be somewhat "soft" in the early months of 1983. The unemployment figures are scary, and the consumer shows every indication of remaining conservative until things look better. This improvement should and could occur bv spring. In terms of volume and demand we forecast all of 1983 to be about the same as 1982.

The past and current promotion of overseas lumber export markets by both Canadian and U.S. manufacturing groups should result in gradual improvement next year.

Finally, if our scenario is a correct one, we project still another market for wood products that has great potential. If there is to be only gradual improvement in wood products markets over the next few years, the industry might really get serious about the light commercial market. Even the commonplace2 x4 can be used for a utile or decorative component. This is done in the West. Why not in the East?

To quote a noted television religious leader, we feel that 1983 will bring some better times for some in the industry. "Tough times never last but tough people do."