There are good times coming

By Pete Niebling Executive Vice President North American Wholesale Lumber Association

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Iorganizations, including ours, have numerous forecasts regarding 1985. These predictions, however well researched, are subject to a number of unpredictable factors. One major example is interest rates and their effect on housing. By the end of October they were declining, yet the consensus of many economists is that rates will increase sometime between now and the end of next year. Next, nearly every lumberman agrees that the market problems in 1984 were largely due to overproduction. How else can one explain the depressed mill prices in a 1.7 million housing start year? Last year NAWLA termed it "a tad too much production." With many others, we simply didn't realize how production capacities had been improved at the mills between 1978 and 1983.

Which leads us to the conclusion that we should "crystal-ball" the 1985 marketplace environment rather than cite a litany of projected statistics. Sooner or later demand and supply will come into balance in 1985. We have no more idea when that will be than anyone else. Perhaps by March, logcally by mid-year, or it could be next fall, before production curtailment is sufficient enough to provide a strong market for lumber.

When this demand-supply balance occurs we will find our industry in a very healthy environment that should lead to excellent business activity. Let's look at some of these pluses.

Lumber manufacturers in North America have worked successfully to become low-cost converters. Although this translates into high mill production rates on the one hand, it can also be stated that surviving mills will be well positioned when demand equals supply.

More importantly, today's producer is thinking more about adding value to his products than adding a new high-speed widget to push up production. Manufacturer's have geared up their trade associations to promote and expand lumber markets. We mentioned this change in thinking last year,and it's nice to report that these promotion projects are going ahead full throttle. NAWLA foresees slight improvement in every major lumber market except housing in 1985. These promotional efforts by the producer may do even better in terms of demand than we expect!

At the wholesale distribution level there are many changes going on. Wholesalers have also been forced to