Seller's market can be develoPed

Bv H.C.A. Hunter Director-Sales & Marketing Lumber & PlYwood Division St. Regis

r INLIKE dis. lUtributors and retail dealers, wood products manufacturers did not benefit from 1984's relatively high rate of new home construction.

Historically a 1.75 million plus level has meant at least reasonable profits for lumber and panel producers. Over-production in North America and a dead export market destroyed the supplydemand balance in the U. S. and at mid-year prices had sunk to l98l-82 depressed levels.

With 1985 housing starts forecast to be around 1.6 million, there doesn't appear to be much to look forward to for mill owners. Reduced production schedules and some permanent mill closures will have to occur before any semblance of a seller's market appears in 1985. Dstributors should have another good Year, however, because of low inventorY strategy on the Part of dealers and builders.

On the positive side are the increasing non-housing light construction markets and the acceptance of Permanent wood foundation sYstems. Relief from part of their purchased timber obligation will enable several producers to continue in business, lending stability to the supply side. Renewed export demand is needed as well as the continued growth of the repair and remodel segment.

1985 just doesn't shaPe uP as a very healthy situation for lumber and panel producers. Long term prospects are positive, assuming there will be some downward capacity adjustments.

Story at a Glance

1.6 million housing starts. .. seller's markei possible. .good year for distributors. ..positive long term prospects for indus' try.

IT looks like Imore of the same for 1985!

Our own distribution business wls developing a nice little head of steam all during 1983 with every single month showing a tidy increase over the previous year. This favorable trend continued through April, '84. However, in looking back to that point, it's obvious that sales have been coming a lot harder during the past six months.

One reason is that Alaska business definitely took a downward turn, starting in the second quarter. In addition, the depressed conditions that

1985: a re-run of '84

By Robert D. Peterson Chairman of the Board Palmer C. Lewis Co.

exist in the forest products industrythe number one industry in Washington and Oregonare not showing any signs of abating. In fact, we're seeing a steady increase in the number

Story at a Glance

More of the same in '85...oi1 prices and interest ratescontrol economy...improvement pos. sible, but extra elfort will be necessary.

of layoffs and closures. It's realistic to accept the fact that there's going to be a long shakeup period in that vital industry.

We think it's prudent to expect that today's business conditions will probably continue well into 1985. As a result, we're going to do our very best to pay extra close attention to business basics - trying to do what good common sense tells us to do. We're certainly involved in working the "cost side" of the business equation real hard. At the same time, we recognize

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