Dealers optimistic about '87

By Harlan Hummel Executive Vice President National Lumber and Building Material Dealers Association

llf trg A few geographical UU exceptions, 1986 wil be regarded as a banner year for most retail lumber and building material dealers. Reliable indicators at this time point to the likelihood that 1987 will be equally as good. However, in the oil producing and agricultural regions of the country, as well as a few of the heavy industrial areas, the general economy is still down, thus putting a damper on housing and related economic activities. But all together, 1987 holds promise for a brighter future for many dealers in these slow-growth areas as well.

Although we are optimistic about 1987, many complex issues are yet to be reckoned with that could substantially influence the final outcome. For example, the full impact of the new tax bill on our industrv has not been deter- mined. If we are to enjoy continued growth, interest rates must remain at or below today's levels. Inflation will have to remain at a moderate rate. A major undertaking of the 100th Congress will. be addressing the potential problems of the huge federal deficits with no adverse impact on economic expansion.

All of these external factors will play an important role in our industry's performance in 1987; some of the effects could be negative. However, because dealers have recently undergone tough economic times, many have emerged better equipped to operate their businesses successfully. Lumber dealers throughout the country have had to become superior managers for inventory control, employee relations, and investments in equipment and warehouse space; they have learned new skills that help bring about an improved return on investment.

Building material dealers fortunate enough to have experienced a high level of growth in the last two or three years should not become complacent with their local market position. There will always be extremely strong forces vying for the consumers' dollars. The major competition may not be the lumber dealer or home center down the street; more than likely it will be the automobile or larger appliance dealers. These competitors for the consumers' disposable income do an excellent job of marketing their products; they frequently are able to convince the home owner, or potential home owner, that a snazzy new automobile or hightech appliance will enhance their life style more than a new home or a newly remodeled kitchen or bathroom. Lumber dealers must learn to deal with these sophisticated marketing thrusts.

Story at a Glance

lmpact of tax bill on industry undetermined . . . higherlevels of efficiency needed to im' prove margins and profits. lumber dealers must learn to deal with sophisticated marketing thrusts.

If we effectively cope with the various forces that shape our industry, we can compete successfully. If we do this, 1987 should be a sound economic year.

Modest growth in transportation

By Gary D. Schlaeger Senior Assistant Vice President, Forest Products Burlineton Northern Railroad

F8ft ,3JT",in::l'"fl;,,P#t and its predecessor companies have enjoyed a good relationship with the forest products industry in the UnitedStates and Canada.

A significantportion of the railroad's total freight volume comes from the forest products 6@E&G,r3 il Induslry. Factors affecting the forest products products industry are important to BN.

In 1986, housing starts in the United States will be about l.8 million units. Housing starts are expected to decline about 5% in 1987, to about 1.7 million units. Lumber consumption for total residential usage will probably decline about 2o/o from 1986 levels.

While the residential repair and remodeling segment of the industry

Story at a Glance

Canadian softwood lumber duty may increase demand from Pacific Northwest mills ...probable transportation price increase. spot shortages of lumber hauling equipment. prices will hold firm or even increase.

has experienced tremendous growth over the past few years, it will probably soften by about 1.50/o in 1987.

The overall building industry will decline slightly next year, also as a result of the non-residential glut. With an average office vacancy rate of about l6olo in large downtown areas, and up to 230/o in suburban areas, this particular segment needs a shot in the arm.

Finally, the new tax bill passed by Congress contains provisions making investments less attractive. The signs all seem to point to overall volume in the forest products industry declining in 1987, but we

The Merchant Magazine

The !,liedenneyer Co. (industrial and export sales) has been formed in Portland. Or.. by Tom Niedermey'er with Henry Clenro and Audre).' Scto on staff ... Wi,qandCorp.. Colorado Springs, Co., is opening a DC for treated products in Denver. utilizing the former Metz Lumber Yanl...

A unified Canadian oflercombining increased stumpage fees and an exp0rt tax in lieu of the preliminary 15%r countervailing duty set by the U.S. is under consideration by the U.S. Department of Commerce.

Dixieline and Wickes Cos are both negotiating for the So. Ca. Handyman stores due to be liquidated by Dec. 3l . . . Dixie/ine seeks to acquire two San Diego stores and one in neighboring La Mesa to add to its 5store chain which will soon become 6 with a company-built store due reports have it that several [{andyman locations will not close because of lease commitments, but will continue to operate. possibly under a differentname...

Home Depot has posted a lot across the street from Dixieline's Sports Arena Blvd. store, in San Diego, Ca., as a future site . . . Grossman's Inc., (formerly part of Evans Products Co.) has completed reorganization and emerged from bankruptcy proceedings. .

Western Lumber Co., San Diego, Ca., is acquiring the Lumber I subsidiary of Cole Induslrles, National City, Ca.. effective Jan. 1; no price has been disclosed for the 4 retail units and I wholesale operation in San Diego County. .

Wickes Cos. is acquiring Collins & Aikman Corp. (textiles and wallcoverings) for $1.6 billion but has backed off from a $1.7 bitlion offer for Lear Siegler because of difficulty in obtaining bank financing due to the Boesky scandal (see page 63) ..

Lumbermens of Palm Springs, Ca., will open a 4 acre yard in Indio, Ca., in July as part of a Lttmbermens Business Centerof 9 acres of complementing businesses ., Count.y Lumber C'o., Santa Barbara, Ca.. is closing Builders Square, which recently had the right to use that name upheld by a jury in a suit brought by Builders Choice. San Antonio, Tx., has opened a second store in the Portland, Or.. area with two more to debut in 1987 . .

T'um-A-Lum Lumber Co., an 80 year old Vancouver, Wa., c0. is relocating its headquarters to Troutdale, Or. . Wickcs Co.s. is renaming 39 recently acquired Ole's stores as Builders Emporiums.

Home( lub has opened a 100,000 sq. ft warehouse store in Kent, Wa., with plans to open a second Wa. store in Lynnwood early next year . Orchard Sup- ply & Hardware is building a store in Watsonville. Ca.

Waldron Forest Products lnc., Sacramento, Ca.. has moved to new offices at 5744 Windmill Way, Suite 6, Carmichael, Ca. 95608 Jones Wholesale Lumber Co. has moved into handsome new 5,000 sq. ft offices at their Lynwood. Ca.. facility

Inland Lumber Co. sold onlv the office equipment but ni, inventory when Martin forest Industries, Healdsburg, C&., acquired its Dublin, Ca., operation; some details of this transaction were incorrectly reported in our Nov. issue . the deal has n0 effeet on other Inland Lumber offices in Ca.. .

Louisiana-Pacific has completed acquisition of 98.000 acres and a sawmill f'rom 7'imber Realizatiort Co. in Ca. for $9,5 million ... Vent-A-Hood o.l Ca. has opened a 7,000 sq. ft. distribution and design center in Hayuard.Ca....

Branson-Cross Luntber Co.. Union City, Ca., has bought land in Lathrop, Ca., with construction of new facilities due in the spring . Blue Lake Forest Pradr/cls is a two mo. old firm being operated by Bruce Taylor at the former MacNamara & Peepe sawmill in Arcata. Ca.

North American Lumber International, Ltd. is a new Portland, Or., co. organized by Cary Rose, formerly with Niedermeyer-Martin .. . California Redwood Moulding Co., Sacramento, Ca., has leased mfg. facilities from River City Moulding.

Anthony Industries, City of Commerce, C?., has acquired Finestone Coatings from Finestone Corp., Detroit, Mi., for its Simplex Products Div. . . . Kohler Co.'s Sterling Faucet Co. plans to buy Owens-Corning's Fiberglasreinforced-plastic components div. for an undisclosed price lPlease turn t() page 411

Housing srarts in Oct. (latest fies.) dropped to a seasonally adjusted annual rate of 1,648,000 units... single-family starts edged up 0.506 . . multis dropped 1.8%. permits were down 2.90/t . .

We at San Antonio feel strongly that quality has to go into a building from the start. Quality is an integral part of our buildings, not something that is added later.

The quality of a San Antonio building begins {rom the ground .rp . . literally. From the first step of construction until the last, our crews are guided by a quality control program that is part and parcel of everything we do.

One definition of quality is ttconformance to requirements." We like this definition because it means we can completely fill our customers' re. quirements while main. taining the standard of quality that is the hallmark of all San An. tonio buildings. lh0 lilll0 ca||$ tTill| |l|8

Please call us when your needs include a quality building to fill your requirements.