Mpects

We expect a slight droP in housing starts next year as interest rates ri*, but overall housing affordabilitybased on inflation, interest rates and housing payments as a Percent of family incomeremains healthY and should keep the droP to a minimum.

Significant future growth in the industry will come from the remodeling, repair and additions market, a market that is exPanding at an impressive 8 to l0% annually. This growing army of do-it-yourselfers and professional remodelers has specialized needs that will require innovative new products. Manufacturers that are able to develop these products will be rewarded with higher margins and more consistent demand for their products.

Another area of oPPortunity is the growing use of wood Products in industrial applications. High-grade particleboard, hardboard and other composite panels, for example. will be in increasing demand for use in automobiles, ready-to-assemble furniture and other commercial applications.

The near-term outlook for the industry is not all positive, however. Overcapacity in structural panel production, with the resulting excess supplies, has kept prices for these products low for some time now, and there is no sign of that situation changing in the near future.

We can, nevertheless, be encouraged by improved export markets for wood products as a result of the lower level of the U.S. dollar compared to many foreign currencies. Pacific Rim countries, in particular, will be important markets for U.S. building products because of the critical need for housing in that area of the world.

American producers, however, must make a long-term commitment to continue serving these foreign markets. Many countries have building products specifications that differ

Bullish building Products future...home imProvement, industry, exports offer new markets. slight housing start drop in '88 foreign markets' special needs must be met.

There still is tremendous potential for future growth in the building products industry. By taking advantage of new market opportunities and better serving existing markets, manufacturers and retailers will continue to profit in years to come.