Diversification spurs panel industry growth

By William T. Robison President American Plywood Association

ARKET forecasts are alwavs fickle and subject to chanle - especially when such projections are made in a period not yet stabilized following a historically steep plunge in the stock market.with this qualification, however. I believe the U.S. structural panel industry can ap- proach the future - both immediate and long-rangewith its customary confidence and optimism.

There is an obvious need for discipline and calm in the prosecution of our nation's economic policies. The American Plywood Association joins with the industrial community everywhere in support of bipartisan efforts to harness and progressively reduce the federal deficit. We equally support national economic policies that will sustain a reasonable measure of economic growth while avoiding a new inflationary spiral.

Subject to the attainment of these larger objectives, America's basic economy appears sound, and founded on real achievements in productivity improvement and market expansion.

We are completing a great year which should see 1987 industry production at 27.1 billion square feet, 3/8-inch basis. This will be our fifth consecutive production record.

The interesting thing about the demand expansion is that it has been proceedlng steadily at a time when home building, as previously predicted, has been declining.

How will the panel industry manage to have easily surpassed the 25.6 billion foot record of 1986, with its largest single market in a moderate slump?

We were helped by the fact that panel volume increased substantially in each home builta direct result of promotion. But the driving force for the 1987 demand surge has been market diversification - again the result of a long-range approach to promotion tackling the best oppor- tunities in every sector liom home building to repair/remodeling, nonresidential construction, industrial applications and exports.

The nonhousing markets and exports are the major areas where big promotional gains are being recorded.

Over-the-counter panel sales from home additions and alterations are continuing to grow from the hot pace of 1986, when there was a 34% gain in expenditures from 1985.

Adding to this is an unexpectedly high level ofpanel usage for nonresidential remodeling and maintenance. This market segment appears to be twice as large as APA previously estimated.

Export markets are expected to top 800 million square feet for 1987, 33% over 1986.

Will the broad multi-market advances of 1987 continue in 1988?

While the full impact of the recent stock market crash and resultant world money market fluctuations will not be known for some time, we feel the basic economy will plod ahead. Housing should do better than previously expected, giving hope for another year ofstrong panel market activity.

With the close support of dealers and distributors, we look forward to doing our part in maintaining a healthy economy and providing mutually shared opportunites for all engaged in the manufacturing and marketing of structural panels.

Story at a Glance

Fifth consecutive production record this year. panel volume increasing in each home built. over-the-counter sales growth will top 34o/o... export market continues strong.