1989 A year of new growth

By T. Marshall Hahn, Jr. Chairman and Chief Executive Officer Georgia-Pacifi c Corporation

E DO not expect any dramatic changes in the performance of the building products industry in the coming year. The progress we make will be based on our abilities to continue improving the efficiency of our operations and product quality, producing higher-value-added products, and developing new markets.

Building products manufacturers and distributors were affected in 1988 by declining housing starts and continued low pricing for many products, and we see these market trends continuing into 1989. We do believe, however, that there remain good opportunities for growth and profitability in this indusiry.

With low prices for panel products still persisting, one of the best ways we can maintain or improve profits is by continuing to upgrade our operations with new technology, thus lowering our production costs. This could be the key to survival for many manufacturers, since housing starts are expected to remain at 1.4 million to 1.5 million during the next year.

New developments in the use of computers in order processing and electronic data transfer will make information transfer more efficient and accurate. The Universal Product Code also is gaining in use and will help to improve inventory control for both manufacturers and retailers.

Improved technology has provided wood products manufacturers with the means to produce more highquality specialty products such as nine and ten foot siding, high-grade lumber and smooth-face particleboard used in furniture, which are in increasing demand. These specialty products will continue to grow in importance in years to come and, because of the higher prices they command, offer another way to maintain or improve profitability.

Another component of future success will be selling our products more aggressively. In recent years, the building products industry has progressed from being primarily manufacturing driven to focusing more on market demands. At Georgia-Pacific we have responded to this trend by developing products such as shrink-wrapped lumber, which offers customer convenience. We will continue 1o pursue other opportunities to improve customer servrce.

Customer service will become even more critical. An anticipated decline in demand from some market sectors next year means distributors will have to be more innovative in their sales approach and their product offerings. As we all are aware, the competitive nature of the building products industry has never allowed marketers the luxury of letting products sell themselves.

Story at a Glance

No dramatic changes ahead... improved technology. moderate growth more specialty products 1.4 to 1.5 million housing starts. repair and remodeling market will hit $100 billion.

One area that will continue to show strength is the remodeling, repair and additions market. Georgia-Pacific expects annual industry sales to this market to reach $100 billion by the end of 1988, and to grow at a moderate but consistent rate in the coming years. Growth opportunities also are seen for industrial wood products markets such as panels used for cabinets or ready to assemble furniture. New market opportunities overseas are opening up as the U.S. dollar maintains a lower level in relation to other major world currencies.

Even though growth in building product markets is expected to moderate in the coming year, manufacturers and retailers still will be able to profit by concentrating on the fundamentals and making a commitment to produce top-quality products.