A big 33i1" ahead

By William T. Robison President American Plywood Association

fn ONCPnNING next year, there

V isn't anyone who really knows for sure what is going to happen! Every forecast is conditional on a makes his profit, building an attractive, well designed home finished off with an eye appealing blend of mouldings and millwork. number of big "ifs," but APA believes there are grounds for projecting a modest panel market recovery in the second half of I 99 I

The new found freedom for millions of people in Europe, along with the combined European Market through EC-92, is going to create a phenomenal market place for the lumber producing nations. This is not going to be an overnight happening, but eventually it will happen. When it does, WMMPA members plan on being suppliers of good quality millwork to these markets.

Due to recent legislation and the Super 301 negotiations, which involve shipments to the Pacific Rim, and the new situation in Europe, we are confident our products are going to be in demand in new world markets. Many already have started marketing internationally.

WMMPA members have some of the world's most advanced woodworking technology. Our production and quality is unmatched anywhere in the world. Quality conscious buyers in the sophisticated world market demand this. Companies that produce mouldings and millwork under the WMMPA logo are fortunate and excited about the future.

The lone downer in all these plans is the availability of raw materials for our plants, but I am sure that the people of this nation will soon realize that we cannot survive as a free people and industrious nation without manufacturing our own products. We must manage and utilize our forests and continue to be a world leader in the manufacture of good products.

Our best estimate for l99l at this time is a modest recovery beginning in the second half, permitting production of 27.3 billion sq. ft. This is based in large part on the assumption that the Fed will lower interest rates to stimulate recovery about midyear.

We expect only a gradual improvement in new residential construction in 1991. Housing starts will continue weak until interest rates soften and the basic real estate climate improves. The current S & L problems, which have put a damper on new real estate loans from almost every quarter, will tend to slow the housing recovery that normally occurs when mortgage rates subside.

Our forecast assumes that shortterm interest rates will drop meaningfully shortly after the first of the year, but it will take about two extra months for that decline to be reflected in long-term rates. The results will be no housing recovery before June and a slow rate of new growth after that.

Overall, the U.S. economy will go through some tough sledding before returning to a modicum of health. Given an acceptable solution to the Middle East crisis and a stronger U.S. financial community, prospects remain. however. for a much improved longer term economic environment.

Subiect to a number of big "ifs" a modest panel market recovery is possible in second half.