1.2 million starts

By Nicholas R. Kent Executive Vice President North American Wholesale Lumber Association

T HE BUILDING material indus-

I try has been riding a beautiful wave for several years. That wave has finally hit the beach.

While the foregoing statement is simplistic. it does summarize the latest housing cycle. What compounded the situation. however. was all the talk of "soft landings" and continued stable growth with dashers of Europe '92 thrown in to spice up future prospects. We were also blinded by the savings and loan crisis and the Iraqi invasion of Kuwait.

As housing cycles go, our current drop from l.8l million starts in 1986 to 1.23 million starts in 1990 represents a decline of about 330/0.

Uncertainty permeates virtually every aspect of our lives these days. Fuel prices continue to escalate. Bankers, spooked by the sins oftheir brothers, have become overly conservative, stifling growth. Homebuyers, even if they have money, are reluctant to buy for fear prices are too high or may fall. Remodeling, while a good market, has slowed its growth, at least in the areas of additions and alterations.

Opportunity does exist, however, and some tried and true solutions will help our industry use this period to its advantage. Now is not a time to go it alone. Some manufacturers, trying to get their product closer to the market, have increased their use of reloads. The logistics of this move are sound but the financial aspects do not carry water. More mills are working more closely with wholesalers shifting the inventory expense closer to the market along with the product. This move is allowing those mills to do what they do best, produce lumber, and lumber wholesalers to do what they do best, sell lumber.

Housing represents only one part of the future for the lumber industry. NAWLA predicts total U.S. housing starts for 1991 at 1.2 million units. We believe that 900.000 of these units will be single family with the balance being multi-family units. Lumber. and lots of it. will be sold in