No doom & gloom

By Hal R. Marsolais Executive Director Home Center Institute

S THE economic storm clouds gather, it is interesting to note the stampede to jump on the Chicken Little bandwagon to proclaim "the sky is falling." The nightly news is filled with stories of gloom and doom while experts paint wild scenarios of "what will happen if ..." As a nation. we seem to be dedicated to talking ourselves into a deep recession.

In fact, it is reasonable to expect some sort of economic downturn after 80 plus months of growth. Most prudent planners had already factored those expectations into their business plans for the 1990-1991 period. other markets.

We had anticipated a soft housing market for the early '90s related to population demographics and interest rates. Although the belt tightening of the banking industry has exacerbated the situation in some areas of the country, we can reasonably expect a gradual reduction in interest rates and a subsequent growth in housing turnover as potential home buyers re-enter the market.

Our forecasts call for a 3.30/o real growth figure for hardlines retailers in 1991 with a long range overall projection of 5.30/o compounded annual growth for the period 1990-1995. This is still well above the growth projections of l.7o/o for retailers in general during the same period.

Perhaps the greatest hope for the future can be found in exports. Even when housing does rebound, demographics suggest that future peaks of activity will seldom, if ever, reach the high levels of the past decade.

Lots of lumber will be sold for rcmodeling and other markets .. exports look iavorable morc cooperation betYveen manuf;acturcr and wholesaler.

A number of NAWLA members are already successfully trading lumber in the world arena. More will follow. Again, some manufacturers are already seen going direct, placing inventories thousands of miles and oceans away from their facilities. We believe that a more controllable, more predictable conduit will involve world wholesalers who will take lumber off the hands of manufacturers before it leaves our shores.

In summary, we are now experiencing a bottoming out period following a good home construction period. While remodeling will help make up some of the differences, exports will draw heavy attention. There is heavy interest in strong lumber wholesaler and manufacturer relationships.

Major planning considerations for the period include repositioning strategies as we deal with a mature market and changing consumer demands coupled with increased competitive pressures as the industry shakeout continues. Beyond a doubt, there will be winners and losers, but overall the industry will continue to grow.

Although we recognize that l99l will be a slower growth period, we do not subscribe to the gloom and doom scenario. As Barry Asmus, economist for the National Center for Policy Analysis, points out, "Economists have predicted eight out of our last two recessions."

Expect a gradual reduction in intercst rates and improved housing markets ...3.T/o rcalgrowth for hardlines retailers in 1991 ... overall industry growth.