Hardwood ready for down side

By Ernest J. Stebbins Executive Manager National Hardwood Lumber Association

I T DOESN'T take an office fult of I Wall Street economists to tell a hardwood lumberman that the economy is slowing down. A quick glance at his order file willtell him without all the statistical analysis.While it's little consolation to point out that we are in the eighth year of an economic expansion

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- most hardwood lumbermen are prepared for the down side of what they know is a cyclical market.

While no one can accurately gauge to what extent the Mideast problems will affect our economic condition, that does not prevent the economists from analyzing each aspect of it in great detail in the press. Sometimes it seems that the tone of published reports, whether optimistic or pessimistic, has more influence on the trend in the state of the economy than the real numbers dosuch as changes in the GNP.

Consumer confidence does influence the economy. When confusing or conflicting messages come from Wall Street or Washington, D.C., consumers grow cautious and refrain from spending, and housing and furniture sales decline.

Why are housing starts dipping below 1.2 million units in a country where the population could easily absorb twice that amount? Why is housing so expensive? Is the demand for credit (debt) by business and government finally pushing the individual consumer out of the (mortgage money) market? How much of the cost of that new home is attributable to timber sales never offered because they are locked up in the courts or held back by the agencies who do not want to tackle the preservationists' lawyers?

Has it cost the consumer $1.000. $2,000, $3,000, or more? Will the construction industry ever lead us $ut of an economic downturn?

Lumbermen today are preparing for

Hardwood industry is prcpared for tough times wood promo tion needed to retain existing customers and gain new ones we must convince the public treeharvesting is OK.

a stagnant market. They've trimmed their inventories and are monitoring receivables closely. Their plants are in reasonably good shape having made investments in capital equipment while the market was strong, and have since reduced their debt while production and margins remained firm. They are working smarter, lowering operating costs.

But what can they do about consumer confidence? What can they do about public opinion? Industry-wide promotion of hardwood lumber and other wood products is essential during this period. Consumers must be kept aware of not only the quality of real hardwood products, but the real value which they give to the buyer. If the consumer is unaware of that value, then it will not be home building and furniture that leads us out of our economic slowdown. but the sales of other products such as consumer electronics and automobiles. Industry-wide public relations is just as important. If, for example, 400/o of our timber supply is locked up in the courts or by government regulations, what will the competition for what is left do to the price of our wood products at the consumer level? Price them right out of the market when compared to competing products. We need to tell the public that well managed, working forests, not preserves, provide a continuous supply of forest products without borrowing from our future. It really is "Okay to harvest a tree."

The challenge to lumber manufacturers and merchants for l99l is not only to prepare internally for what's immediately ahead, but to prepare their businesses for the rest of the 1990s.