UFAGTURING

By John LeFors Vice President of Building Materials Sales Willamette Industries, Inc.

Burin"r, has been hard to predict this year and it's not getting any easier. A strong economy buoyed by the lowest unemployment rate in decades, low interest rates and high housing starts has contributed to making 1999 avery good year.

By Nicholas R. Kent President and c.e.o. North American Wholesale Lumber Association

llllirr,in the wholesale lumber community, questions such as the one posed to me for this commentary are always amusing. It is the nature of wholesalers to always view life as good regardless what may be going on in the world at large.

Since the first wholesalers went into business, people have been trying to put them out of business. A typical human response would be to fight back, but wholesalers

Entering 1999, markets for building materials were at low levels for pricing. Even though interest rates were down and housing starts were up in 1998, building materials were in the doldrums-the result of too much supply. Products that had been sold into foreign markets found the U.S. the only open door, and more supply came pouring in.

In good times and bad, producers can prosper by keeping focused on creating efficiencies that allow them to make the most of any market opportunity. Willamette's strategy, for instance, stresses vertical integration and full fiber utilization.

I 999 has been one of the best in recent years for the forest products industry. But how long will it last? No one knows with a high degree of certainty. My view is that we will see a sradual slowins in demand over the next two to three years as the previously pent-up demand is exhausted. Supply will be balanced to more closely match the reduced demand, and improving offshore markets will help absorb supplies.

Regardless of market forces now or in the future, our focus of adding value to our resource base gives us the flexibility to react to the forces that face our industry. "Good times" or "bad times" are subjective measures. We at Willamette are confident about the future.