The Signs Point to o Better Yeqr for Lumber

lVritten Especially For THE CALIFORNIA LUA'IBER IvIERCHANT

By A. B. Hood, President,

Western Pine Associqtion

We can look for a moderately better year in 1958 in the lumber .business, although the sales depariments will be working harder.

With a rough year to look back on, Western pine region operators are in no mood to day-dream about the good past when_production was all they had to fret about. Nevertheless, they-do-expect some improvement by Spring.

The fact staring them in the face is that-the lumber manufacturing industry has been going through a severe period of recessio:r.and price .deflation. Western Plne region pioduction for,.l957 is expected to show a drop of 10 to ti-y" trom the 8.5 billion board feet turned out in 1956. Shipments for the first nine months were down 8.3% and were expected to finish at around 8/o below the 1956 performance.

. Business Economics at Work

_ ^T!t. Jga.r wag a good deal like I946-only in reverse. In 1946, OPA had the price lid battened down so tight it disc:ouraged production. In the past year-especially laie in 1956 ---productio_n was_so great that prices were discouragecl.

_Inexorable w_orkings of the law of supply and demand are wlrat made 1957 a rugged year for lumber producers while forcing corrections that we believe laid founhations for improvements to come. These corrections worked. and are still working, hardship on many producer firms caught in the squ_eeze. between costs of government stumpage and declining realization levels. In our l2-state region, wfiere 7A/, ol ali timber resources is held by government, the shoe'pinched especially hard. Virtually all lumber mills in the region are dependent in whole or in part on federal timber.

Few in our industry expect a strong upsurge next year, but there are.-many who ire planning for"a lrear-somewhat better tlan 1957. They believe "bottom; was sciaped in late summer. Certain recent developments are viewed as significant.

Housing Starts fmprove

For the Western Pine industry, the most encouraging sign was when the rate of housing starts began to pick up iri -fu- 1957, approaching and touching the seasonally idjusted rate of 1,000,000 staits annually. Residential constiuctibn is this industry_'s largest market. Increased home building is reflected immediately in better demand for lumber.

Various financial experts have forecast more mortgage money to be available in 1958. Since there is general agrJerient miilions of home-wanters would act if they could, iny apprecia- ble thawing of the mortgage market is'expected to hive fast results in stepping up housing starts.

Vacancy Rate Revealing

_ Despite all the buildirig in ."."qt y*i's (8,385,500 ner,v homes since the start o.f 1OSO) the'housing vacancy rate is down to 2.8/o of all units, as against 3.0%\" mid-1'956. 'Iitre number -of multiple-family dwellings being built for renting number of dwelli is sharplv up. and the number of up, ing of hbmes being conventionalli financed is just as high as 1955. And the nu"mber of young, new home-wanters (males of typical marriage or young, 24 years), lrsw -rrurrrc-wdILrts \rrrarcs or marrtage age, z+ y< has finally started to increase ifier 14 y."r.if aiciining.

There's no denying the bloom is 6ff the tract-buili: -the tract-builiing progr-q1 which brought lush times in recent years. BuI we still have the individual home-builder of some standing in his community. He continues to be the backbone of our indust-ry. ffe can get his loan through regular commercial channels, at rates sliehtly above F.HA.

__In 1956, conventionally financed housei accounted for 650,000 starts, which shows how vital a role the individual home seeker with a good credit standing plays. And his number is legion. We must cater to this man's wishes and l<eep his interest.

Quality Control Vital

^ Western Pine region manufacturers, producing 27fo ot Arnerica's softwood lumber, have been working t"ogether on quality- control for more than 30 years and have-macie a great deal of progress. They are rlore determined than ever to"keep thc ernphasis on it.

The Western Pine Association's research laboratory staff, now numbering about 15 specialists, has helped get nu-merous irnprovements under way. Most noteworthy is the change that the.years have brought in seasoning practices. Better dry titns and more of them is the order of the day. Seasoning research was started by the association on behalf of the whole industrv somc 35 ycars ago and continues today on a larger scale than ever, .lvith three full-time consultants and reseaichers on the

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WESTERN PINE lumber-Grode meeling qr Chester, Colif. (right) wos otended by obout 100 rnen from o dozen o? more mills. Similqr meeting3 in 1957 have hod total ottendonce of obout 1,400 men from sbout 250 nrills. Grode troining is o moior octivity within the Western Pine indusfry.