"Why Hosn't the LumberIndustry Done Better Thon It Hos?"

(The following brief but fascinating talk was given by Dr' Johrt Zianuska, forest economist at the Uniztersity of California, to members of the Cerltral California Dry Kiln CIub at their Septernber meeting, as reported in the Minutes.)

Dr. Zivnuska outlined lumber production from the early 1900's until 1950. The banner years of production were 1906-1907, with a lumber production of 46 billion feet. Prorluction has been coustantly falling to a 38 billion peak in 1950 primarily because of slackening' in agricultttral expansion and thus construction of farm buildings, ancl the fact that from 1930 to 1950 lumber prices more thau doublecl relative to wholesale prices generally.

From 1951 to 1956, a changing situation exists where we zrre natioually growing triore ,wood than is cut. Lurnber production in lgJl-1956 varied aroutrd 37 billion arrd during i957 ard 1958 dropped to 33/2 billion, clearly indicating a clrop in demand. For tl-re current year, l1etv orclers are 11111ning 10-l2o/o below those in 1958.

Housing Starts and Their Effect

'I'o indicate fttture consumptior.r of lumber, housiug statistics afiord some information. House construction cousLlmes tlre bulk of lumber produced, so that housing starts reflect to some extent tl-re potential lumber market dttring arry 1-reriod. For the period 1950-59, housing starts l.rave tveragecl 1-1/3 nrillion Per year.

,\s indicated by housing requiremeuts, the atlswer is errcouraging as to how big a lift in lumber cotrstttuption <.rccur in the 1960's.

The two elemeuts which cotttrol house building voltttlre are household formatiou aud replacenrent of obsolete ancl substandarcl housing. In the late 1950's, tl-re building levels were higher tl-ran forecast. Household formation was ttp because of a large shift of single persons into houses of their owrr. At the present time, for example, only 3/o of .single lvonlerl over 25 have families with them. Replacemettt building was also high during the period and the number of substandatd units was reduced from 37/o to 1916 h tbe tlecade. Both of these factors will therefore be of less importallce in boosting housing starts in the future.

In spite of the rapidly increasing population on a national basis, tl.re projected level of annual new housing starts frour statisticzrl data is very similar to that existing at the present time. i.e.. 1.3 million in 196O-64 and L4 million in 1965-69. There is also a treucl to reutal housing, which uses less lttmber than siirgle unit or duplex-type housing. It is possible, frour a consicleration of age class distribution, that there may be a boom iu rental housing whereas house builders may have a shrinking market. -

Influence of Building Practice and Costs

The influence of costs on future building practice is best expressed ina cluotation from Fortune magazine: "The most solid reasorl for believing that the cost spiral will be slorved is the tremendous intensification of technological conrpetition amorlg manufacturers of building materials every aspect of home building is undergoing change. The most rapid progress is being made in industrializing the basic house enclosure itself through the use of large wall, floor, and ceiling partels that contairt the structttral member, exterior insulation in a single piece.

"The Natior-ral Association of Hon.re Builders recently erected two research houses : otte using a new panel mauufacturecl by Nlasonite Corp., the other a polystyrene sandlvich panel produced by Koppers. National Homes, the largest U.S. prefabricator, is experimenting witl-r load-bearirrg alumirrum wall panels for future production. Simpson Timber, u,hicl.r entered the home building fielcl just two years ago, is norv turning out a plywood panel. The system of oanels aucl tmsses developed by the Lumber Dealers Research Council is being *idely irsed, and the Douglas Fir Plyu'oocl Association recently anuounced a system of its own."

It is apparent that considerable challges in coustrttction are taking place. Without a sttbstantial increase irr technological clevelopments within the lumber inclustry, competitive materials and techniques will clisplace eveu such common items as studs, it was said.

An article in Forum on this subject concludes: "If the irrdustry were willing to invest $30 million per year in,researclr and development-only l/. of total annual lumber sales-building would soon see a rettaissance in wood."

The effort put into research and tecl-rnological-developrnents by the-lumber ir-rdustry compares very unfavorably 'rvith those in competing industries.

\\Il-ry hasn't the lumber industry done better than it has? One oi the cl-rief reasons for tl-ris is that the lumber industry is the least concentrated of any major manufacturing inrlrrstry. For example, in 1954 the largest four ,rrroducers accorinted for only 7/"of total product ancl the largest