The Lurnber Outlook for 1957

By Leo V. Bodine, Ex e cutia e V ic e-Pr esid. ent, N ational Lamber Manufacturers Association

Written Especiolly tor The Gqliforniq lumber Merchont

The housing credit shortage and its effect on new home starts rvere the most important factors in the lumber picture during 1956.

Softrvood producers and hardwood flooring manufacturers were the hardest hit by the decline in housing starts.

At this writing, total lumber production for 1956 was estimated at about 37.6 billion board feet-four percent below 1955's high output of 39.1 billion board feet.

Partially offsetting a five percent decline in softwood production, estimated at 30 billion board feet, was a one percent increase in hardwood output, figured at 7.6 billion board feet.

I-umber consumption for 1956 is estimated at approximately 39.8 billion board feet-eight pecent below the level of 43 billion board feet in 1955.

Softwood shipments for 1956 \\rere one percent below the year's production, while new orders fell two percent below output. fn hardwoods, shipments and ner.v orders both trailed 1956 production by five percent.

fn a way, it was ironic that in the year now drawing to a close there was plenty of almost everything except money. On the other hand, with an expanding national economy demanding more funds than were available, it was inevitable that some industries would be depressed by a lack of adequate financing.

It was such a lack of financing, more than anything else, that caused home construction to slip backward during 1956.

The Federal Reserve Board's money policies, aimed at holding down the availability of credit generally, aggravated the situation. But, without question, the major deterrent to investment in home mortgages this year was the 4l percent interest ceiling on government-backed home loans.

While the tight mottgage-money market caused a sig-. nificant decline in housing starts this year, the impact on lurnber and wood been expected.

1. A strong furniture market helped bolster demand for hardrvoods, as furniture manufacturers keyed their styling to the latest trends in home design and modern living.

2. U.S. hardwood shipments to the United Kingdom fell off, due-in part, to Britain's release of hardwood stockpiles held since World War II.

3. In building codes, wood construction continued to make steady gains in almost every class of building.

There are several important lessons to be learned from lumber developments during 1956. Not the least of these is the need for more research aimed at developing a greater variety of new products.

Such research should cover a broad area. Greater log utilization, new efficiencies in production and distribution, more economical glues-these are major goals that should guide future efforts.

In reviewing 1956 activities, it is encouraging to note:

(1) the undertaking of more cooperative research by groups of lumber manufacturers; (2) the stepped-up pace at which the production of other forest products was added to sawmill operations, and (3) the resurgence of rvood windows in new home construction-a striking example of the benefits accruing to manufacturers who emphasize quality control.

Prospects for the year ahead are clouded by a number of uncertainties. Legislation-wise, the complexion of the new Congress promises little to improve the climate for free enterprise.

One reason for torvard larger and this was a continuation of the trend better-quality homes, featuring greater variety of purposes-paneling, kitchen decorative trim and exterior finish. to products was not as great as might have use of wood for a cabinets, windows, narne a few. flere are some of the other factors that infuenced lumber production and demand during the year almost behind us:

In modestly priced homes, too, builders relied more on wood paneling and wood kitchen cabinets this year to give their dwellings a custom touch.

Of particular concern to the forest products industries are prospective bills which would: (1) tie up large areas of government timberland solely for recreational uses; (2) put the government in the business of reporting prices on forest products; (3) enlarge the Administration's public housing program; (4) require the filing of additional reports with the Securities and Exchange Commission,.and (5) make business mergers more difficult.

Following is a summary of other prospects that would have a mljor bearing on lumber industry affairs in 1957:

1. Housing credit probably will remain one of the big problems of home builders throughout the vear. But, since home building is recognized as a keystone of the nation's economy, we may expect Congress or the Executive Branch, (Continued on Fage 25)

Merchandising is like religion. If you once get it, you never lose it. If you ever lose it, you never had it. ***

You can hear and read merchandising ideas from many angles, and based on a multitude of opinions. ***

But the best fundamentai thought in building-material merchandising is finding ways and methods of pointing out to'people the interesting things they can do with your goods, materials, stocks, services, or whatever you are selling. ***

There is interest, enticement, attraction in looking over and thinking over what you have, and using your brains and ingenuity to apply them to the needs of your trade.

And when that trade is unconscious of its building needs or wants until you pres€nt your offerings, then you are really merchandising, because you have made sales that had not yet reached the point of demand, or competition. Creating business is what that is called. ***

We knew a lumber dealer once who built up a substantial business, established a fortune, and died. He never merchandised in any modern fash'ion, scorned any sort of advertising, and just ran an old-fashioned yard.

Merchandising was n*""n"U lo fri- innumerable times in his life, but he couldn't se,e it. He was making a financial success of the operation, so why change? He never changed his mind.

He left his busines" *ln**J of his son. The son r ras much like the father in a general way, and it might have been predicted that he would follow in the old man's footsteps. *d.{.

To show how hard it is to judge humans, he was just the opposite kind of a business man. From retail dealer to modern merchant went this father and son. t<**

He runs the same business that his father ran, but he considers that day wasted that has not seen something new in the merchandising*line attempt€d in that business.

The father would not spend a cent for publicity. The son pays an expert to handle his publicity of many kinds. He is just as thoroughly convinced that modern merchandis-

BY JACK DIONNE

ing methods are vital to his business as his father was that there was no sense to them.

*t<*

The young man is making at least as much of a success of h,is operation of the business financially as his father did, and a whole lot bigger success viewed from other vantage points.

The business is an infinitely greater service-giving machine than it was in the old days. It is just as soundly conservative as it ever was, but much more active in applying itself to the affairs of the building trade than the father ever dreamed of making it.

The answer, of course, is that times have changed, the lumber and building material business has changed, the public has come to know and appreciate better things in the line of service than it used to: the methods that made the father a success would not do today, and the son grasped the situation and the opportunity. *{<{<

Which goes to show once again that it is every man's job to improve on the things his father did. It is the vital and essential law of progress, that men never stand still. They either advance or go back. The young man in the above story went ahead, keeping the solid characteristics of his father, and adding to them new thoughts and new things.

Long ago an advertisrJ ;"-r"med r,ewis wrote these very wise lines on the subject of merchandising. The young lumberman told about above may never have heard or read them, but he incorporated them into the business his father had left him. Thel are worth mulling over:

"The seliing process is the ultimate purpose of an organization, and if it fails, the company fails. Its vital importance is obvious. It is the only reason why a business exists. We sell to a public. The public is a peculiar thing. ft is busy, indifferent, exacting. We know less about it than we should, but we do know that: It is a fallacy that the public will automatically seek the best. It has t6 be educated and directed. It is a fallacy that the public knows the difference between price and value. It is a fallacy that the public knows what it wants. It is a fallacy that the public will automatically reward enterprise and service. It is a fallacy that the public will demand over any great length of time what it is notreminded of."

In that paragraph will be found much merchandising wisdom.