Pinched timber industry glimpses way out of the woods. Housing-start pickup is a big boost, but few see a return to the boom days of the '70s
After more than four years lost in the woods, the Western forest-products industry is beginning to catch glimmerings of economic daylight. Traditionally, lumber companies are among the first to feel the onset of an economic downturn and among the first to recover. ''We certainly hope this pattern continues to hold,'' says Hugh Love of the American Plywood Association (APA).
In the Pacific Northwest, some mills that have been shut down are beginning to reopen. A number of those that have remained open, but cut back to three- and four-day workweeks, are increasing their production. A recent shortage of stock in the nation's lumberyards pushed up prices briefly by 15 to 20 percent. There have even been a few reports of spot shortages of trained mill workers in the Pacific Northwest.
''There were times last year when two-thirds of the industry were shut down or curtailed. Now we're back to about 75 percent of normal,'' summarizes John Benneth of the American Forest Institute.
All this is welcome news to an industry that has gone through an economic depression even deeper than the 1930s. A study by the Western Timber Association , commissioned last year, found that not since 1926 have cuts in lumber prices and demand been as sustained or deep as in the last several years. Now, with housing starts up across the United States - the last quarter of 1982 saw a 1.22 million yearly rate, up from a low of 870,000 in the throes of recession - the economic outlook is brighter.
But this good news is tempered by the uncertainties of 1983. These are so great that no one is ready to celebrate yet. ''We're not knocking it. We are seeing an actual recovery, more or less. But the situation is still far from satisfactory,'' Mr. Love says. No one in the industry expects a return to the boom days of the 1970s anytime soon.
''It's going to be a bumpy year,'' ventures Jack Robotham, general manager of the Fort Vancouver Plywood Company, a small independent firm in southwest Washington. He expects prices and demand to go through a number of ups and downs for most of the year, with some improvement at the end of the year. His worker-owned operation has remained open throughout this period, but ''we haven't been making any money,'' he says.
Similarly, officials at the Weyerhaeuser Company, one of the nation's largest timber firms, remain leery of current conditions. ''Our economists are still really cautious about the upturn. We are certainly not rushing out to add new capacity,'' company spokesman Steve Pearce says.
Robert G. Anderson, director of market research at APA, recently forecast 1.3 million housing starts for 1983. Figures in the range of 1.3 million to 1.4 million appear to be the current consensus, assuming mortgage rates drop to 12 percent by midyear. While this would be a 30 percent improvement from 1982, it would still return the industry only to 1950s levels of production.
Conditions in the plywood industry are fairly typical of the forest products industry as a whole. In January, about 18 percent of the work force was laid off. This is down substantially from the 30 percent level that layoffs were running the year before. But the 1.3 million level for housing starts would translate into only a 6 percent increase in the demand for plywood, increasing the industry to only 75 percent of its total capacity.
The mixed picture is also illustrated by the Idaho-based lumber company, Boise Cascade Corporation. They have reopened some plants recently but they also laid off 2,000 people permanently last year. ''These people will not be coming back,'' company spokesman Vince Hammity says.
Thus the economic upturn as currently projected holds hope of reducing the economic and unemployment problems in the industry significantly, but falls far short of eliminating them.
The rough lessons of the last few years have spurred considerable activity aimed at lessening the industry's dependence on US home construction. Weyerhaeuser, for instance, has been busy retooling its mills so it can turn out metric-sized lumber for the Japanese and European markets. And the APA has been researching methods for utilizing more of their product in areas such as packaging and home repair.