193 I Outlook West Coast Lumber

West Coast Lumbermen's Association

Manufacturers of Douglas fir, West Coast hemlock, Western red cedar and Sitka spruce in the territory along the West Coast of Oregon, Washington and British Columbia sold approximately 25 per cent less lumber in 1930 than during the previous year. The percentage of decline was practically identical in the foreign as in the domestic markets, Europe being the only major market area wherein important increases occttrred.

Approximately 83 per cent of the lumber manufactttred in the Douglas fir region of Oregon and Washington is used in the United States, as is 65 per cent of the lumber produced in the Canadian Province of British Columbia. Of the combined Oregon, Washington and British Columbia lumber shipments into the United States, approximately 50 per cent moves by water to California ports and to the Gulf of Mexico and along the Atlantic Seaboard. The remainder is shipped to the interior by railroad. While the lumber and wood products of the Douglas fir forest region are used for thousands of purposes, the bulk of the production is utilized in individual home building, railway construction, engineering projects and in wood fabricating industries.

As 1930 closes, the \A/est Coast lumber industry is preparing for a rvinter of protracted shutdowns with consequent extremely low production. For the entire year the industry averaged 54 per cent of capacity in production, and during the last five months about 45 per cent. It is expected to average not more than 30 per cent from December 15 to February 1. Since summer, or for at least six months, the lumber industry of this region has been operating at a loss of from two,to three dollars per thousand board feet. As the total production for the region has been approximately 3,000,000,000 board feet in the past six months, the aggregate loss at two dollars per thousand rvould be $6,000,000. Average mill prices on all items in December were five dollars per thousand feet below those of a year ago and until they increase to at least slightly above the average cost of production, it is unlikely that lumber cutting in volume rvill occur in this territory. The present outlook is for very slow production schedules until spring. Recently inquiries for industrial stock and for railway car and bridge material have come to our industry in larger volume than heretofore and some firm orders have been placed. We expect more railway and industrial business in 1931 than was received in 193O.

The lumber use outlook for 1931 depends more on a revival in residential construction throughout the United States than on any other one factor, as home building is still the largest single lumber market. Fewer single homes were built during 1930 than in any year since 1924. The slump in residential construction started in the midsummer of. 1928 and the volume has declined ever since. We believe it has reached its bottom and should now, or at least early in the spring, begin to revive. Whether the revival will immediately be of consequence or not, cannot be told at this time but we ju.dge from studies made on residential contracts arvarded this fall and building permits in August, September and October, that greater activity in residential construction will occur in the spring of 1931 than was witnessed in 1930. Important reductions in the cost of home building occurred during 1930 and in many localities houses may be built for from 1O to 20 per cent less than in 1929, r,vhich should hasten the residential construction movement and give it strength when it starts.

Stocks of lumber of all kinds in the hands of wholesalers. retail lumber dealers and industrial users throughout the United States are extremely low. Due to the decline since 7923in the sales price of lumber at the mill and to the more rapid railway and steamship service in the past ten years, dealers and distributors have gradually lowered their stocks. Business has been slow with them in the past two years, and this local stock depreciation has continued until now the bulk of the lumber in stock in the United States is in the hands of the mills. Five years ago the situation was reversed and the retail dealers and other distributors carried greater stocks than did the mills. In our judgment, the combined stocks of mills, retail dealers and other distributors, as well as industrial users, are not excessive for a market demand equal to that of 1930, and if demand increases suddenly, lumber stocks may be found to be too low.

Another movement, the penetration of western woods into new market areas throughout the United States, has been going on during this period of retail dealer, distributor and industrial user inventory depletion. Today, Douglas fir, West Coast hemlock, 'Western red cedar and Sitka spruce are in common use in thousands of communities and in scores of industries where they were unknown ten years ago. These gains are particularly noticeable in the railway car and bridge material items and in the demand from important lumber consuming areas for standard building lumber. The structural grades of Douglas fir-especially in the larger timbers-have come to be the accepted standard of the country during the past two years. This expansion in the distribution of West Coast lumber during the past five years is expected to continue in 1931. It is based on the qualities of these western woods in competition with other species and on the reduction in production in other timbered areas.

The outlook for lumber and other West Coast forest products in the foreign markets is complicated by the extremely low buying power of practically all countries and the great volume of lumber planned to be sold by Russia throughout the world as part of her five-year economic plan. The American lumberman of the west, paying taxes on his forests, and high wages to his employees, cannot compete in Europe, Africa, South America or Asia, with lumber from Russia made from confiscated timber on which no taxes are paid and logged by convicts or enforced labor whose cost to the Russian government is but a few cents a day. Seventeen per cent of our West Coast production in lumber is usually sold in the export trade but it is doubtful, in the light of Russian competition and. the depressed

(Continued on page 18)