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Letter from Ed: 2009 Doesn’t Look Exciting, but Better Days Might Be Ahead
We need to stay focused, not get distracted off the path we are traveling. Navigate the trail but don’t be tossed by the winds.

By Edward C. Brindley
Date Posted: 2/1/2009

            I have received some positive comments about my December letter entitled “What – Me Worry?” Negative reports and attitudes seem to be on every corner these days, but the point that I made is still valid today. Our attitudes contribute significantly to what is happening, and certainly to how we perceive today’s events. The question is are we going to be shaped by what happens around us, or are we going to be proactive and direct our decisions through the maze of life.

            A really fine young lady in my church addressed our congregation last Wednesday evening on the subject “victorious surrender.” Her meaningful comments contained a word that might resonate for many readers. She elaborated on the three Ds of defeat – distraction, discouragement, and doubt. I agreed thoroughly with her analysis and want to share a few brief thoughts in the first half of my letter.

            We need to stay focused, not get distracted off the path we are traveling. Navigate the trail but don’t be tossed by the winds. This means we have to be proactive to avoid pitfalls while refusing to give into fear that can immobilize our lives and businesses.

            All of us have moments when we wonder what is going to happen in the future and how we will deal with it. We must remember that doubt is a killer. If doubt dominates our lives, it will do just that – dominate. I tell doubt to get out. I will not accept it. I refuse to let doubt drag me down all the while I keep on doing the things I need to do to succeed.

            In any down cycle, there are winners and losers. A lot of that has to deal with how you adapt to challenges. There are two questions on the mind of many business leaders right now. Will things get better? And when will it happen?

            I have to believe that things will get better; they always have. The negative news has seemed to come in tidal waves. Unless we are going to throw in the towel and drift out to sea, we have to believe that things will eventually get better. Timing is another issue.

            All of us hope that the actions being taken by the government will precipitate a positive economic impact on the overall economy. A major issue to monitor is how the Obama administration looks to shore up the ailing housing market, which could face even more foreclosures due to many exotic mortgages waiting to reset over the next 1-3 years. The good news this time around is that both the federal government and banks are aware of the problem, and they seem to be working toward avoiding a repeat of the first housing mess. This issue has a good article from a few research experts on the causes of the current economic crisis. See page 24.

            While the current numbers are disappointing, there is a feeling that things may improve. Long-term demand for housing looks strong due to a growing population that will need some place to live. Opportunities in wood energy and certified lumber products give progressive companies a reason to hope for the best. Of course, the short-term reality is the big question mark.

            The Western Wood Association’s recent release indicates the U.S. lumber demand is expected to finish 2008 at 40.9 billion board feet, 36% below the 2005 peak. For 2009, lumber demand is forecast to fall to 35 billion board feet, the lowest annual consumption since 1982.

            The revised WWPA forecast expects the lumber market to start a slow road to recovery in 2010. Unfortunately housing starts in the U.S. are expected to contract further in 2009 from an already historically low level, with a bottom projected in the second quarter. Starts in 2009 are likely to be in the general neighborhood of 750,000 units after falling below 1.0 million starts in 2008 for the first time since 1945.

            On the positive side, housing starts in 2010 might recover to the 950,000 level, and there is a projected rally around the corner in 2011 to a more normal level of close to 1.5 million. Other lumber markets, such as remodeling and commercial construction, are expected to rise as well.

            In spite of the negative news about housing, auto, and general merchandise, the wooden pallet industry seems to be witnessing better business levels than many other industries. We are slow, but we are surviving better than many industries. Jeff McBee of the Pallet Profile has heard that pallet demand has started to rise in some parts of the country.

            The need for pallets to ship food items is a big difference. Apparently more people are buying groceries and staying home to cook instead of eating out. While the grocery industry is low margin and very competitive, it also has the positive side that people have to eat. They do not have to buy a new house, refurbish an existing house, take a big vacation, etc.

            This issue has articles on a number of companies that have faced challenges and have found solutions to come out ahead. I hope this encourages you that happy days will be here again for those that work to serve customers, develop new products and innovate a better way of doing business.

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