January 10, 1922 



Hardwood Record — Veneer & Panel Section 



35 



Forecasts for 1922 Are Chiefly Optimistic 



Number of Leaders of Veneer and Plywood Industry Respond to Hardwood 

 Record's Canvass of Opinions with Predictions of Better Demand, and 

 Prices for the Ensuing Year; a Few Are Pessimistic 



INCREASE IN DEMAND FOR VENEERS AND PLYWOODS, 

 advance in prices, no over-production, no "boom" condition, 

 but the development of a more or less stable and orderly situa- 

 tion, is the opinion of virtually all the leaders of the veneer and 

 plywood industry canvassed by HARDWOOD RECORD for the 

 purpose of securing forecasts of the 1922 situation. The large ma- 

 jority of the forecasts reveal a definite optimism and there is hardly 

 any that does not express belief in a certain measure of improve- 

 ment in 1922. These leaders of the industry point out that increased 

 activities in the furniture and building industries, which promise 

 to be accelerated in 1922, indicate an improvement in demand, 

 while the supply is likely to be small, insuring good prices, because 

 of the difficulty of getting veneer logs. Most of those making fore- 

 casts seem to believe that the projected nation-wide advertising 

 campaign will get under way before the end of the year and that 

 this will develop nev/ lines of demand as well as increase the 

 demand from the established sources. Even those who can see no 

 particular reason for expecting 1922 to be an improvement over 

 1921 express a belief that 1922, nevertheless, will be a better year 

 for the manufacturer of veneer and plywoods. 



However, Thomas D. Perry, vice-president and manager of the 

 Grand Rapids Veneer Works, Grand Rapids, Mich., and president 

 of the Plywood Manufacturers' Association, declared that the 

 "over-production of the plywood plants, together with the disposi- 

 tion on the part of wood-workers to make their own plywood, pro- 

 duces a situation that defies analysis. I do not see how plywood 

 producers can even make their expenses on the prevailing market. 

 If the limited demand continues to hold the prices down to a margin 

 so close to cost, either the demand must substantially increase or 

 the capacity be decreased." 



Mr. Perry feels that the "extraordinary world conditions, for 

 which there is no precedent, render it difficult to estimate the eco- 

 nomic developments of the ensuing year." He said that, "I feel, 

 however, that forest products, whether manufactured into the raw 

 material, as lumber or veneer, have seen their lowest prices and 

 will continue to at least maintain their present standards, if not 

 reach a higher level. My reason for this is the non-replaceable 

 character of stumpage. I feel that the operators will only produce 

 enough to take care of their running expenses until the market is 

 more favorable and this will produce a limited supply and tend 

 towards keeping prices up." 



Adopts Pessimistic View 



A number of the letters point out that the excessive demand that 

 developed during the "boom" era caused an increase in the capac- 

 ity of the veneer and plywood industry beyond the requirements 

 of normal demand. This is mentioned in the letter received from 

 the president of a large Kentucky veneer organization, who desires, 

 however, that his name be withheld. His view is probably the most 

 pessimistic received, and he admits that he "might be called a pes- 

 simist," but emphasizes the point that he tries "to look at things as 

 they are." In part he says: 



I hesitate to express my opinion of the outlook for the present 

 year in the veneer and plywood lines. Present conditions indicate 

 no revival, but things are in such uncertain state that another 

 month or six weeks may cause one to view the matter ditTerently. 



The nation-wide advertising campaign will not be launched be- 

 fore the end of this year. One all-powerful reason is the lack of 

 money. Manufacturers are not likely to increase their advertising 

 expenditures (as they should do) under depressed conditions. 



There has been no revival of prices in veneers and plywoods. 

 When the slump came along, prices went down and down until, 1 



hope and believe, they have struck bottom, and we are now await- 

 ing some rebound. 



As you know, there is now an excess of capacity over demand, 

 and much of the equipment is lying idle or running short time. 

 Present capacity will make over-production under normal demand. 

 If the "values of our products" do not overcome the present com- 

 parative weakness during 1922, there will be a weeding out of 

 over-ripe concerns. 



Log supply will depend to a considerable extent on the condition 

 of the lumber business. 



A More Optimistic Viewpoint 



The opinions of Mr. Perry and the Southern manufacturer quoted 

 above are about the only ones that do not show more confidence of 

 a greatly improved condition in 1922 than doubt of it. The domi- 

 nant note in most of the others is optimistic. One of the most 

 hopeful of these optimistic forecasts is that made by E. V. Knight, 

 president and general manager of the New Albany Veneering Com- 

 pany, New Albany, Ind., who is also chairman of the publicity 

 committee of the Plywood Manufacturers" Association. Mr. 

 Knights' views follow; 



As to a real revival of the demand for plywood, will say that for 

 the past ninety days the business of the New Albany Veneering 

 Company has been increasing steadily and I may say, rapidly, and 

 in some departments we are now working day and night force m 

 order to take care of the business which is coming m to us. 



1 have personally visited a number of our customers and with 

 few exceptions they express the belief that case goods furniture 

 business, particularly bedroom and dining room furniture, is im- 

 proving steadily and that it will continue to do so during this year. 

 This, of course, means that the plywood business will be corre- 

 spondingly good. M ■ I 



There is no doubt that the Plywood Trade Extension or National 

 Advertising Campaign will be launched before the end of the year, 

 and if "Advertising Pays," as you and 1 most certainly believe it 

 does, there is no question in my mind that this will mean not only 

 increasing demand for plywood in its present known uses, but there 

 will be new and additional avenues of use opened up which will 

 create an increasing demand for plywood products. 



The prices of manufactured plywood are considerably below the 

 cost to manufacture on numerous items now being sold, and, as 

 compared with the present market values of raw material, par- 

 ticularly rotary gum, poplar and gum lumber, also walnut veneer 

 and lumber, present plywood prices are inconsistently low. hor 

 instance, 5-ply walnut face veneers, reject back, tops for case goods, 

 tables, etc., using gum core, are being sold for at least 40 per cent 

 less than the actual cost of a solid walnut top of the same dimen- 

 sions, and in my twenty years of manufacturing plywood this is 

 the first time I have ever known this difference in price between 

 plywood and the solid stock to exist. 1 have personally seen in- 

 voices of some of our competitors on the material above specified 

 as low as 21 cents per foot, whereas the lowest cost obtainable in 

 the plant of the New Albany Veneering Company on these same 

 specifications is $258.37 per M feet, or a cost of more than $50.00 

 per M feet higher than the sales price of the concern above men- 

 tioned. In my opinion, this inconsistency in price will not con- 

 tinue, nor is any one benefited by such a price situation; on the 

 contrary, not only the entire plywood industry is affected adversely, 

 but the furniture industry as well, as a shrewd furniure buyer, who 

 is familiar with manufacturing costs, uses, not the fair market 

 value or cost value in figuring prices at which furniture is to be 

 sold, but instead he uses the lowest sale price which is known to 

 exist, and, therefore, places the furniture manufacturer in a disad- 

 vantageous position as regards a fair price which such furniture 

 manufacturer should receive for his finished product. 



As to the relation of supply and demand for 1922, with anything 

 like a normal demand will come increased prices — this for the 

 reason that as soon as the present existing stocks of veneer and 

 lumber are used up in various plants and the real demand comes 

 for a replacement of raw materials, it will be discovered that there 

 is not only a shortage of veneer and dry lumber in the different 

 markets, but that it is going to take many months to produce a 

 sufficient amount of veneer and lumber logs to take care of any- 



