The U.S. woodworking industry’s most challenging year of the young 21st century is drawing to a close. While there are no guarantees that 2008 will be any better, I’m willing to bet that most readers are ready to take their chances on the New Year.
As we gratefully bid adieu to a less than stellar year, I pause one last time to reflect on what I view as the five most significant stories of 2007 that are carrying over to 2008.
1. The Housing Crash
An over-speculated housing market, propelled by historically low interest rates, continued its slide from peak to valley heading into the New Year. According to the National Association of Home Builders, seasonally adjusted housing starts stood at 1.229 million units in October, 16.4% below those of a year ago.
Meanwhile, the potential of more than 1 million home foreclosures led the federal government to contemplate imposing a five-year freeze of interest rates for home buyers who took advantage (or were taken advantage) of short-term, sub-prime mortgages.
The housing bubble’s burst dampened the fortunes of cabinet, flooring, windows and doors, and other wood product manufacturers tethered to the home. The kitchen cabinet industry, for example, experienced its 12th straight month of declining sales in October after realizing 127 consecutive months of growth through October 2006, according to the Kitchen Cabinet Manufacturers Assn.’s Trend of Business Survey.
The bad news is that housing starts may not quite have hit bottom yet, according to the NAHB. The better news is that the NAHB predicts new home construction to begin growing again in the third quarter of 2008.
2. Product Recalls
Dozens of recalls, involving millions of toys coated with lead paint, not only grabbed headlines, but led to finger pointing at the audacity of Chinese manufacturers to put profits before safety and
potshots at American companies like Mattel and the Consumer Product Safety Commission’s inability to keep unsafe products from reaching retailers’ shelves.
Chinese manufacturing also was behind the recall of about 1 million cribs imported by Simplicity Inc. of Reading, PA. The deaths of at least three children have been attributed to product defects involving drop-side rails.
Time will tell if the CPSC gets tougher on imports, particularly those from China, and creates de facto trade barriers in the process.
3. ITC Investigation & Illegal Logging Bill
While these are two separate items, I lump them together here because both actions were triggered by Sen. Ron Wyden (D-OR). At Wyden’s behest, the International Trade Commission launched a probe of wood flooring and hardwood plywood products from China and other countries. The investigation, scheduled to wrap up in June 2008, aims to determine if imported products are entering the United States mislabeled to circumvent higher tariffs and/or being sold below market value.
China is also the central target of Wyden’s Combat Illegal Logging Act of 2007, which amends the Lacey Act that protects endangered species, to prohibit the import, sale or trade of illegally logged wood and wood products in the United States.
4. CARB Formaldehyde Regulations
The clock begins ticking in earnest in 2008 for the Composite Wood Air Toxic Control Measure adopted in 2007 by the California Air Resources Board. Wood product manufacturers who sell products in California need to ready plans for meeting stricter formaldehyde emissions standards for particleboard, MDF and hardwood plywood that kick in Jan. 1, 2008, with even more arduous standards set to phase in as of January 2010.
5. The Green Movement
One area of the U.S. economy that continues to grow strong is green building products. Since the U.S. Green Building Council rolled out its Leadership in Energy & Environmental Design (LEED) rating system, a growing number of trade associations and companies have hopped on the bandwagon. For example, the Business & Institutional Manufacturers Assn. has developed its own voluntary emission standards and testing methods for office furniture; the Composite Panel Assn. is beginning to bring its Environmentally Preferred Product program to downstream users; and the Kitchen Cabinet Manufacturers Assn. is stepping up the pace of its Environmental Stewardship Program.
If your company is not among them, I suggest making it your New Year’s resolution to find out what’s going on and plot out a “green” strategy for your company.
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