The New Year brings a new presidential administration into power and the renewed hope that the struggling U.S. economy turns the corner and begins showing visible signs of improvement.

Even the more optimistic economic gurus predict that we won’t see an economic up-tick before the fourth quarter. But considering the depths to which business conditions have sunk, I’m sure I speak for the vast majority of our readers and advertisers in suggesting that a fiscal quarter of financial flatness would be a welcome sight and viewed as a potential foreshadowing of better things to come.

As I step into the New Year with fingers crossed, I offer a quick update of four evolving issues that Wood & Wood Products editors will continue to monitor.

1. Economic Bailouts

The meltdown on Wall Street was fuel to the fire of an economy already battered by a housing crisis. Washington’s emergency rescue response was to throw $700 billion at the problem. Not much later, the Big Three auto makers made their pitch for a bailout.

The nation’s mounting economic woes have rippled through the North American wood products industry. I long ago lost count of the number of plywood mills that have shut down. The news in other industry sectors, most notably the cabinet industry — our biggest sector of readership — has been nothing short of horrific.

The November 2008 Trends of Business Survey released by the Kitchen Cabinet Manufacturers Assn. reported a 29.1% drop in cabinet shipments compared to November 2007. This follows an 8.7% drop in November 2007 over November 2006. Related to this bad news are the recent announcements of major cabinet manufacturers shutting down some of their operations, including:

• Merillat’s Adrian, MI, plant, the company’s flagship operation, will close later this year;

• Canac’s Statesville, NC, plant; which closed last fall, mere months after the company shuttered its plant in Ontario and shifted all production to Statesville.

• Kraftmaid’s West Jordan, UT, plant, an 840,000-square-foot facility that only opened in April 2006.

A healthy home building industry is fundamental for improving the fortunes of cabinet manufacturers, flooring manufacturers, window and door makers, etc. The National Association of Home Builders has launched its “Fix Housing First” campaign to lobby for a $250 billion stimulus package to jump-start a housing sector recovery.

2. Product Recalls

The Consumer Product Safety Act is set to take effect Feb. 10. It is designed to eliminate lead in children’s products, including toys, clothes and shoes by establishing new mandatory product safety procedures.

The lead scandal and other product safety issues have particularly put Chinese manufacturers under the U.S. Consumer Product Safety Commission’s microscope. On the furniture side, 2008 saw numerous recalls of cribs and bassinets. The pressure on crib manufacturers and importers to ensure the safety of their products can only expect to intensify in 2009. What’s more, several crib makers were hit with a lawsuit by the California Attorney General’s office for allegedly having excessive levels of formaldehyde.

3. CARB Formaldehyde Regulations

Speaking of formaldehyde, phase one of the California Air Resource Board’s Composite Wood Air Toxic Control Measure kicked in on Jan. 1. The regulation establishes stricter formaldehyde emission limits for particleboard, MDF and hardwood plywood, as well as testing and labeling requirements for all products sold within the state of California.

The U.S. Environmental Protection Agency announced Dec. 24 plans to conduct a voluntary survey of composite panel manufacturers as part of its proposal to formulate a national formaldehyde rule. Industry could support an EPA rule, providing it mirrors the CARB regulation, which is widely viewed as a de facto national standard.

4. ITC Investigation of Hardwood Plywood & Flooring

The U.S. International Trade Commission released the findings of its investigation into the competitive conditions of U.S. manufacturers of hardwood plywood and wood flooring. It concluded that imports of each of these product groups more than doubled between 2002 and 2007, aided by use of illegally harvested trees, government subsidies and other factors. China was singled out as the biggest culprit of U.S. market share losses.

Sen. Ron Wyden (D-OR), who helped spearhead the ITC to conduct its investigation, has asserted that the report “barely scratches the surface when it comes to problems caused by illegal logging enforcement.”

An effort to curb the import of products made with illegally harvested woods was the subject of the Lacey Amendment passed by Congress last spring.

It remains to be seen what relief the hardwood plywood and flooring industries might seek. Options could include filing an antidumping petition or pressing Wyden to champion even stricter measures aimed at countering “unfair” imports.

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