SP 34: Proceedings of The Second International Conference on Exploring Change in the New Asia: Opportunities for US Building Materials and Housing Exports.
Bruce Lippke and Ivan Eastin. 1999. (172 pp)
EXECUTIVE ABSTRACT
The recent economic recession in Asia has had a significant impact on the forest products industry in the US in general, and the Pacific Northwest in particular. The continued economic stagnation in Japan has had important implications for both manufacturers and exporters of wooden building materials in the US. Housing starts in Japan declined from 1.64 million in 1996 to just under 1.2 million in 1998 and will likely be around 1.2 million in 1999. As a result, exports of wooden building materials from the US to Japan (our primary export market) declined precipitously in 1997 and fell further in 1998. However, as dramatic as the economic recession in Asia has been, other structural changes have been occurring which could have a greater impact on the competitiveness of US wood building material in Asian markets. In Japan, factors such as the graying of the Japanese society, concerns over "Healthy Houses", changes in the Building Standards Law and the recent approval of the Housing Quality Assurance Law will result in substantial changes in the way wooden building materials are specified and uses. In China and Korea, the lack of building codes for wood from construction have limited the use of wood in construction to non-structural applications.
We have brought together a highly knowledgeable group of government specialists, business practitioners, industry association experts, and academic researchers to provide conference attendees with a strong insight in the changes that are occurring throughout Asia and the implications that these changes will have on the international competitiveness of US wooden building materials in Japan, Korea, and China. It is our hope that the information provided at this conference can help US manufacturers and exporters of wooden building materials to better understand the structural and regulatory changes that are occurring the major Asian markets and gain some insight into how these changes might affect the competitiveness of their products and the way that they do business in these markets. As a backdrop for the information provided by the speakers we have included an analysis of primary and secondary wood product export trends in Appendix III.
From any long-term perspective the demand for wood products and building materials will continue to grow with the Pacific Rim population base and increased affluence. While Japan's demographics may be turning older, increased affluence will support remodeling and the upgrade in the housing stock maintaining if not increasing the investment in housing. Upgrading housing stock is a phenomenon that almost every country goes through with increasing income. China's effort to privatize housing will further increase demand and given the shortages in their domestic supply, more of the needs will be served by imports.
Korea has done more than the other Asian countries in reform and has by far the fastest recovery. Maybe that should provide more than a small hint on what makes good economic policy. However, Japan is such a large share of the Asian economy they are sill most important, and will remain so for the foreseeable future. They have succeeded in producing some statistical signs of recovery through substantial stimulus efforts but are reaching alarming levels of debt in the process. How they will be able to recapitalize around all the bad loans remains a major problem. Their strengthening currency, while an aid to North American exporters, will surely put a drag on their efforts to sustain the recovery. And as a consequence, no one if forecasting a fast recovery. So it is too soon to pass awards around to the optimists or for that matter thank the pessimists for keeping us alert. Nevertheless, the Japanese consumer continues to accumulate vast amounts of low return savings that remain in their country reducing the risk that the economy will slip into a deep recessionary spiral. Japan is different from the other Asian countries in being less dependent upon imported capital.