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24 PalletCentral • November-December 2022 palletcentral.com manufacturing sectors. Regarding data to watch, the new housing starts data is a great leading indicator for lumber prices. We also look at Manufacturers' Shipments, Inventories and Orders reports. A non-scientific indicator is the volume of our regional corrugated box companies. René Harpin PRESIDENT SPEC WOOD & MARKETING SOLUTIONS Will we see improvements in the economy? Pallets move the world, and trucks move these pallets and their goods. Fuel prices are driving the costs of goods, boosting inflation. As fuel prices stabilize, the cost of goods and the economic environment will improve. Unemployment is low, so it is not the "usual recession." Wages are based on offer and demand. e shortage of labor and Baby Boomers' retirement is putting pressure on wages. Getting young people to work physically is more difficult than ever. More robots are taking over these demanding tasks, but it will take years before it impacts. e supply chain disruptions show our dependence on China and the weakness of our supply chain. e "Just in Time" is not sustainable, and the "Just in Case" can expose one to a certain risk. Most of the time, a balanced purchase order file, balanced inventory, and ongoing forecast will be a solution. Extreme conditions such as an epidemic, a recession, or a rapidly expanding economy require reacting faster. North America, Mexico, the USA, and Canada have a lot of resources and capacity to produce most of the essential products we require. Manufacturing is coming back to North America, and more is needed. For the rest, we must better choose our business partners in friendly countries. Finding good employees takes work, and keeping them is challenging. Offering competitive wages, a safe working environment, a flexible schedule, especially for family reasons, feeling part of a team, and feeling respected, are all part of the "package" helping retention. Building pallets is not "sexy," is not "fun," but you can make it rewarding and good for the employees. ere are some notable examples in our industry. Regarding data, by the time the statistics are published, it is old news because it reflects what happened one or two months ago. To see what is happening today, we watch pallet production, truck availability, stock market, and delays. It is not scientific, but a great indication of the direction that things are going. Kurt Larsen PRESIDENT & CEO VIKING ENGINEERING & DEVELOPMENT I expect the economy to grow at a slower pace in 2023 and eventually slow to near zero. Wage rates will continue to grow in early 2023 (despite recent tech layoffs) and eventually slow as the economy slows. Inflation should then slow as well. Supply chain disruptions will continue until demand slows, as there is no labor solution insight to help expedite production. Although shipping has seen improvements, there is still plenty of global uncertainty and potential conflict (e.g., chip supply disruptions from Taiwan which generates 90% of the world's supply). I follow job reports, logistic reports, the ISM Report on Business for Manufacturing and Services (PMI) and, the Global Wood Markets Info (GWMI), various trucking/shipping indices (e.g., NTI). I also communicate with customers and suppliers and am a member of a CEO Roundtable that meets monthly. Some of the best information comes from conversations with my pallet customers. e published Federal Reserve goal is to have a 2% inflation rate which is deemed healthy. As our current inflation rate is still much higher than 2%, it is expected that the Fed will continue to tighten, thus raising interest rates – albeit at much lower rates and a slower cadence. We have recently seen the higher interest rates ripple through the housing market and, at the same time, witnessed lower fuel prices. As the U.S. consumer makes up approximately 70% of the U.S. GDP, any improvement in consumers' expenses and attitude typically equates to a higher level of goods purchased (which need pallets to ship). Labor supply will continue to be a long-term issue for the pallet industry. Many customers are looking to automate or upgrade their production to alleviate the ergonomic load of their employees with machines. Finding good employees takes work, and keeping them is challenging. – René Harpin, President, Spec Wood & Marketing Solutions

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