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Pallet C e nt ral • Ma rch -Ap r il 2 0 26 3 3 year ago, while others pointed to global conflict, political volatility, and consumer affordability as ongoing headwinds. "ings appear stable. Inflation is under control. I am cautiously optimistic about growth and expansion," said Jon Dyer of Industrial Resources. Still, planning in such an environment remains difficult. "We wish we had a crystal ball and could prepare for the unknown," said Kathleen Dietrich of Commercial Lumber & Pallet. "In the interim, we are focused on achieving reductions in our operating expenses." Costs Up, Prices Stuck If one theme cut across nearly every response, it was margin pressure. Input costs—including lumber, nails, labor, insurance, and operating expenses— remain elevated, while competitive dynamics continue to limit pricing power. "Costs are staying high while pricing gets even more competitive," said Yusuf Ali of AAA Pallet Co. "Labor, insurance, and operating expenses aren't easing much, making margins tighter. Volume is less predictable, which makes planning harder." Several members described a market resistant to price increases, even as costs continue to inch upward. Others expressed concern that aggressive pricing competition risks resetting margins to unsustainable levels. Demand: Choppy And Hard To Forecast Demand conditions remain uneven across regions and customer segments. Many respondents reported limited forecast visibility, shorter ordering windows, and customers unwilling to commit beyond the near term. "Customers are unsure about their own forecasts, so demand is choppier," said Ali. "As they slow down, they're looking more closely at costs, and we've seen more customer turnover than in the past." Housing-related demand continues to be a key variable, alongside fuel prices and trade policy. "We have a very diverse customer base and very diverse concerns," said Dietrich. "Tariffs, housing, fuel prices." Some members also noted a shift toward more reused pallets as customers focus almost exclusively on cost containment, adding further pressure to pricing and quality expectations. What The Numbers Say: Stability Over Surge e survey's quantitative data reinforces what many members are experiencing on the ground: a period of stability rather than acceleration. • Manufacturing inventor y levels: Roughly 60% of respondents expect inventories to remain about the same over the next six months while approximately 30% anticipate moderate increases. • Sales volume projections: Nearly two-thirds expect volumes to remain flat, with about one-third forecasting growth of more than 10%. • Pricing expectations: Most respondents expect pricing to remain relatively stable, with limited expectations for significant increases. Overall, the data suggests an industry preparing for continuity—not contraction, but not a rapid rebound either. Preparing For Swings: Flexibility Is The Strategy Rather than betting on a sharp recovery, members are focused on staying lean, flexible, and operationally disciplined. Cost controls, inventory management, and efficiency improvements dominate near- term strategies. "Investigating different sources and vendors of components used on equipment, and getting competitive quotes" are key focal points, says Dyer, as is "[e]ngineering work to simplify or change our systems to keep them cost effective." Others are adapting product offerings and processing methods to better align with evolving customer needs. "Becoming more flexible in our product offering and the way we process our material" are how Michael Meenan of Riverview Industrial Wood Products is dealing with the current economic environment. Across responses, communication— with customers, suppliers, and internal teams—was repeatedly cited as critical to navigating uncertainty and maintaining trust during slower, less predictable cycles. Workforce: Stable Staffing, Persistent Challenges Despite economic uncertainty, workforce levels are expected to remain largely stable. Most respondents plan to maintain "Rather than being on a sharp recovery, members are focused on staying lean, flexible, and operationally disciplined."

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