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34 PalletCentral • March-April 2016 palletcentral.com cabinet industry growth lags the growth in U.S. housing starts, indicating cabinet imports or alternative materials have made inroads with consumers. • Molding and millwork: "Natural" or painted wood? As with cabinets, consumers have been shifting to painted wood (which could be a composite such as MDF) and whitewoods, though red oak demand increased, too. With respect to furniture manufacturers, the massive move offshore has abated. However, it supports a domestic industry with a different profile. Most growth in U.S. furniture manufacturers comes from the upholstered sector (versus the "case goods" production sector). As noted by the Hardwood Market Review, shipping costs "favors manufacturing close to final markets." Pallets lead hardwood lumber demand for industrial users, followed by railroad ties. Truck bed floors and board road timbers comprise two other important industrial applications. In 2015, industrial markets accounted for 59% of hardwood market consumption. Pallets, railroad ties and truck bed floors all support shipping physical goods; slow-growing economies generally reduce the demand for these applications. Conclusions The hardwood industry lacks a simple supply/demand framework. While the U.S. benefits from a growing, thriving hardwood forest, it produces supplies that respond, in a way, to consumer demand. The hardwood lumber industry lives on diversification. Variances associated with the scale of facilities, the irregularity of hardwood log species and grades, and the complexity of the local supply chains reinforce how hardwood log markets represent the ultimate in localized analysis. Attempts to project hardwood markets highlight a certain reality: simply owning lots of trees differs markedly from investing in high quality and valuable species. PC MARKETS Dr. Brooks Mendell is president of Forisk Consulting and vice president of research. He may be reached at 770-725- 8447 or www.forisk.com. Dr. Jack Lutz is principal and for- est economist of the Forest Research Group and may be reached through www.forestresearchgroup.com.