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Weyerhaeuser Seeing Beginnings of Housing Recovery, CEO Says

03/08/2013 | By Allen Kenney

Dan Fulton, president and CEO of Weyerhaeuser Co. (NYSE: WY), joined REIT.com for a CEO Spotlight video interview at NAREIT’s Washington Leadership Forum.

Fulton discussed the synergies between his company’s different lines of business: timberlands, wood products, regional homebuilding and cellulose fibers.

“Our four businesses are in a sense different, but complementary,” he said. “In a sense, they operate independently, but, ultimately, are all related one way or another to the trees and the ultimate use of those trees, which, in North America, is primarily housing.”

Weyerhaeuser owns approximately 6 million acres of timberlands in the United States to go along with managing 14 million acres in Canada and owning more than 300,000 acres in Uruguay. He noted that the different business units often consumer each other’s products. For example, the wood products division buys logs from the timberlands unit.

Fulton called the recovery in the housing market as “very significant.” Over the long term, he said the housing market will demand between 1.6 million and 1.9 million new starts per year.

“Household formation dropped significantly during the recession,” Fulton said. “Household formation in the U.S. should roughly be about 1.2 million per year. It dropped to 700,000. There’s a rebound taking place now as people are gaining confidence. Inventory levels of both new and resale homes are at record lows. We’re finally seeing the decline of excess inventory from foreclosures. We’re all seeing prices start to rise. With the underpinning of household formation coming back, a need for housing starts, low mortgage rates and a general increase in consumer confidence, we are at the early stages of a housing recovery. But it’s real, it’s solid and we think that we’ve got another three to four years in front of us just to recover to maintenance levels of what we think are necessary to cover long-term housing starts.”

Fulton offered some insight into Weyerhaeuser’s operations abroad. The firm recently completed construction of a cellulose fibers facility in Poland, primarily for products to be distributed on the global market.

“The growth in the cellulose fibers market is primarily happening in the growing Asian markets,” he said.