State ... "Popular Caledonian making wooden wall panelling!" (8)
I believe the answer is:
wainscot
'wooden wall panelling' is the definition.
(I've seen this before)
'state popular caledonian' is the wordplay.
'state' becomes 'wa' (I can't explain this - if you can you should believe this answer much more).
'popular' becomes 'in' ('in' can mean trendy).
'caledonian' becomes 'scot' (I've seen this before).
'wa'+'in'+'scot'='WAINSCOT'
'making' is the link.
Can you help me to learn more?
(Other definitions for wainscot that I've seen before include "Wood panelling on lower walls of room" , "Wooden panel on a wall" , "Wooden panelling on lower wall of a room" , "Boarding" , "Wooden wall lining" .)