Later this year, Japan-based Sanyo Homes expects to break ground in Portland, Ore., on its first homes in the United States. The 42-year-old Sanyo has built more than 80,000 homes, mostly in its homeland, and prefers using earthquake-proof steel-framing construction. It also places a lot of emphasis on building for sustainability, which was one of the reasons it chose Portland as its first market. (For the past two years Sanyo Homes has been marketing “all electric” solar-powered homes with lithium-ion battery backups in Japan.)
Last year Sanyo Homes, whose major shareholder is Sanyo Electric, decided to expand to foreign lands. Hideo Nakai, the former president of Sanyo North America (Sanyo Electric’s U.S. operations), is managing Sanyo Homes’ overseas projects. Builder interviewed Nakia by email about his company’s plans.
Builder: Sanyo Homes specializes in energy-efficient houses constructed with steel framing. How will your homes in the United States be different from or similar to what Sanyo builds in Japan?
Nakia: We plan to use steel framing for our houses in the States, too. We fabricate steel, based on designs of houses, in our factory near Osaka, Japan. Steel framing is the essence of our houses [because] we believe it is more durable than wood, and unlike wood it is recyclable. We don't use any welding at a jobsite, just bolts and knots, so it only takes a few days to erect a structure at a site.
Over 70% of our new houses in Japan include solar-powered systems, and they sell their excess electricity. We also try to utilize the “passive proposal” [an economical ventilation system utilizing natural forces to move warm air upward] for our houses in Japan, which has become popular with people conscious of the environment and nature.
We would like to include these features in our future homes in the States. But as we don’t have any manpower there yet, our initial business model in the States will be to partner with local builders and developers, and we would listen to their opinions about whether those features are appropriate for each local area.
How large are your homes in Japan and what is their average selling price? What do you anticipate the size and selling price range will be for the homes you build in the U.S.?
The average size of our houses in Japan is about 1,500 square feet, and the average price is about US$250,000, excluding land. The size and price of our future houses in the States will be determined by our discussions with future partners and customers, but I feel that 2,000 square feet and $350,000 could be appropriate.
I remember when Toyota and Honda entered the U.S. market; all American cars were much larger. The same thing may happen for us in your housing industry.
In America, will you be building on land that Sanyo Homes develops, buying developed lots from other developers, or requiring home buyers to own their lots?
We would like to find developers as partners, build and sell houses, and share the gains with them.
Sustainable Business Oregon reports that your company might eventually open an office in the U.S. Until then, how (and from where) will you manage your American home building operations?
Until opening our office, we would like our potential local partner to manage the operation. If that is too difficult, though, we might need to open a U.S. office sooner.
What is the biggest challenge for a foreign company entering the U.S. housing market?
Finding U.S. local partners. Also learning U.S. building codes, regulations, and other laws related to construction.
How many homes would your company like to build and sell in the U.S. in its first year of operation here?
We will limit [our production] to a trial number. From there, it would depend on our potential partners, how strong they are and how much they want to do with us, but our ultimate goal is a few hundred houses annually. Then we can study [whether to build a steel] factory in the States.
After Portland, what other U.S. markets would your company consider for expansion? And would you be building the same kind of house as you grow or adjust your product to different markets?
After Portland, we would like to move to other cities along the West Coast, such as Los Angeles, San Diego, Seattle, Vancouver, and so on. We would like to keep the basic concept of our houses, with emphasis on safety and energy efficiency; but we would adjust our houses based on the recommendations of our partners, climates, and other local differences.
A few days ago, Sekisui House, the Japan-based company that’s the world’s largest builder—which has development and home-building agreements with U.S. companies in California and Virginia—announced that in the aftermath of the earthquake that hit your country it would focus its homebuilding efforts on Japan for the foreseeable future. Will the construction priorities stemming from the earthquake affect your company's expansion plans into the United States?
We don't do much business in the northern part of Japan, where the recent great earthquake happened, and we have not been affected by it. So we will continue our efforts to enter the U.S. market.
John Caulfield is senior editor for Builder magazine.