KOREAN MANUFACTURER SAMSUNG has been in the U.S. white-goods business for 20 years—sort of. The company didn't sell any major appliances of its own, but it was one of the largest manufacturers through “original equipment manufacturer” (OEM) agreements, which means it made appliances for major U.S. brands. Now, Samsung markets its own line of appliances.
Globe Union, also from Korea, has a similar story. An OEM supplier to many prominent U.S. companies—including The Home Depot's Glacier Bay line—the company now markets its own line of faucets, under the Danze brand.
The emergence of foreign brands such as Samsung and Danze has been good news for American consumers, affording them greater product options and competitive prices. American manufacturers, however, may not share the same rosy outlook.
When BUILDER asked a half dozen U.S. building product manufacturers to comment on how upheaval in international trade is affecting their way of doing business, we hit a nerve. At best, their PR firms gave us a polite brush-off. At worst, they wouldn't even return our calls.
That's because domestic makers of vinyl windows, faucets and fixtures, and other labor- and material-intensive building products are facing tremendous (and unfamiliar) pressure from other, growing economies. Why worry? The reasons are many, from uneven tariffs on U.S. imports and exports to a leaner, meaner South American presence to a unified European alliance to Asia's explosive growth.
But, oddly enough, some U.S. manufacturers are losing market share to places like Brazil despite their own success. Ed Elias, director of international marketing for APA - The Engineered Wood Association, based in Tacoma, Wash., says that even with manufacturing plants at full capacity, demand still exceeds supply. That situation has opened U.S. borders to more imports than ever before.
“We've seen significant imports from South America of softwood plywood,” Elias notes. “A lot of these trees were planted by U.S. companies that no longer own the forests. It's the exact same species we use here, but the properties of the wood grown in that climate are different—and [the trees] have to be treated differently from the same trees grown here in order to meet the same standards.” These handling differences cause concern that such imports may not live up to U.S. performance standards.
CHINESE TAKEOVER? On the other hand, Elias adds, while U.S. companies have lost some market share to South America, Asian products have yet to make deep inroads into the construction category. That's because China is using most of the building components it manufactures.
Indeed, construction products have become one of China's major manufacturing categories. Log on to Made-in-China.com, and look under “faucets, showers & sinks.” You'll find more than 3,400 product listings. Type in “doors and windows,” and you'll find more than 800.
Despite China's growing products presence, Mike Luzier, president of the NAHB Research Center, in Upper Marlboro, Md., says he thinks American construction product companies—with the possible exception of makers of commodities such as cement—will continue to have an advantage over foreign firms.