Starting from zero, up to $50 million in China-sourced carpeting will begin selling this year to U.S. home builders through a distribution network of about 150 flooring contractors nationwide following the products' intro this month at the Surfaces marketplace in Las Vegas.
But the trend just isn't in carpets. American builders also are sourcing wood flooring, ceramic tile, and laminates from China, some of which get the builders' private labels as they arrive at building sites.
Promised savings of 35 percent to 45 percent across raw materials—and an increasing number of manufactured goods— will widen the array of materials big builders source from China in 2006, even as builders squeeze manufacturers and distributors to strip costs out.
“Pulte has made it clear that as it works with manufacturers to understand every specific cost driver, there's to be no fat in the equation,” says Tim Joyce, president of Atlanta-based Global Product Sourcing, which sources a number of Chinese flooring material options.
Conventional wisdom in construction circles is that China sourcing is efficient mostly for raw materials and goods that normally involve a high labor quotient. Joyce notes that Chinese “search and copy” tactics have fueled savings, because research and development costs are eliminated, as well as the overheads associated with marketing and branding and developing a streamlined sales channel.
The result: Big savings to builders who can order volume enough to fill shipping containers and get the materials to building sites on time. As focus turns to margins and costs to continue profit momentum, private labeling overseas-sourced manufactured materials becomes a greater likelihood.