Taking a cue from the manufacturing world, builders are beginning to view “Made in China” as a formula for curbing costs and bolstering supply.
Exports of Chinese cement to the U.S. increased 75 percent in the first half of 2005 versus the same period in 2004, and industry experts predict strong future import growth in such areas as cabinets, countertops, door hardware, and lighting and plumbing fixtures.
Behind this outlook are builders' concerns about rising material and labor costs, as well as shortages stemming from aggressive construction schedules and acute supply chain disruptions, such as the 2005 hurricanes.
Michael Hartnett, president of Strategic Associates, an Atlanta-based building products consulting firm, also sees rising imports from China as a natural consequence of builder consolidations and the desire to exert more control over the supply chain. “Large builders are not so much concerned about the brand of products used in their homes,” explains Hartnett. “They are the brand. In the future, the cost economies of dealing directly with contract manufacturers in China may be more valuable to them.”
“China has continued to grow as an economic power, and it consumes considerable resources,” says McCoy. “At the same time, commodities from many international markets have come under severe pressure due to events such as the tsunami in Asia and Hurricane Katrina in the U.S.”
McCoy says he believes the “potential is infinite” for increasing supply from global sources, but he emphasizes the importance of resolving domestic supply and distribution issues first. “You don't just step into these markets overnight,” says McCoy, who recalls that it took his previous employer, Wal-Mart, five years to lay the groundwork for its supply chain infrastructure on mainland China.
If Pulte does move ahead with its global strategy, McCoy says he sees the company leveraging the experience and contacts of suppliers that have manufacturing experience in the Far East. “We've just completed a thorough RFQ process and, increasingly, we are choosing partners with strong global relationships.”
One logical area for Chinese imports is door hardware. “You can get quality product with a PVD finish with a lifetime warranty at very good prices,” says Callahan. Other product areas that he is exploring are HVAC systems and cabinets. Ideally, he would like to see existing suppliers augment their product lines with new products from China—and take responsibility for insuring quality. In any case, stresses Callahan, “we would start small and test the concept thoroughly. We will be very careful about rolling out unproven products.”