Housing: “Made in Japan”

SAN DIEGO — In this perennially growing part of the country, the average price for a detached single family used home reached $144,800 last month. This item in the local newspaper reminded me how little change is under way in our country for more efficient housing construction before the next Japanese import invasion of manufactured houses begins in the mid-1990s.
During a visit to Japan in 1979, I spent a day with a young executive who headed one of the country’s biggest factory-built housing companies. His lots were filled with houses of many sizes and designs. Customers would come by to choose their homes and various interior combinations, much as consumers buy cars in a dealer showroom.

But this entrepreneur was not just interested in sales figures. Relentlessly, he was refining his organizational and distribution costs, expanding his economies of scale, and improving his designs. Still in his thirties, he made no secret of his dream to someday tap the biggest individual housing market in the world — the United States.

Indeed, given some amendments to local building codes, the high-cost U.S. housing market is an inviting plum for imported housing. Already, the Swedes are shipping pre-fabricated houses to the East Coast where they are assembled for their pleased owners. But just as the Swedes sold their Volvos and Saabs in the U.S. before the Japanese car companies really showed how big imports could become, the Japanese may do the same for the imported shelter industry. Japanese construction companies are already building billions of dollars of projects in the U.S., ranging from highway tunnels to dams to office skyscrapers. They are bringing new technology and ample financing to their deals. These firms are also studying the intricacies of the American housing industry, construction union power, obsolete or restrictive housing codes, and the presence of corruption. Because of the latter factor, most of these firms are staying out of New York City for the time being.

Why would Americans ever consider imported, manufactured housing? The major reasons would be cost, quality, design, and the diverse choices and combinations available from the catalogues and showrooms. For years there have been reports of shoddy new housing construction, a dreary sameness to large housing developments, and a serious absence of innovation, in part due to complacent domestic management and thousands of local housing ordinances that assure architectural and engineering stagnation.

Against this background, new domestic housing prices are soaring. Even with more moderate interest rates, affordable housing is out of the reach of many moderate-income families, especially those where only one spouse has a paying job. Meanwhile, the Japanese are placing their junior management people in key areas around our country to study, listen, learn, and refine. They are noting the negative practices of the U.S. housing business, including wasteful organizational traditions, the missing of construction deadlines, poor quality control, conflicts between construction firms and labor, aging technology, and antiquated materials.

The domestic housing industry knows all this is going on, yet like its counterpart in the auto industry, has been frozen with inaction. Federal, state, and local governmental reports are produced periodically urging fundamental changes. These reports gather dust.

With the construction market slowing in Japan, the Japanese government is broadening the amount of foreign real estate in which Japanese insurance companies and pension funds can invest. Japan, Inc. is loaded with cash looking for outlets. As more Japanese manufacturing companies set up shop in the U.S., their allied construction firms build the plants and stay to seek more business here. They will soon be part of an increasingly stronger political lobby to remove local restrictions that impede the installation of manufactured housing.

Here in San Diego, fifty percent of all new car sales are imports. If America doesn’t get moving, a decade from now, lots of young families may be driving their Japanese cars to their Japanese built homes loaded with Japanese electronic equipment.

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