Stanley Martin, the American branch of Japanese homebuilder Daiwa House Industry group, hopes to set up a factory in the U.S. to lower the costs of prefab home construction, as reported by Nikkei Asia on March 6.
Prefabricated homes can be built panel by panel, saving on expensive labor costs compared with houses that are built on site. Construction times are also potentially shorter.
“In Japan, it is common for major homebuilders to manufacture panels in factories and then ship them across the country,” Nikkei staff writer Narushi Nakai wrote, but added that many American firms have attempted the same, but left the market “littered with prefab home businesses that tried and failed,” in large part due to the vast distances required for transport across the continent.
Steve Alloy, CEO of Stanley Martin, told Nikkei that for now, the company’s partners have been “opening assembly and fabrication plants in new markets where we operate in the South,” but it plans to get directly involved with the manufacturing later on.
“The future strategy is more for Stanley Martin to do it,” he said.
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Daiwa House, which bought Stanley Martin in 2017, has a major competitor in Sekisui House, also from Japan, but the latter has a different approach to the U.S. housing market.
Instead of building a factory in America, the company will focus on shipping panels from Japan. Currently, Sekisui has its Shawood brand of Japanese-style wood houses, which are marketed primarily on the U.S. West Coast, but it is poised to acquire New York-listed U.S. homebuilder MDC Holdings in a $4.9 billion deal later in the year.
The purchase, which Daiwa’s president Keiichi Yoshii described as “amazing,” stands to give Sekisui a foothold on the East Coast and place it ahead of Daiwa House in the U.S. market. Both companies are based on Osaka, Japan second-largest urban area.
In the 1970s, Daiwa House had tried to enter the U.S. market, but withdrew after suffering losses. Its acquisition of Stanley Martin has seen the latter company improve its credit rating and allow it to borrow from Japanese banks at low interest. In 2018, 2020, and 2021 it made further acquisitions.
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Keiichi Yoshii, President of Daiwa House, has focused on expanding its U.S. footprint by letting Stanley Martin handle business “from the local level,” something Alloy said he was appreciative of.
“I think that Yoshii-san’s vision for having the U.S. executives continue to lead the U.S. operations is the most effective way,” he told Nikkei.
By contrast, Sekisui has ruled out building factories in the U.S., with president Yoshihiro Naki saying there would be “very little cost-effectiveness” in doing so currently.
Alloy said that his company is taking the factory slowly, but that it would materialize within a decade.
“We want to make sure that we make good decisions,” he said, so that “we don’t take too much risk,” adding that their “long-term plan includes factory automation.”
