Toronto, ON-"Build the whole house yourself if you want to control the quality and delivery dates," Gaylord Lindal says. He has to control both because he sells about 1,000 houses a year in Japan, where they expect high quality and on-time delivery.
Lindal got into the housing business in the 1950's as a dealer for his cousin, Sir Walter Lindal, then owner of Colonial Homes of Toronto. After Sir Walter sold his Canadian company and moved to Seattle to found Lindal Cedar Homes, Gaylord started Viceroy Homes, Ltd. in 1961.
Gaylord Lindal has more than 20 very good years and in 1987 he grossed $65 million, but in 1988 the Canadian market for new homes collapsed and in the early 1990's sales sagged to about $25 million. Then in May of 1994, the Canadian office of the Japan External Trade Organization (JETRO) called. Some Japanese businessmen were in Vancouver, 2,732 miles from Lindal's office in Toronto. Would Lindal care to meet with them? Tomorrow? Lindal did and the meeting paid off in spades or-more accurately-Yen. Sales last year to Japan totaled about $105 million.
"They needed a lot of new homes in Japan," Lindal recalls, "and they were willing to look at new ideas. Traditional Japanese houses are post-and-beam and they don't stand up well in earthquakes. They like our 2x4 frame construction and they like the strength of manufactured trusses," he said.
The Japanese also liked Viceroy's designs and Lindal's approach, but while the Japanese are willing to accept new ideas they are demanding customers. "They expect precise delivery schedules," Lindal says now, "and we couldn't always provide that with outside suppliers."
Viceroy was already making their own windows, because of problems with outside suppliers. Lindal began making wooden windows first and then-in the 1980's when the business was booming-he bought his own extruder and began making his own PVC windows. Now he's re-introducing a line of wooden windows to give customers a choice.
Making his own windows gave Lindal an edge but the Japanese also wanted better floors that he could not guarantee with outside suppliers. The floor is an important part of a Japanese house-it's almost never buried under a carpet-and to guarantee that supply and the quality, Lindal decided to make the floors himself. Viceroy now offers tongue-and-groove flooring made of individual boards about 3/4" thick by 3" wide.
"Making it ourselves has some obvious advantages, Lindal says, "It means we control the quality, and the delivery times. And it's not expensive because we had the space available and-aside from the cost of a few machines-there's very little cost to us. Out operation is in-house-we call it 'corner of the factory manufacturing' and our flooring division doesn't need any salesmen or advertising or accounting or executives. The operation is run by the foreman and supervisors on the floor, so our fixed expenses are almost nil," he added.
Finding the space for a flooring plant was no problem because in those days Viceroy had an almost embarrassing surplus. With business booming in the early 1980's Lindal built a 150,000 sp. ft. factory in Port Home, ON, about 60 miles east of Toronto and when the market crashed in the last 80's the new plant was much bigger than he needed.
Sales to Japan took up the slack, but Japan is a long way from Port Hope. For awhile Viceroy thought about a factory in Asia, but in 1997 settled for 120,000 sq. ft. plant in the Vancouver suburb of Richmond, BC.
"All Viceroy homes for the Japanese market are panelized and because the Japanese prefer it that way, the panels are generally smaller than they would be for a North American home. The Port Hope plant still produces some panelized homes for sale in Eastern Canada and the U.S., but it's now shifted largely to complete house packages.
"They sell better in Europe and the Mediterranean," Lindal says, "and they have some advantages in Ontario and the northeastern U.S. where many Viceroy's homes aimed at a luxury rural-market are erected in vacation areas with marginal roads. A flatbed truck carrying a house package can go almost anywhere, but the kind of trailers used to carry assembled modular sections often have problems with bad roads."
High-end rural homes also tend to have a lot of windows and that makes work for Viceroy's window shop. "We build some very complete window assemblies," Lindal says. "We produced complete window walls and elaborate gable windows and protruding windows of different shapes. They're not in our catalog but almost all our homes are customized-we almost never sell one out of the catalog. Most of our customers insist on making changes and often very extensive changes to our basic designs," Lindal adds.
The Japanese market also drove the development of Viceroy's kitchen cabinet shop. When customers demanded better quality and design in the cabinets Viceroy began making their own doors for suppliers' cabinets and now makes complete cabinets. Again, they had the space to do it and the market demanded it.
"High-end homes also demand custom stairs," Lindal says. Viceroy has always made its own straight stairs, in pine and oak and soon they plan to begin making customer lines.
"I think we're really unique in our market," Lindal says. "I don't know any other company that manufactures such a broad range of housing components. And of course a lot of companies couldn't do it. We produce a total of about 2,000 homes a year-most of them bigger and more expensive than average-and I don't think a smaller company could diversify the way we have done. Most house manufacturers buy most of their components and for a smaller company I think that makes sense.
"But, if you can do it, it makes a lot of sense. If you have the volume to support your own operation it gives you more control- over quality and delivery-and in foreign markets it gives you an edge," he says.
About half of Viceroy's production is sold in Japan, 30% in Canada, 15% in the United States and 5% in Europe and the Mediterranean-but Lindal says that may change.
"I think for the future we have to look at more sales in the States," he says. "That's a huge and very wealthy market, with the same housing traditions and the same building practices as we have, so we feel that that's the wave of our future.
"We have had a display court in Seattle for several years and it has been very successful. We've recently opened one outside of Detroit and we will be opening one in Boston later this summer. In a few years we expect to have one in every major city in the United States," Lindal concludes.
Copyright 2006. Reprinted from the August 2006 Edition of Automated Builder Magazine with the permission by the publisher. |
The Viceroy System