As the concept of making, selling, and building with American-made products gains traction in the market, ProSales' Mark Newman talked with dealers, distributors, manufacturers, and builders about what the growing trend means for their business. Here, John Pace, president and chief operating officer of U.S.-made moulding and trimboard manufacturer Versatex, explains the upside to stocking American-made.
U.S.-made products are perceived to be more expensive than foreign-made. What’s the value proposition for dealers who carry American-made products?
JP: I believe the old adage, “You get what you pay for,” is appropriate when comparing U.S.-made products to those from China and other overseas countries. Let’s compare cellular PVC made in the U.S. to that made in China. Most of the cost to produce cellular PVC trim is in the materials that go into making it. That being the case, how can a company offer a lower priced product unless they cheapen the formulation? Significant compound cost reductions can be achieved by:
- Using a lead stabilizer versus tin stabilizer, which not only is cheaper but also poses environmental issues and concerns.
- Reducing the amount of titanium dioxide (TiO2) in the formulation, which is the ingredient found in sun screen. TiO2 provides a certain level of UV resistance to the sun’s rays. Without a certain amount of titanium dioxide in the formulation you might see early yellowing of your PVC trimboard, especially in southern markets like Florida and the Carolina’s.
- Increase the level of Calcium Carbonate in the formulation. Calcium Carbonate is a cheap filler. Increases in the amount of Calcium Carbonate added to the formulation will lower your per-pound cost.
Cost reductions can also be realized from the method used to produce the ethylene that is a key component in the production of PVC. Some countries extract the ethylene that goes into cellular PVC using coal instead of natural gas. To do this they must use mercury as the catalyst in the reaction. China is the world’s biggest user and emitter of the highly toxic pollutant mercury. Considering their abundance of coal, it doesn't appear they will be changing their PVC process anytime soon.
There are other issues to consider when buying foreign-made versus U.S.-made products. Who will provide customer and technical support? Who do you turn to for help if you have a problem with an imported product? How comfortable are you that the warranty will be honored? What if you need technical assistance after the sale or even a jobsite visit by the manufacturer? The import may look the same as the one made in the U.S. and have a much more attractive price tag, but looks can be deceiving and after a couple of years in the field you may regret buying on price instead of quality.
Some smaller dealers have a real problem with the amount of government regulations—real or perceived—being leveled on small businesses. However, don’t these same rules and regulations help make American-made products superior to those made overseas?
JP: Like many American business owners, I believe the Federal government has taken regulations to a whole new level. I am all in favor of regulations by the Food and Drug Administration, the Environmental Protection Agency, and Occupational Safety and Health Administration to protect company employees, the community, and our country. However, I am not aware of any government regulations that make American products superior to those made overseas. Some regulations make products safer, but does that make them superior? Superior products are made by companies that want to produce the best products in their respective market. Maybe it differentiates them from their competition or maybe the executive group sees it as a necessity as they enter a particular market segment with a new brand. In any case, those companies have built their businesses on a philosophy of superior product quality and customer service. Some government regulations do nothing more than add unnecessary costs to a company. Just look at what companies are doing to escape the burden of over regulation and added cost associated with Obamacare. The net effect of these unnecessary government regulations is cost-cutting measures to offset the impact these new regulations have on a company’s bottom line.
What can dealers do to convince their pro customers that American-made products should be the first ones they specify?
JP: It’s hard to convince a pro-customer to buy U.S.-made products. That decision rests with each individual. It depends on many factors such as the budget for a particular project, the competitive price pressures in that particular market, the product specified for the project, the level of pride the builder and contractor take in their work, as well as their viewpoint on product quality and product loyalty. Some builders I’ve met with tell me that as long as the exterior trim they use performs as expected through the first full year, which is the typical length of their warranty, that’s fine with them. They don’t need products that carry 30 year transferable warranties. High-end custom builders and remodelers who put their reputation on the line, “get it” and understand the difference between quality U.S.-made products and inferior imports. They also know what it costs them in additional field labor to correct product tolerance issues or imperfections. A dealer can explain the benefits of a U.S.-made product over imports, but at the end of the day the final buy decision still rests with the builder or contractor. Whatever drives his buying decision will determine the product he purchases.