Volume 42, Issue 2 - February 2007
|The Three Cs: Construction, Curtainwall, China
How the Industry is Handling Increasing Chinese Curtainwall Imports
by Ellen Giard
In light of the current North American construction boom, building owners want their projects built fast and on budget. With so much construction activity, some contract glaziers say it’s been challenging to get what they need, when they need it. In order to stay on schedule, some have begun exploring material sources from other countries, namely China.
While it’s a generalization, of course, Chinese companies have been known for their fast, inexpensive manufacturing capabilities and in some cases, they’ve also been known for products of varying quality. The Chinese, however, are working hard to establish their companies as dominant manufacturing players.
In China, it seems, there is no industry that will go unexplored. Over the past few years the U.S. glass industry watched as the Chinese quickly became a strong, global glass manufacturing force. Those in the United States are still watching, and paying close attention as the Chinese move more and more into the realm of not only glass production, but also curtainwall.
In just four short years, imports of aluminum products from China into the United States have skyrocketed, according to the U.S. Census Bureau. In 2001 the value of imported aluminum products from China was approximately $27 million; by 2005 that number reached nearly $465 million (see box on page 80).
Looking at extruded aluminum products specifically, Rand Baldwin, president of the Aluminum Extruders Council, says, undoubtedly, Chinese imports increased from negligible to noticeable.
“My sense is we’re still talking about small percentages of the North American market,” says Baldwin. “The bigger question, though, is how much more is poised to arrive in the next few years?”
Bryan Sullivan, vice president of Vision Enclosure Walls Inc., a Dallas-based contract glazing company, says the U.S. construction market is so strong that domestic suppliers cannot meet all of the scheduling requirements.
“Owners need the product and, if the production people cannot produce it, then the job gets pushed back and that’s why we’ve been willing to work with Chinese suppliers,” Sullivan says.
Clark Folsom, national accounts manager for United States Aluminum Corp., a curtainwall manufacturer based in Waxahachie, Texas, agrees glazing contractors are starting to buy more curtainwall from the Chinese due to the fact that companies here are so busy.
Eddie Bugg, who works in product development for Kawneer in Norcross, Ga., has similar opinions.
“There is no doubt that our lead times for curtainwall products have been extended in the recent past,” he says. “But we have been working to balance capacity, and we’re also considering some accelerated service programs.”John Shum, vice president of Sierra Glass & Mirror, a contract glazing company in Las Vegas, says cost is the primary reason for the growth in Chinese imports.
“There are great savings—up to 30 percent,” Shum says. “There’s no other reason to buy from China. I have always believed in buying American, but to stay alive in this business … if that’s what it takes to get the job done, we need to do it.”
Do They Pass the Test?
But what about the products? Are they going to provide the same levels of quality and service that the U.S. market demands? Are they going to meet the given specifications? Suppliers and supporters, say yes, quite often they do.
Asia Aluminum, for example, is a Hong Kong-based producer that has been selling and working in the United States for more than ten years. The company makes a variety of products for the building industry including extrusions and flat-rolled aluminum.
“A lot of times the products made in China are superior in quality than those made in the United States,” says Stanford Bian, who works in the company’s Pasadena, Calif. location.
Bian says China’s products perform well because they also sell their products in other countries such as Japan, where even more stringent quality standards are in place. And his reason for the growth of Chinese products? “It is primarily a response to both the reality and the perception that Chinese products are cheaper, while the quality is good enough,” he says.
Bian says his company is reaching the U.S. market by working with glazing contractors. It is those companies that then bring the products to the attention of the architects and owners.
In the United States, there are many requirements mandated by the Federal government, as well as local jurisdictions.
“To make sure everything is in compliance, we have the structural calculations and shop drawings verified by the architect to ensure it is all structurally sound and per code,” says Shum.
And as far as the warranties on imported products? They are comparable to those of U.S. producers. In some cases warranties could be as much as five years on stick-built aluminum framing systems and on shop-assembled aluminum framing systems.
Shum says his company has not yet had to enforce a warranty, so they do not know how it will be honored.“
Subcontractors need insurance policies, performance bonds, payment bonds, joint-check agreements, personal guarantees, etc. before we can even get a single dime on a project,” says Sullivan. “It’s very hard to litigate against an international company that does not have U.S. assets.”
One Step at a Time
While some markets, especially Las Vegas, have seen an influx of Chinese curtainwall products, Shum is approaching things carefully. He says his company is taking baby steps, using some Chinese materials on small jobs.
“Before we started working with any Chinese company, we sent our representatives there to inspect and observe the plants and their operations,” Shum says. “There are good companies and bad companies, so you have to check out those sources and verify their references.”
Sullivan’s company is doing a number of jobs right now including hotels and casinos, airports and condominiums, all utilizing Chinese materials. But he’s quick to point out that Chinese systems are not always right for every project.
“The mentality right now of the [U.S.] curtainwall industry is we’re full; there’s too much work,” he says. “On some projects, though, those involved [i.e., the owners] are willing to color outside the lines and use [imported] products and those are the products that can keep the job moving.”
He says since Chinese materials are so readily available they can allow the project to be built according to the owner’s schedule.
“The pricing is not always better, but if the product can keep the project moving in our timeframe and is in our budget, we’ll use it,” adds Sullivan.
Shum adds, “You have to have the owner’s participation. They need to know that to be able to save costs on the job they have to buy into it. We need them to be partners with us and to take on some of the risks.”
There can also be a lot of challenges involved with using Chinese product. Product quality, project coordination, scheduling and delivery, as well as cultural and diversity issues are obstacles that many contract glaziers have to overcome.
Rick Hamlin is the national head estimator for Alsip, Ill.- based Trainor Glass Co., one of the country’s largest contract glazing companies. He cites challenges like communication, as well as cost and the time it takes to provide oversight. Quality issues are also a concern.
“The oversight is crucial because it appears quality in the Chinese market takes second place to schedule,” Hamlin says. “In the U.S., schedule has a priority, but quality must be maintained at a high level.”
For Sullivan, one of his company’s challenges has been getting past stereotyping.
“We took a project team—owner, architect, general contractor—to visit the operations of a Chinese manufacturer,” he says. “The drive from the hotel to the factory takes 20-30 minutes and, as we were driving, I told the contractor to look around at all of the tower cranes—and there was probably 120 of them. And he just could not believe the growth the city was experiencing. And then they see cleaner factories than in the United States, more automation, more production and [more] square footage produced annually and all of this in just one location and, by the way, they have five others. People start to see these things and they let go of their pre-conceived notions. It’s all about education and dropping the stereotypes.”
Logistics and shipping can still be a challenge.
“The product is on the ocean for at least three weeks and a minimum of one week in customs,” says Shum.
But Sullivan says lead times from Chinese suppliers are just as good, if not better in some cases, than those of domestic producers. This could be attributed to the amount of capacity available in China.
“Sometimes we warehouse the material here because owners don’t want to wait for the products,” says Sullivan.
He adds that shipping costs from China are included in the total materials price.
And if something is wrong? Sullivan says the same thing is done as with a domestic manufacturer; it is re-made and replaced as quickly as possible.
Whose Job is it Anyway?
The risk factor goes deeper, though, especially when contractors or owners opt to work directly with the product supplier. In some cases, owners or contractors buy the aluminum and glass curtainwall systems from a Chinese importer and then want to work with the glazier for labor only. Bob Trainor, president of Trainor Glass, says there are several manufacturers’ rep operations working with Chinese unitized wall companies to sell direct to the general contractor, owner or developer. “This is not good news,” says Trainor.
As Hamlin explains, this cuts the glazing contractor out of the picture, unless they take on just the installation. “To remain competitive with Chinese products, some glaziers have felt the need to cut margins to compete,” says Hamlin.
“If a glazier does a job with Chinese products and he has the full contract, if something [were to go wrong], the glazier is the responsible party,” says Glenn Heitmann, president of Heitmann & Associates, a consulting firm based in St. Louis. “But, when the owner buys full from the Chinese and then just pays the glazier for the erection, that is a problem. If the product is designed, engineered, manufactured, fabricated and shipped all by a Chinese company but a local erector puts it together, that local entity is the one who will have to deal with the situation if a problem arises.”
Shum agrees, saying when glaziers engage in these jobs it can negatively impact other contract glazing companies, as it’s difficult to survive in business on a labor-only basis. When a contract glazier takes a job where the owner is furnishing the material, it can actually take work away from other companies because they may not be willing to bid such work.
“They need to realize the damage they are causing to contract glaziers when they themselves agree to perform such work,” Shum says. “There is little we can do with companies that call themselves ‘erectors’ and do not engage in the purchasing of material as other companies, such as ours, do. All we can hope for is that owner-purchased material does not become common practice or we will all be calling ourselves ‘erectors.’”
Sullivan adds that no company wants to be involved in a material-only scope—whether international or domestic.
“Nobody likes to be assigned a vendor, especially when you may not have a relationship with that company,” adds Sullivan.
Chinese manufacturers are showing no signs of slowing—they are becoming better at producing product at an accelerated pace. Their role as a global player in the glazing industry is solid.
Sullivan says that while, at this time, Chinese curtainwall may be somewhat of a niche product, that perception will soon change.
“As the quality of Chinese products continues to improve and those companies become more and more educated about the United States, we are going to see those products written into specifications,” says Sullivan.
We can also expect to see more in the future.
“As the domestic manufacturers continue to be full, the Chinese provide capacity that’s not available across the board in the United States,” says Hamlin. “Combine the capacity with low labor costs and the pressure to slow the price escalation of aluminum and glass, and the Chinese producers will be a viable option to consider.”
In order for companies here to compete, there are certain areas on which to focus: lean manufacturing, cost conscious awareness, service and quick turnaround.
“The winners on the global scale will have the same characteristics that they have always had on a regional scale,” says Baldwin.
With Chinese companies already taking on more work here than they did just under two years ago, it’s evident that U.S. companies will have to adapt. The key will be to continue watching and learning to better prepare for whatever the future has in store.