When the U.S. building industry went bust during the recession, one Florida business was already eyeing an emerging market faced with a critical housing shortage.
Southwest International Construction Corp., a Venice, Fla.-based builder and material exporter, had been planting roots in Douala, Cameroon, constructing a factory there to produce the structured insulated panels used to build American-style homes in American-style gated communities in Africa.
Where others have failed to build a better mousetrap – affordable and energy efficient homes in Africa – Southwest International is finding success. The insulated panels, key to its business plan, are assembled by local employees in its new Douala factory. They create energy-saving exteriors that address homeowners’ concerns about Africa’s steep electricity rates.
The factory and its Cameroon-based construction subsidiary Quality Habitat Corp., will manufacture and build 2,000 homes annually, according to Tim Truax, Southwest International’s production manager in Venice.
“We have $25 million in construction projects on the books,” Truax said. “Once we get going we’re expecting $200 million to $300 million a year in housing projects. The government of Cameroon has said it needs 10,000 homes to make up the shortage. There’s a growing middle class in Africa and in Cameroon, in particular, there’s a huge housing shortage.”
Southwest International and Quality Habitat have been granted contracts to build four additional panel-assembling factories in surrounding countries. Southwest International has pre-sold all of the 183 homes — priced from $48,000 to $85,275 (excluding sales tax) — planned for its first garden community.
In its research of the best building technologies world-wide, Southwest International determined that the most suitable technology was also the most simple: glue, foam and cement panels first introduced for exterior walls in the 1930s. In the 1950s these panels were perfected with Styrofoam by Alden B. Dow, the brother of Dow Chemical’s founder. Dow’s original foam-insulated panel homes in Michigan are still standing some 60 years later.
Truax said the panels have been structurally tested to survive hurricanes, earthquakes and fires.
“It’s great construction,” he said. “We have procured more land to continue with hundreds more homes.”
The technology will make homeownership more affordable, he said. The panels have an insect barrier and life expectancy of 50 years. They also provide sound and temperature insulation and will reduce energy consumption by 70 percent compared to existing homes, according to Truax.
An experienced crew can assemble the exterior walls of a 1,076-square-foot home in a day.
“Traditional housing in Africa is not efficient building,” Truax added. “Electricity is very expensive and homeowners pay power bills that are three times their mortgage payments. Americans pay eight cents per kilowatt hour; Africans 27 cents. The country needs more efficiently insulated homes to bring power bills down.”
Florida resident Jerry Smith, construction supervisor at the Douala factory, has been in the French-speaking West African nation since earlier this year. He oversees 200 employees who assemble the panels and other components of Quality Habitat’s first gated community.
“My duties are to train the workers for a specific American construction system using American measurement methods, setting up crews and supervising construction, as well as preparing for the manufacturing of various components for the home structures, including the panels, septic tanks, and blocks that will all eventually be made here in Douala,” Smith said. “We are currently preparing each individual lot and building foundations using a production-type system.”
Those systems will likely be incorporated into subsequent Southwest International factories and Quality Habitat communities. Gabon, Chad and the Congo are among the contenders for new factories.
Truax said government officials have been supportive and receptive of Quality Habitat’s presence. The Bilateral Investment Treaty program between the U.S. and Cameroon supports Southwest International ‘s business model. The treaty protects private U.S. investment in developing countries, allowing “money to move freely,” he said.
Southwest International has also been contracted to build student housing and a market/shopping mall.
“I recently met the minister of housing and development for Cameroon when he came to the jobsite for a progress update,” said Smith. “Like many of our visitors, he liked what he saw. It is a good project.”
On paper, the company’s Garden Community resembles a plucked-from-America gated community with landscaping and a retention pond. Houses with three and four-bedroom floor plans — some boasting 1,615 square feet of living space — have two stories and single-car garages. Homes, which are coaxial-cable -and internet ready, also have Bahama shutters to maximize natural airflow while reducing interior heating from direct sunlight. Communities are illuminated at night with solar-powered streetlights. Garbage collection is centralized and neighborhood wells provide clean water. American technology also uses an ultraviolet system to treat water, killing meningitis, typhoid fever, polio and other infectious diseases transmitted through contaminated water.
Southwest International has partnered with major U.S. retailers and manufacturers to supply building materials, including Fastenal, Sherwin-Williams, Ashland Chemicals, Mohawk Industries, Sealoflex waterproofing systems, Cell-Tek Geosynthetics, Lowe’s and Jeld-Wen windows and doors. It has sourced factory LED lighting from a neighboring Venice, Fla. business.
“We’re shipping good-old American products to Africa,” Truax said. “A lot of American companies pulled out of Africa, including Sherwin-Williams. We’re using their paint and will bring them back into Africa.”
Smaller homes in the company’s communities start at $25,000 for 860-square-feet. In addition to import and export difficulties, Southwest International’s business plan was designed to overcome short- and long-term financing challenges that have previously prevented economic development in Africa.
“Finding workers is not a problem; finding qualified workers has been a bit of an issue. Training and/or supervision is going to be required. You have to keep in mind that everything has always been very labor intensive with just minimal basic tools and with very little direction or supervision,” Smith said. “Production, schedules and quality-driven objectives are new to them. It has been a real challenge to just change the culture and the work environment.”
Many employees, who the company trains and educates, travel a great distances and earn $60 to $360 a month, Smith said. Most take tremendous pride in their work.
“They’ve been receptive to training and eager to learn. If I’m explaining something or demonstrating, I immediately draw a crowd because they want to know. I have hard workers who take pride in doing things the way we want it done, and they like to be acknowledged for their work.”
The oftentimes slow-moving governmental process, which Smith credits to “lack of organization, lack of communication and no sense of urgency,” are among the main obstacles his company faces.
“It’s almost as though they like to appear progressive and business oriented, but just don’t know how to go about achieving it,” he said. “Fortunately, our organization has a driving force with many connections to keep the wheels turning. Hard to explain, but there is a bit of a disconnect somewhere in my opinion.”
Still, Southwest International has earned the government’s confidence. The company has also been contracted by the city of Douala to build the Marché Congo shopping mall under a private investment project partnership.
“The government participates by putting up land and loan guarantees in concert with a management company we set up to ensure everyone involved does their part,” Truax said.
Southwest International also expects to chip away at the void of some 120,000 needed dormitories – a billion dollar project, according to Truax.
“Overall, the business climate has been very receptive,” Smith said. “From a personal standpoint, I have been a little taken aback by the welcome and reception I have received. They clearly go out of their way to make sure I am comfortable and that my needs are met — and they clearly appreciate my presence and input. I’m not sure you could meet more polite people than the people of West Africa. It’s left a real impression.”