Open house: a Canadian company sees Latin America as a springboard for its assembly-line homes

Latin Trade, Jan, 2005 by Jen Ross

Margarita Bahamundes just wants a safe place to call home. The 36-year-old widow lives with her four young boys in a tiny two-bedroom apartment in the El Volcan ghetto, about 30 kilometers outside of Santiago. She moved there in 1996 and pays a small monthly mortgage. In 1997, heavy rains made her children sick.

"My house would get wet and mold started to grow, and the doorframes would droop," she says. "Two of my children got pneumonia as a result of the leaking, which gave me depression and a temporary epileptic condition because of my stress:' The government repaired her home in December 2003, Bahamundes doesn't complain about the delay, but she is worried if it can withstand earthquakes.

"So far so good;' she says with a furrowed brow. "It doesn't leak anymore,"

Latin America is the most urbanized area in the developing world, but much of its housing is substandard. Land squatters account for as high as 60% of total housing in most countries, according to the United Nations.

A Canadian homebuilder thinks it has the answer. Rockport Homes builds houses on assembly lines using patented technology called shot-crete. The company sprays strong, high-pressure, quick-drying concrete into molds that dry out to become factory-built homes. Trucks then carry them off to the site where they are assembled to order for the owner. It's cheap and fast--one home takes only four hours to build and one week to install, costing US$8,000 for a 37-square-meter unit. The homes are resistant to hurricanes, fire, floods, termites, and they are seismic-proof--ideal for an earthquake-prone country like Chile, where it chose to build its first foreign plant.

Rockport chose Chile because of the country's housing deficit of 750,000 units, says Nelson Riis, vice president of Rockport Homes. The government says the country will build 105,000 homes a year beginning in 2005 to help narrow the deficit, according to the housing ministry. Rockport has not signed contracts with the Chilean government yet but, given the demand, and the government's variety of credits and subsidies available for new housing, the company decided Chile was the right place to build its first production plant abroad.

"The difference with some countries is that they've actually set aside the resources or identified the need to help people get affordable housing" says Riis. "Chile is perhaps a little more economically advantaged than others, and it actually has programs in place to assist people to afford their first home purchase."

Savings largely come through lower labor costs. In the United States and Canada, labor accounts for up to 70% of the total cost of building a home. Materials account for the rest. In Chile, the cost of labor represents 40% of the price of a home, according to the Chilean Chamber of Construction. The government reports similar figures. However, Rockport says it can trim labor costs down to 16% thanks to its assembly-line approach.

"The days of building a home on-site are coming to an end," says Riis. "The prices we're quoting are the lowest in the world for a house of this quality," he says.

Private-sector developers are target customers for the technology too, says Riis, a former member of Canada's Parliament. "I've always said that if we could find a private-sector solution that didn't require public investment we'd be miles ahead."

A number of contractors are interested in purchasing Rockport homes, such as the private Casa Grande development project on the outskirts of Santiago, says Riis. Rockport has also spoken with state-owned copper miner Codelco to supply homes for workers at two of its larger mines in northern Chile. Rockport expects to begin production in Chile by year's end. It will source all materials in the country, thus providing jobs, 200 directly and 700 indirectly.

Cheaper solutions. The government can provide cheaper housing solutions than Rockport. It can build a wooden house and sell it for $5,000, but such units last less than a decade by design, and they are usually sold to families after emergencies such as earthquakes. Otherwise, public housing normally costs around $7,200 for unit of about the same size as a Rockport home, although not made fully out of concrete, says Juan Jose Guixe, head of the southeastern division of the public works department at Serviu, the housing ministry's public-housing project developer. Guixe's division is responsible for putting up 40% of the nation's government-built homes.

"Building a new house or apartment block here can take months or more than a year. Just repairing a house takes us three to four months, and a year for an entire neighborhood," he says. "Speed is crucial, and this company has an obvious advantage there." Repairing cheaper houses can cost more than building a new one, says Guixe, who says that the government is spending $8,000 to repair homes damaged in 1997, a year of unusually heavy rains, even though they are worth just $5,000.

The private sector, meanwhile, says Rockport homes are a deal. Today, the government would sell a house of the same size and materials of a Rockport unit for $11,500, says Emanuel Vespa, an economist with the Chilean Chamber of Construction. That figure is too high to be fully covered by a government subsidy, which makes Rockport's technology more attractive, he says. "Houses made purely of concrete for [$8,000] or less? They don't exist in the Chilean market," says Vespa.