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Housebuilding industry in metropolitan Vancouver Price, Edmund Vansantford 1970

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THE HOUSEBUILDING INDUSTRY IN METROPOLITAN VANCOUVER t>y EDMUND VANSANTF0RD PRICE B.A., UNIVERSITY OF BRITISH COLUMBIA, 1966 A THESIS IN COMMERCE SUBMITTED TO THE FACULTY OF GRADUATE STUDIES IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION We accept t h i s thesis as conforming to the required standard THE UNIVERSITY OF BRITISH COLUMBIA A p r i l , 1970 In presenting th i s thes is in pa r t i a l fu l f i lment of the requirements fo r an advanced degree at the Un ivers i ty of B r i t i s h Columbia, I agree that the L ibrary sha l l make i t f r ee l y ava i l ab le for reference and study. I fu r ther agree tha permission for extensive copying of th i s thes i s for scho lar ly purposes may be granted by the Head of my Department or by his representat ives. It is understood that copying or pub l i ca t ion of th i s thes is fo r f i nanc ia l gain sha l l not be allowed without my wr i t ten permission. Department of Commerce and Business Administration The Un ivers i ty of B r i t i s h Columbia Vancouver 8, Canada A p r i l 17, 1970 Date ABSTRACT i i The major objectives of the study are to determine the nature of the housebuilding industry i n Metropolitan Vancouver and to suggest possible reasons f o r an apparent lack of large-scale b u i l d e r s . The industry i n the United States and i n other regions of Canada i s analyzed on the basis of e x i s t i n g l i t e r a t u r e and data, and a general indus-try framework i s established. Firms are c l a s s i f i e d into categories by size, and the existence of large firms i s found to be quite general among c i t i e s of Vancouver's s i z e . The nature of the metropolitan area i s examined, and placed i n the context of other Canadian c i t i e s . Popula-tions, general topography, and type of government are d i s -cussed, and i t i s found that Vancouver i s a f a i r l y t y p i c a l Canadian c i t y except f o r i t s mountainous s e t t i n g . Most of the information on the Vancouver housebuilding industry i s based on a series of interviews and on the data generated by a questionnaire answered by the builders them-selves. There i s a discussion of the Vancouver builders, and the structure of the industry here. This enables a compari-son to be made with the industry elsewhere, and some of the differences and possible reasons f o r them are discussed i n considerable d e t a i l . i i i In the f i n a l portions of the paper there i s a d i s -cussion of the most important variables a f f e c t i n g the industry i n Vancouver, leading to the conclusions. Suggest-ions are made f o r further study. IV TABLE OF CONTENTS PAGE INTRODUCTION . . . . 1 PART I. A. LITERATURE STUDY AND GENERAL INDUSTRY BACKGROUND . . . . . . . . . . . . . V 3 B. THE HOUSEBUILDING INDUSTRY 7 The Custom Builder 11 The Operative Builder 13 The Small Builder 17 The Medium Firm 25 The Large Firm 32 PART I I . A. AREA STUDIED 49 B. THE VANCOUVER HOUSEBUILDING INDUSTRY . . 66 The Small Builder . . . . . . 73 The Medium Builder 84-The Large Builder 91 PART I I I . CONCLUSIONS 104-SUGGESTIONS FOR FURTHER STUDY 106 APPENDIX A . . 108 APPENDIX B 115 APPENDIX C 116 > FOOTNOTES 116 ^ BIBLIOGRAPHY 120 ;..v LIST OF TABLES TABLE PAGE I. Population of Selected C i t i e s 55 I I . Starts of Single Detached Family Dwellings In Selected C i t i e s , 1959-68 . 56 I I I . Wage Hates For Selected Canadian C i t i e s In Canada 60-61 IV. Cost of Single Family Dwellings Per Square Foot i n Canada 62 V. Consumer Price Index For Vancouver and Canada . 63 VI. Percentage of Firms Paying B i l l s Within Given Time Spans 68 VII. Use of "Packages" By Size of Firm 69 VIII. Firms Who Could Obtain Financing For Land Purchases (Including Agreement For Sale, Mortgages, Terms) 71 IX. The D i s t r i b u t i o n of Responses from Random Samples . 72 X. The Performance of Tasks by the Firm's Own Employees (Not Subcontracted) 73 XI. Firms "Tied-In" With Others By Size . . . . . . 75 XII. Average Age of Firms By Size 76 XIII. Percentage of Firms Building Last House on contract by Size 78 v i TABLE PAGE XIV. Price of Last Home Sold By Size . . . . . . . . 79 XV. Percentage of Firms Whose Owners Feel I t Is At "Optimum" Size by Size of Firm 80 XVI. Percentage of Firms Reporting D i f f i c u l t y i n Obtaining the Desired Number of Building Loans 81 XVII. Percentage of Last Houses B u i l t Sold by Builder By Size of Firm 82 XVIII. Percentage of Firms Developing Their Own Land (Performing Two or More Tasks) . . . . . . . 85 XVIII(a) Percentage of Firms Purchasing Last Land From Real Estate Agent 86 XIX. Average Farm Size i n Areas Adjacent to Metro-p o l i t a n Census Areas 88 XX. D i s t r i b u t i o n of Firms Surveyed By Size . . . . 90 XXI. Single Family Detached Dwellings Starts Financed Under N.H.A. In Selected C i t i e s . . 99 XXII. Single Family Dwelling Starts Financed Under N.H.A. As A Percentage of Total i n Selected C i t i e s . . . . . . . . . . . . . . . . . . . 100 ACKNOWLEDGMENT The author i s greatly indebted to Professor R. U. R a t c l i f f of the Faculty of Commerce and Business Administration, the University of B r i t i s h Columbia. Dr. Ratcliff»s guidance, h e l p f u l comments, and c r i t i c i s m of the preliminary d r a f t of thi s thesis contributed immeasur-ably to the preparation of the f i n a l d r a f t . INTRODUCTION The purpose of t h i s study Is to examine i n some d e t a i l the housebuilding Industry i n Metropolitan Vancouver with the aim of presenting on a systematic basis the l o c a l industry so that i t can be compared to the Industries of other c i t i e s i n Canada and to c i t i e s which are the subject of previous studies c a r r i e d out i n the United States. For the purpose of thi s study, the housebuilding industry i s defined as the firms and ind i v i d u a l s who are the key decision-makers i n the construct-ion of the single family detached dwelling. The study focuses on the housebullders themselves and t h e i r means of land acqui-s i t i o n , materials purchasing, construction techniques and s e l l -ing. These p a r t i c u l a r aspects of b u i l d i n g are f e l t to be the c r i t i c a l areas i n the industry, and t h e i r r e l a t i o n s to the builde r are considered at some length. The large-scale builder has been a major producer of new houses i n most l a r g e r North American c i t i e s since the war, but he has not achieved any notable degree of success i n Vancouver, which i s one of the la r g e s t s i n g l e family dwelling markets i n Canada. The study w i l l address I t s e l f i n p a r t i c u -l a r to the question of why these builders are apparently l e s s successful i n the area. A study of t h i s nature i s desirable because of the importance of housing to everyone and the r e s u l t i n g concern of 1 2 i n d i v i d u a l s and government bodies i n the type, q u a l i t y and production of housing. No study of t h i s nature has yet been made f o r the Vancouver area, and a systematic analysis based on relevant data would be a step toward providing a sound basis f o r future discussion. This paper consists of three d i s t i n c t parts. The f i r s t part deals with the e x i s t i n g l i t e r a t u r e on the subject, and outlines the general s i t u a t i o n i n the housebuilding industry as determined by previous studies. This section r e l i e s heavi-1 2 l y on e a r l i e r works by Sherman J . Malsel and John P. Herzog, The second part introduces the Vancouver area and summarizes the s i t u a t i o n i n the r e s t of Canada as much as possible, then describes the industry i n Vancouver, leading to the conclusion. The remaining part i s an appendix which contains complete des-c r i p t i o n s of data sources and methodology f o r the survey on which the section on the Vancouver industry i s based. Although they are c l o s e l y r e l a t e d topios, neither the subject of mobile homes, a s p e c i a l type of single family de-tached dwelling, nor the place of the single family dwelling i n the o v e r a l l production of housing has been discussed, be-cause of the necessity to l i m i t the scope of study. Any further research should consider these aspeots of housing. PART Z 3 A. LITERATURE SURVEY AND GENERAL INDUSTRY BACKGROUND Although a number of books and papers have dealt with housing or the construction industry at large, r e l a t i v e l y few have focused on the housebuilding industry i t s e l f , and fewer,! i s t i l l have probed and examined the entrepreneurs and firms who carry out and oversee the a c t u a l erection of the houses. i One of the most comprehensive works i n the f i e l d i s Housebuilding i n T r a n s i t i o n by Sherman J . Maisel, a study of the San Francisco Bay area. Although the data gathered was mainly f o r the year 19^9 and the work i t s e l f appeared i n 1953, the book gave a cl e a r , accurate picture of the d i f f e r e n t types of firms and the basic methods of operations, methods which have a l t e r e d s u r p r i s i n g l y l i t t l e i n the l a s t twenty years. The work serves both as a rigorous study of the house-b u i l d i n g industry i n 19^9 and as a s o l i d basis to compare l a t e r developments and changes i n the industry. An important aspect of Maisel's work was h i s d i v i s i o n of firms i n t o various c l a s s i f i c a t i o n s by c h a r a c t e r i s t i c s as r e f l e c t e d i n s i z e of annual production. The three major categories of firms he outlined were: small firms — those b u i l d i n g from one to twenty-four units per year; intermediate firms — those b u i l d i n g from twenty-five to ninety-nine units per year; and large-scale firms — those producing one hundred or more units per year. Each cl a s s of f i r m was then broken down and analyzed, with the differences i n techniques, management and financing determined and the d i r e c t i o n of the industry as a whole indicated. The r e s u l t s c l e a r l y indicated a new trend to large-scale builders, a trend that was to accelerate i n the next decade. Another valuable work was to appear l a t e r as a doctoral d i s s e r t a t i o n by John P. Herzog. This study accepted the gener-a l structure of the firms as outlined by Maisel, and concen-trated on the nature and development of firms producing one hundred or more houses per year i n the decade 1950-1960. Herzog considered not only the San Francisco Bay area but Northern C a l i f o r n i a as well and c l e a r l y showed the emergence of the large-scale builders as the dominant force i n house-b u i l d i n g i n Northern C a l i f o r n i a during the decade. The r e s u l t s were dramatic, with the large firms increasing t h e i r share of production from approximately thirty-two per cent to seventy-four per cent of t o t a l new houses started. The d i s s e r t a t i o n appeared i n book form i n 19^3, and served not only as an i n -depth study of the r e l a t i v e l y new large-scale housebuilding firm but a l s o as a confirmation of Maisel's e a r l i e r work and predictions and a v a l i d point of comparison of the industry i n the Bay area a f t e r ten years. While these two works must form the basis f o r any study of the Industry at those times, other works have made t h e i r 5 appearance• A more general work appeared In 1 9 5 9 * a c o l l e c t i o n of studies by Burnham K e l l y and associates e n t i t l e d Design &  Production of Houses./^ The book was wide-ranging, concerning i t s e l f with new designs, both a r c h i t e c t u r a l and land use, new f a b r i c a t i o n techniques, research, labor r e l a t i o n s and land use controls as well as the current state of the housebuilding industry. While consideration of the industry i t s e l f was necessarily somewhat s u p e r f i c i a l because of the wide scope of the studies, the study does give some points of comparison to r e l a t e developments i n the United States as a whole to those i n C a l i f o r n i a . Another general c o l l e c t i o n of studies appeared i n 1 9 6 6 e n t i t l e d Urban Housing, and edited by Wheaton, Milgram, and Meyerson*^ They attempted to provide a comprehensive c o l l e c t -i o n of essays and excerpts from works of leading thinkers con-cerning most major aspects of housing* In a section devoted to the housing industry, four a r t i c l e s present d i f f e r e n t Interpretations of the industry and i t s development i n the post-war period. In a d d i t i o n to the works mentioned above, there has been the occasional a r t i c l e i n publications such as House and  Home i n the United States and i n Canadian Builder i n Canada* Aside from occasional j o u r n a l i s t i c works i n magazines and 6 trade publications, there has been very l i t t l e published i n scholarly journals or a d d i t i o n a l research papers on the house-bu i l d i n g function. Numerous publications such as I n d u s t r i a l 7 Eolations i n the Construction Industry have appeared but usually are concerned with d i f f e r e n t aspects of construction, barely touching on housebuilding i t s e l f . This study w i l l present a picture of the housebuilding industry and i t s development elsewhere as r e f l e c t e d i n the l i t e r a t u r e , then compare t h i s p i cture to the development and present state of the housebuilding industry i n the metropoli-tan Vancouver area, as much as the scope of the study permits. Since the l i t e r a t u r e a v a i l a b l e on the subject considers almost exclu s i v e l y the American industry, i t i s very d i f f i c u l t to compare the industry i n the r e s t of Canada with that of Vancouver. Wherever i t has been possible, whether from govern-ment s t a t i s t i c s or other sources, to obtain relevant data to base comparisons on, i t has been used to t r y to put Vancouver i n i t s Canadian context. The s i t u a t i o n of Vancouver has some-what more meaning when compared to other Canadian c i t i e s , rather than American ones, because of common laws, f i n a n c i a l I n s t i t u t i o n s and operations, and a scale general to the country as a whole. 7 B. THE HOUSEBUILDING INDUSTRY The f i r s t question that a r i s e s i s whether there r e a l l y i s a recognizable housebuilding industry separate from general construction. Maisel, writing i n 1953t f e l t that ••• the housebuilding Industry does e x i s t as an ent i t y , separable from general contracting a t one extreme, and from owner-builders at the other.° He stated further that Contrary to previous assumptions that dwellings are not commonly constructed by a s p e c i a l class of producer, ... t h i s research developed the f a c t that, a t l e a s t i n the Bay area, the overlap between housebullders and others i n the b u i l d i n g industry i s not great.9 In an a r t i c l e published i n 1962, 1 0 James G i l l i e s and Frank Mittelbach discussed t h i s conclusion of Maisel. While noting Maisel*s argument as well as the f a c t that journals such as House and Home and the Journal of Homebuilding deal-ing almost exclusively with housebuilding had appeared and that the National Association of Homebuilders, a trade a s s o c i a t i o n of builders, had flourished, they concluded that ... a d e t a i l e d appraisal of the construction industry i n southern C a l i f o r n i a during the period 1955-1959* ••• does not support the proposition that there i s a housebuilding industry, b a s i c a l l y separate from general construction•H This conclusion was based on a sample of f i f t y construction firms studied i n d e t a i l and a l a r g e r general survey c a r r i e d out i n Los Angeles by the Security - F i r s t National Bank of 12 Los Angeles. The r e s u l t s of the general study indicated a 8 switch by housebuilders into apartment, public, commercial, and i n d u s t r i a l construction during a period of contraction i n homebuilding following 1 9 5 5 * The d e t a i l e d study of f i f t y firms also indicated a strong tendency f o r housebuilders to move into d i f f e r e n t areas which u t i l i z e d s i m i l a r technology, e s p e c i a l l y i n times of contracting production* The arguments of G i l l i e s and Hittelbach t y p i f y those of a school of thought which maintain that housebuilding forms part of an a l l - i n c l u s i v e construction industry and that "... with experience, firms ("housebuilders] have s h i f t e d t h e i r operations to meet new and d i f f e r e n t demands."1-5 In other words, housebuilders tend to evolve into l a r g e r firms i n areas d i f f e r e n t from but rela t e d to housebuilding. In the following year John P. Herzog published an adapted version of his doctoral thesis, which was based large-l y on Maisel*s concepts of the building industry. He took the p o s i t i o n that ... how one looks a t the industry w i l l determine, at l e a s t i n part, what one regards as the causes of i t s problems. I f one views housebuilding as simply one of many a l t e r n a t i v e short-term opera-tions of firms and individ u a l s engaged i n the broader category "construction", such a view i s ce r t a i n to color one's assessment of innovation, managerial i n i t i a t i v e , and the like.3-^ Herzog also mentioned that f o r the purposes of h i s study, "... i t i s Impossible to describe i n d u s t r i a l structure and 9 organization without o u t l i n i n g the boundaries of the industry He f e e l s that i t i s necessary to answer at l e a s t three basic questions to determine whether housebuilding can be separated from construction i n general f o r study; whether there i s s u f f i c i e n t s t a b i l i t y In volume to maintain firms; the extent of s p e c i a l i z a t i o n of firms i n housebuilding and whether i t i s possible to i d e n t i f y a group of builders with s u f f i c i e n t con-t i n u i t y i n housebuilding work to q u a l i f y as a separate indus-t r y . 1 ^ He noted that ... the overwhelming majority of large-soale firms do p r a c t i c a l l y nothing but b u i l d houses, and second-l y , there i s not a d i s c e r n i b l e trend away from t h i s practice.17 Herzog concluded that there i s indeed a housebuilding industry, p a r t i c u l a r l y when the large-soale firms are being considered. He stated that while ... there i s more than a n e g l i g i b l e degree of i n s t a b i l i t y , ... the same can be said about any durable goods industry, and there was nothing i n the s t a t i s t i c s to indicate that the large-scale builders suffered greatly i n housebuilding recess-ions ... [but] probably fared better ( i n terms of reductions i n output) than d i d large firms i n almost any other durable goods Industry. There was no apparent tendency f o r large-scale house-builders to turn t h e i r a t t ention to other types of construction during recessions, or f o r that matter, at any other time. ... Furthermore, the s t a t i s t i c s on continuity indicate that house-builders are slow to desert t h e i r chosehprofesslon, even a f t e r leaving the large-scale class.18 In summation, he states that most firms which b u i l d 10 v i r t u a l l y the entir e new stock of Northern C a l i f o r n l a n homes "... are, have been, and w i l l probably continue to be primarily housebuilders. From the above arguments, one can see that there i s a strong case f o r the existence of a separate housebuilding i n -dustry. On the basis of these arguments then, as well as the need to l i m i t and define the type of firm to be studied, t h i s paper accepts the Maisel - Herzog d e f i n i t i o n of a housebuild-ing Industry d i s t i n c t from general construction. Having determined the existence of the industry, one must then determine the nature of the industry i n general and the functions of the builders themselves• From the l i t e r a t u r e i t i s possible to e s t a b l i s h a comprehensive picture of the Industry i n the United States ( p a r t i c u l a r l y C a l i f o r n i a ) , a picture which generally applies i n Canada, as f a r as i s known. There are b a s i c a l l y three types of builders who erect homes: the general contractor, the operative or merchant b u i l d -er, and the owner-builder. The owner-builder e i t h e r builds or organizes the b u i l d i n g of his own home. I t i s usually a one-time proposition, and any industry study cannot include them except a t the r i s k of seriou s l y biasing the r e s u l t s . In the industry i t s e l f there i s an es s e n t i a l d i s t i n c t -ion between the kinds of general contractor. The small con-t r a c t o r i s s t i l l , to many people, the symbol of the housebuilder, 11 "... the man who builds on a l o t which the owner has bought, builds to a design which the owner has selected, accepts pay-ment f o r his work as i t Is i n s t a l l e d i n the house, and r i s k s very l i t t l e i n terms of decision or c a p i t a l . " The other type of builder i s the merchant or operative builder, "... who acquires the s i t e , determines the design, puts out h i s own money as the work progresses, and assumes the r i s k of l o s i n g 2.CI h i s entire investment i f the house does not s e l l . " The Custom Builder The small contractor, or custom b u i l d e r as he i s often 2' known, has been concisely described by Dletz, Bay and K e l l y . The t y p i c a l custom b u i l d e r generally retains the carpentry function or a t l e a s t a portion of i t , beoause t h i s trade i s continuing during the enti r e job and co-ordinates the other trades, the r e s t i s subcontracted to small operators s i m i l a r i n nature to himself who s p e c i a l i z e i n d i f f e r e n t trades. This method i s the most f l e x i b l e i n use because i t permits the assembling of a wide range of s k i l l s to do any p a r t i c u l a r job that may be necessary. Most small builders have regular sub-contractors they work with on a continuing basis. T y p i c a l l y , he i s characterized by a small volume, wide fluctuations i n output, minimal overhead and organization, and a considerable dependence on many other small businesses. His volume w i l l range up to twenty-four units a year, often 12 including some houses b u i l t on speculation, each on a d i f f e r -ent s i t e and intended f o r an i n d i v i d u a l owner, who i s often intimately involved with the house and makes the work more d l f f i o u l t f o r the operator. The builder supplies most of his own working c a p i t a l through h i s personal Investment. I f he needs a d d i t i o n a l funds he usually borrows from a bank, often on h i s personal c r e d i t and assets. Land i s r a r e l y a problem as he buys i n small q u a n t i t i t i e s , usually a single l o t , or the customer provides h i s own land. He i s usually quite independent-minded i n his r e l a t i o n s with a r c h i t e c t s and he may even draw up his own plans and s p e c i f i c a t i o n s where po s s i b l e . His labour i s l i k e l y to be non-union, e s p e c i a l l y i n areas on the edge of a c i t y where most bu i l d i n g occurs. His overhead i s very low i n terms of cash expenditures; usually h i s o f f i c e i s i n h i s home, and h i s wife or daughter acts as a secretary. Sometimes an outside bookkeeper w i l l be his only expenditure. He i s usually paid during the work on the house by construction loans (known as interim financing i n Canada) which come down to him from the owner or bank as he completes various steps i n construction. Materials and equip-ment are usually bought from l o c a l dealers, who carry the accounts on c r e d i t against monthly or periodic b i l l i n g s . The small b u i l d e r r a r e l y comes int o c o n f l i c t with the l o c a l b u i l d -ing code, and when he does, usually accepts i t without argument. 13 In the United States, most small builders belong to the 2 2 National Association of Home Builders (N.A.H.B.), an organ-i z a t i o n which c a r r i e s out studies and research f o r builders and acts as a lobby and information c l e a r i n g house. The Canadian s i s t e r organization, the National House Builders Association (N.H.B.A.) i s well established i n the East, e s p e c i a l l y i n Ontario, but i s r e l a t i v e l y new i n B r i t i s h Columbia.* The Operative Builder The operative builder, known also as development b u i l d -er and merchant-builder, builds groups of houses at a single time, using s i m i l a r plans and techniques f o r a l l of them. In many c i t i e s , the l a r g e s t source of new houses are those 2 3 b u i l t by operative b u i l d e r s . Some of these become the large-scale t r a c t builders, who can acquire large areas of raw land, develop i t themselves and s e l l the completed home as w e l l . By b u i l d i n g on c o n t i -guous l o t s , the merohant builder can often take advantage of c e r t a i n economies of scale, depending on h i s s i z e . Character-i s t i c a l l y , he can often get better terms on h i s supplies, by buying i n l a r g e r quantities, he can get more e f f i c i e n t labor * A f t e r the o r i g i n a l chapter closed i n Vancouver City, a new chapter was started a year l a t e r i n Surrey (a suburb of Vancouver) i n 1 9 6 6 . While t h i s new branch i s growing ra p i d l y , i t i s not as stable and i n f l u e n t i a l as those i n the c i t i e s i n Ontario and the United States. 14 prod u c t i v i t y by r o u t i n i z i n g some of the jobs and by forming teams f o r s p e c i f i c functions, reduce waste of materials and use more s p e c i a l i z e d equipment. By s e l l i n g a f i n i s h e d product he i s spared the necessity of coping with the owner a t a l l stages. The small merchant builder t y p i c a l l y builds on develop-ed l o t s , perhaps purchasing several i n a subdivision. Often, i f the firm i s small enough, he w i l l work as a foreman or carpenter, and he i s l i k e l y to have the firm as a proprietor-ship or partnership. Since he can b u i l d on quite small pieces of land without l o s i n g h i s advantages of scale, he can b u i l d on r e l a t i v e l y small parcels of land nearer the centre of the c i t y . He may make changes i n h i s house i f he finds a buyer before completion, and i n t h i s manner he may resemble the custom bu i l d e r . He has a stronger p o s i t i o n with h i s sub-contractors than the custom builder, but much l e s s than the large builder who may have h i s own crews. On the other hand, he may operate i n a smaller population centre than the large producer and s t i l l be e f f i c i e n t . There are some a t t r i b u t e s a l l builders share, whether large or small, operative or custom builders, caused by the economic setting, the nature of the market demand and the 24 nature of the people involved i n the industry. The wide range of subcontractors, both general and spe c i a l t y , with t h e i r 1 5 f a c i l i t i e s , as well as a general a v a i l a b i l i t y of good l o c a l supply outlets makes i t possible f o r the builder to operate with a minimal overhead with no need to maintain s t a f f , equip-ment or inventory. The ohief function of the builder has been to improvise organizations, get and evaluate bids, decide on techniques and equipment, and schedule the a r r i v a l of material and men at the s i t e to gain maximum prod u c t i v i t y . The labour force i s both mobile and f l e x i b l e , with workers quite frequently moving from one employer and p o s i t i o n to the next, as circum-stances d i c t a t e . The f i n a n c i a l , operational and i n s t i t u t i o n a l framework a l l firms work i n i s geared to the premise that houses are b u i l t and assembled at the s i t e by s k i l l e d craftsmen, who work under a contractor who has estimated the t o t a l costs on the basis of plans drawn up beforehand. This background and these conceptions have a profound e f f e c t on the industry i t s e l f . The housebuilding industry i s characterized by a large number of small firms, a f a c t which indicates ease of entry and which a f f e c t s the Industry's f l e x i b i l i t y and p r o f i t structure. I t has been sai d that, I t i s d i f f i c u l t to f i n d a f i e l d of economic a c t i v i t y which can be entered so e a s i l y . Hence, the number of business units i s very large, and the rate of business b i r t h s and deaths very high. Such entry conditions keep homebuildlng highly competitive ••• . . 2 5 16 While easy entry means sharp competition, i t also creates and encourages fragmentation that lays both manage-ment and labour open to charges of Inef f i c i e n c y that are ... l a r g e l y u n f a i r or i r r e l e v a n t , f o r the industry has generally been too disordered to enjoy the p r i v i l e g e s and r e s p o n s i b i l i t i e s of long-term c a p i t a l i z a t i o n of broad research and development, or of stable labor r e l a t i o n s . 2 6 The growth of large scale firms from 1 9 4 5 to the pre-sent indicates that i n some areas, and i n some categories of housebuilding, the structure of the industry may have changed along with some of the framework the firms operate i n to per-mit better c a p i t a l i z a t i o n and planning. A great many of the s i g n i f i c a n t differences among house-bui l d i n g firms are highlighted when the firms are c l a s s i f i e d according to the number of houses completed i n a year. Maisel found that ... when firms are divided according to the number of completions, there occur s i g n i f i c a n t differences between classes which are more meaningful than the differences e x i s t i n g within a class.2/ Certain c h a r a c t e r i s t i c s of the houses b u i l t vary notably with the s i z e of firm. At the one extreme, there i s the small custom buil d e r who v i r t u a l l y hand-crafts the entire home with each dwelling a d i f f e r e n t design. At the other extreme i s the large-scale " t r a c t " builder, who uses large areas of undeveloped land to b u i l d large numbers of near i d e n t i c a l homes on a "mass 17 production" basis. The Small Builder The small builder, although d e c l i n i n g i n Importance, i n terms of t o t a l house production, i s s t i l l an important part of the housebuilding Industry and i n many areas i s s t i l l the main type of bu i l d e r . Their main features and advantages l i e i n t h e i r s i m p l i c i t y , f l e x i b i l i t y , and d i r e c t control over t h e i r workers and subcontractors with an accompanying benefit of per-sonal contact and r e l a t i o n s with everyone involved i n the work. Although simple, t h e i r operations perform the functions r e-quired quite e f f i c i e n t l y . While they often cannot be as e f f i c i e n t as la r g e r firms i n t h e i r production and purchasing, they compensate with a low overhead and low charges f o r p r o f i t s . In some cases, the small builder makes a very low return on his investment and, considering the hours he devotes to his work, his r i s k s and the s k i l l s necessary to perform h i s work, often receives quite a low rate of income. Like many other small businessmen, however, he takes a great deal of hi s s a t i s f a c t -ion i n the independence of hi s own business and the pride of being a general contractor. In many cases he must compensate f o r the i n e f f i c i e n c i e s caused by small operations by accepting a lower d o l l a r Income than he otherwise might. While these small builders usually operate with few exact records and li m i t e d cost information, t h e i r techniques of control are 18 adequate because of the f a m i l i a r i t y of the bu i l d e r with each job. While there i s v i r t u a l l y no opportunity to engage i n research and development of new methods, these firms are usual-l y f a i r l y ready to adopt new techniques, and perform a v i t a l function i n bu i l d i n g experimental homes and newly designed homes created by a r c h i t e c t s . Maisel noted that only toward the top of the small bui l d e r category (volume between ten and twenty-four units) the owners tended to spend t h e i r f u l l time i n d i r e c t super-v i s i o n , and that most of the firms are custom builders with a few small operative builders erecting homes on a speculation 2ft b a s is. He found that a t t h i s low end of the volume scale, the " s i z e " of the firm was often understated by the annual production f i g u r e . Many firms only operated f o r part of the year, or were formed by a tradesman f o r a p a r t i c u l a r project and allowed to f a l l i n t o disuse on completion. In addition, many of the general contractors received income from other b u i l d i n g work, and i n some cases had r e a l estate or land develop-ment income as we l l . At around the ten u n i t per year l e v e l , some changes appear i n the nature of the bu i l d e r s . In the under ten cate-gory, the vast majority of builders are t y p i c a l contract b u i l d -ers working to plans l a i d out by others. In the ten to twenty-four group, the large majority were operative builders, and 1 9 more time was spent i n actual supervision. The r e l a t i v e values of the houses produced by each group was revealing as we l l . Forty per cent of the houses b u i l t by the smallest group were i n the medium to high priced range, twenty per cent of the ten to twenty-four u n i t groups were i n t h i s range, and only nine per cent of the la r g e s t f i r m s 1 production f e l l i n t h i s range. For many of these firms, t h e i r small s i z e i s a conscious preference of the owners. They do not wish to become a large operation and prefer t h e i r small s c a l e . They take pride i n t h e i r c r a f t and l i k e house-b u i l d i n g . They enjoy working with tools and materials and are s a t i s f i e d with t h e i r e x i s t i n g s i z e and independence from worry and s t r e s s . 2 9 Among small firms the organization i s usually as simple as possible, usually a proprietorship or partnership, and few intercorporate relationships e x i s t , except f o r those firms a c t i n g as extensions of r e a l estate companies. Overhead, as previously mentioned, i s kept low, and a f t e r spending s i x or seven hours on the job supervising and probably doing some carpentry work, the.owner w i l l spend the r e s t of the day and hi s evening attending to records, negotiating with customers and subcontractors and generally performing other overhead functions. In some of these smaller firms, where the owner only supervises, he usually has an a d d i t i o n a l Income-producing business, or he i s b u i l d i n g expensive custom homes 2© which require much more negotiating with a r c h i t e c t s and sub-contractors, and thus include greater compensation f o r h i s increased overhead work. This b a s i c a l l y simple overhead structure i s an advan-tage i n that only a low charge f o r overhead may be included i n the cost of the house. On the other hand, i t often means that the management s k i l l s and e f f o r t put i n t o these firms are often minimal. Overhead costs include a l l costs of supervision above the l e v e l of working foreman, o f f i c e expens-es, depreciation, s e l l i n g costs, rent, and the cost of the firm's general working c a p i t a l (the firm's c a p i t a l i z a t i o n ) . Excluding any charge f o r rent, since the o f f i c e i s usually i n his home, the cost of supervision, the return on c a p i t a l and the owner's wages as foreman are usually lumped together. This so-called net p r o f i t had to cover both the necessary return f o r the r i s k of the builder's investment and any cash compensation f o r the many extra hours he and his wife put i n on management functions. In r e a l i t y ... i t may not have been even a normal return on c a p i t a l . The small b u i l d e r was getting l i t t l e or no compensation f o r the time spent i n managerial and overhead functions'. He was paid f o r h i s actual labor as a carpenter foreman and f o r the use of his equity, but that was a l l . A l l h i s executive work was a labor of love. The cost f o r management i n small firms was approximately zero.30 Other factors, such as depreciation are r e l a t i v e l y minor costs, and the conclusion i s that the small builder's 2 1 return i s h a l f the return normally considered minimal f o r h i s type of services. Maisel indicates that The housebuilding Industry i s simply too competi-t i v e i n the lower l e v e l s f o r a normal return to e x i s t . Among small firms increased demand and boom conditions have been r e f l e c t e d p r i marily i n a decrease i n the number taking losses and an lnorease i n the number making moderate p r o f i t s . 3 1 In the firms i n the ten to twenty-four category, as the owners move toward f u l l - t i m e supervisory and executive work, t h e i r return on t h e i r overhead and c a p i t a l increases somewhat, there are fewer proprietorships and more partnerships, corpora-tions and a f f i l i a t i o n s with r e a l estate agents and other r e-l a t e d firms. Their headquarters i s s t i l l usually i n the home, and they probably use only part-time c l e r i c a l help, although they may have an a s s i s t a n t . Under these conditions, i t i s apparent that most small firms have obtained overhead charges and p r o f i t s close to the very minimum, and that with the small amount of p r o f i t s a v a i l -able from t h i s type of bu i l d i n g they cannot a f f o r d to purchase more management s k i l l s . There are management techniques which are general to nearly a l l small firms and f o r the smallest builders there are c e r t a i n basic simple a c t i v i t i e s he performs. Land i s very important to the small builder and he w i l l constantly search f o r reasonably priced l o t s both i n newly developed and other areas. Often he w i l l t r y to maintain a small inventory of l o t s . A f t e r he obtains h i s plans, he then 22 takes bids from subcontractors. In the case of custom b u i l d -ing, he may have to make bids, a procedure that takes nearly three days and includes not only h i s own cost estimates but those of each subcontractor and suppliers as w e l l . Sometimes th i s process i s shortened when the builder has a " t i e - I n " with a r e a l estate firm or an a r c h i t e c t and generally works on a "one-bid" basis. Custom houses cost more to b u i l d , not because of the extra bidding costs, which are usually absorbed by the b u i l d -er and subcontractors, but because of the extra r i s k s involved. The b u i l d e r must commit himself to a f i x e d price regardless of any delays or unforseen problems and expenses that may a r i s e . I f the house i s quite d i f f e r e n t i n design and involves a l o t of unfamiliar types of work, the general contractor must r a i s e h i s bid accordingly to cover a l l p o s s i b i l i t i e s . Small builders i n general have adequate c a p i t a l i z a t i o n f o r t h e i r working c a p i t a l needs. If they t r y to expand or b u i l d on speculation, t h e i r financing problems become more c r i t i c a l , e s p e c i a l l y i n the area of interim financing (con-s t r u c t i o n loans). This s i t u a t i o n i s generally recognized and appears a t the production l e v e l of ten to twelve units per year. His purchasing of materials i s generally at a l o c a l lumber yard, where he often purchases nearly a l l the compo-nents f o r a house. This e n t a i l s a long d i s t r i b u t i o n system 23 with the lumber yards performing a l l inventory functions. By subcontracting the d i f f e r e n t jobs i n building, the buil d e r can eliminate the waste of having men i n s p e c i a l i z e d trades i d l e while they wait f o r t h e i r next task. The subcontractor sched-ules a l l the work of one p a r t i c u l a r type f o r a number of b u i l d -ers, and he provides the s p e c i a l i z e d craftsmen with continuing work i n t h e i r trade. Like the small builder, the subcontractor does not get a very large return f o r h i s services but rather obtains s a t i s f a c t i o n i n running h i s own business. The buil d e r w i l l usually work with the same group of subcontractors, men he has come to know and work with during the years. Although t h i s system of material purchases and subcontracting i s not outstandingly e f f i c i e n t , Maisel found that This I n e f f i c i e n c y i s not a r e s u l t of poor manage-ment or of external influences f o r c i n g the builder to use channels which he does not desire, but rather, a function of his scale. The small builder solves his problems i n the only way open to those of his si z e . . . 3 2 When i t comes to s e l l i n g the house there are several approaches a small builder u t i l i z e s . In Maisel 1s study i t was found that approximately f i f t y per cent of the builders put out a "For Sale" sign when they started b u i l d i n g . I f they f a i l e d to s e l l and the house was nearing completion, they would often advertise, and i f that f a i l e d , the house was turned over to a r e a l estate agent to be sold. The remaining firms usually had the house under a r e a l estate agent a t the begin-ning, often because of services the agent has performed such 24 as f i n d i n g the l o t , a s s i s t i n g i n financing or providing market guidance. As the firm approaches the twenty-four l i m i t i t tends l e s s and l e s s to pay the f u l l brokerage fee and may even have i t s own salesman. In summarizing the trends a f f e c t i n g the small builder, Maisel f e l t there would be more subcontracting, more p r e f a b r i -cated components and an increase i n mechanization. He noted that the organization of the production process had improved and would continue to develop, and concluded that With today's techniques the small b u i l d e r i s e s s e n t i a l l y an assembler of wood products and a co-ordlnator f o r the i n s t a l l a t i o n of other parts of the house, p a r t i c u l a r l y equipment and finishes.-' These observations apply with equal v a l i d i t y to today's house-bui l d i n g s i t u a t i o n . There remains the question of why these firms do not expand more i n periods of dynamic growth. Many builders f e e l that they don't wish to expand because of the a d d i t i o n a l head-aches and worries they w i l l acquire, and a f e e l i n g that t h e i r Income i s s u f f i c i e n t already. There are c e r t a i n economic and 35 p r a c t i c a l reasons that may l i m i t them as w e l l . One common problem i s that small firms f e e l they have reached a management plateau, or that they are producing a t the l i m i t of t h e i r present management and that to increase managerial capacity would necessitate a large jump i n output to keep costs competitive. Another factor i s the added r i s k , 2 5 where since h i s c a p i t a l i s usually not large, a few mistakes i n estimating contracts or market demand may quickly put him under. One-third of the small builders a l s o c i t e d lack of c r e d i t has stopped much of t h e i r expansion.-^ Another fa c t o r c i t e d was the shortage of s k i l l e d mech-anics . A period of boom w i l l often dry up sources of mechanics and often the b u i l d e r w i l l be unable to get a d d i t i o n a l r e l i a b l e men worked int o t h e i r operation before the opportunity i s gone. While t h i s summary of the small b u i l d e r has r e l i e d to a great extent on Maisel's work which appeared i n 1 9 5 3 , there has been very l i t t l e e i t h e r i n the l i t e r a t u r e that does e x i s t or i n the opinions of people involved i n the industry to i n d i -cate that h i s concepts of the nature of the business are out of date. Change i n t h i s industry has been very gradual as a r u l e , and while some of the trends he was noting were i n a l e s s advanced state than today, the same trends s t i l l appear to be operating. The Medium Firm The medium sized f i r m has been defined as producing bet-ween twenty-five and ninety-nine houses per year. In Maisel's opinion, This group o r y s t a l i z e s the housebuilding pattern because i t i s the connective l i n k i n the evolution of the industry from the small custom contractors who s t i l l stand i n the public mind as t y p i f y i n g housebuilders — since they d i d compose the house-bu i l d i n g industry of the past — to the big-scale, 26 mass production t r a c t operators who are changing the shape of the housebuilding industry and gi v i n g form to the future,37 Most of these builders were operative, with approxi-mately seventeen per cent b u i l d i n g on contract. I t was noted that the custom builders were a l l a t the bottom of the volume c l a s s i f i c a t i o n although t h e i r annual d o l l a r volume was often near the top of the group. Chara c t e r i s t i c of the group (outside the custom builders) i s a lack of innovation i n de-sign or technique. While the Intermediate operative builder has grown too large f o r d e t a i l s and withdrawn from custom work, he has not yet acquired the s t a f f or the confidence to innovate i n design or technique. While many of these builders work i n developments, a number b u i l d houses on scattered s i t e s f o r speculation. Some do scattered groups on small land areas i n c i t i e s . Some b u i l d a l l on one t r a c t , while others may co-operate with other b u i l d -ers to develop land. The middle range merchant builder f i l l s the gap i n the market f o r homes between custom and t r a c t types. By r e t a i n i n g some of the advantages of small builders while adopting some techniques of the mass builder, he can s a t i s f y t h i s need. His overhead remains low l i k e the small builders, but ...because of h i s larger s i z e and merchant operation he can get materials at a lower cost by buying whole-sa l e . He can organize his labor force more e f f i c i e n t l y . 27 He can s t r i k e better bargains with h i s subcon-tractors* His controls and h i s p o s s i b i l i t i e s f o r introduction of new patterns i n s t y l e and method are l i m i t e d , but he can o f f e r a s a t i s f a c t -ory produot, a t lower cost, to the consumers who f e e l that they cannot a f f o r d the luxury of custom quality*39 In general there are three types of firms i n t h i s category. There i s the old established firm which has grown st e a d i l y i n production to reach middle s i z e . In the case of contracting firms they have usually gone as f a r as they can without changing to operative builders and changing the entire structure of the firm. A second type of firm i s that owned by a tradesman who started r e l a t i v e l y recently with enough drive and c a p i t a l to get to t h i s stage. In a d d i t i o n there are firms run by men outside the industry who are frequently i n r e a l estate and who wish to invest t h e i r money i n housebuilding. A marked c h a r a c t e r i s t i c of the l e g a l structure i n t h i s group i s associations of the b u i l d i n g firm with another firm i n a r e l a t e d f i e l d , such as a f i r m conducting a r e a l estate or a land development b u s i n e s s . ^ The medium-size firms f i n a n c i a l problems are more akin to those of the large rather than the small firms, because they are p r i m a r i l y operative builders making l a r g e r investments and la r g e r r i s k s . He must have s u f f i c i e n t c a p i t a l to assume the r i s k s of unexpected construction costs or unexpected losses and also be able to obtain funds f o r the entire construction of the house as well as enough money to hold the completed house u n t i l i t i s s o l d . He usually i s required to arrange the 28 purchaser's financing, the mortgage or "take-out" money. His equity financing has usually been obtained on a personal basis, very often from the reinvestment of p r o f i t s , and there i s no recourse to public money. On large numbers of these firms and i n many of the l a r g -er ones as well, equity funds have been s u f f i c i e n t f o r t h e i r attained output, but the d i f f i c u l t y of obtaining further equity c a p i t a l has prevented them from expanding more r a p i d l y . Maisel found that the growth of a great number of these firms depended 42 on t h e i r a b i l i t y to achieve a high rate of c a p i t a l turnover. Unlike the small firms, these firms make a much higher p r o f i t on t h e i r net worth (23$). The problem of construction financ-ing ranks equally i n Importance to these firms, but tends to fluctuate according to economic conditions rather than acting d i r e c t l y as a function of firm s i z e . At times they must borrow to supplement t h e i r working c a p i t a l and i n bridging gaps i n the cash flow, usually obtaining funds from i n s t i t u t i o n s on the firm's assets and work i n progress. In the area of construction financing, the main i n f l u -ence a f t e r the war was government a c t i o n and p a r t i c i p a t i o n i n the finance market, an influence experienced i n three ways: (1) Construction loans were made l e s s r i s k y when the costs of c r e d i t to f i n a l purchasers as well as t h e i r equity requirements, were greatly reduced, and the government insured lenders against losses i f houses could not be sold by the b u i l d e r s . (2) The percentage of value that builders could borrow 29 f o r construction was increased by government p a r t i c i p a t i o n . (3) Available funds were i n -creased when establishment of insured loans enabled lending i n s t i t u t i o n s from outside the ^ area to p a r t i c i p a t e more f r e e l y i n the market. ^ A key feature was the guarantee by the government of the loans i n the name of ei t h e r the b u i l d e r or the buyer, so that any d e f l a t i o n i n the housing market would not a f f e c t the lender. This change i n the financing s i t u a t i o n of the industry was generally the same i n Canada under the Federal Housing Act. Many of the medium firms problems have solutions l i m i t e d by t h e i r s i z e — they are not yet developed enough to u t i l i z e many of the large-scale solutions with t h e i r r e s u l t i n g advan-tages. In market analysis, they can r a r e l y a f f o r d t h e i r own study, and must r e l y on guesswork. In sales operations they cannot mount extensive sales e f f o r t s and must r e l y on under-cuttin g general prices with a standard product. Their designs must be standard, as they can a f f o r d l i t t l e research or innova-t i o n . Most important, they are l i m i t e d i n t h e i r land planning resources and c a p a b i l i t i e s , being unable to develop l a r g e r areas on t h e i r own. So c r u c i a l i s the question of land that Maisel states The most basic decisions of firms that do merchant bu i l d i n g i n t r a c t s are those r e l a t i n g to land. The medium-sized firms are the f i r s t i n the ascending scale of s i z e , f o r whom land i s of cardinal impor-tance. ^ Only f o r the contractors and the smallest builders i n t h i s group i s there s u f f i c i e n t developed land e x i s t i n g to meet 30 t h e i r needs.' Land i s a f i n a n c i a l s t r a i n f o r any firm, but e s p e c i a l l y a f f e c t s small, growing firms with c a p i t a l shortages. The med-ium bu i l d e r i s caught i n a squeeze where land i s usually con-sidered not suitable f o r security on bank loans, and so money t i e d up i n land Is frozen and pushes the firm to a l e s s l i q u i d p o s i t i o n . I f the buil d e r holds large amounts of land f o r de-velopment, he loses h i s l i q u i d i t y , yet i f they do not have these blocs of land f o r planning development, they lose many of the advantages of large-scale b u i l d i n g . The fluctuations i n land values may help the f i r m with c a p i t a l gains, but a sudden drop can leave the firm i n severe d i f f i c u l t i e s ' . The medium build e r usually buys vacant land i n an area already being developed. Unlike many large builders, they can-not a f f o r d to develop shopping centres and community f a c i l i t i e s but must r e l y on others to provide them. He w i l l usually work with areas of ten to f i f t y l o t s . I t i s generally f e l t that land must be bought and the development plans undertaken at l e a s t s i x months before i f not a year before construction, be-cause of the required surveys, plans, permits and i n s t a l l a t i o n s that must be made. The matter of keeping ahead of himself i n raw land, i f i t involves investment of h i s own funds i n raw land and land development i s the heaviest claim on c a p i t a l confronting a builder.^5 \ 31 This problem can be mitigated I f the bu i l d e r i s fortunate enough to obtain an option (agreement f o r sale) on the land where he pays f o r the portions as they are used. Very s i m i l a r i s an arrangement where the landowner accepts a large mortgage on the land and takes payments as the houses are so l d . When i t comes to s e l l i n g the houses they are usually placed with a p a r t i c u l a r broker or land development firm, or a l t e r n a t i v e l y some firms may have an arrangement where a broker gets a f i x e d fee per house. On occasion a model home may be used to t r y and s e l l some of the remaining houses before con-s t r u c t i o n i s completed. The medium firm resembles the small firm i n that i t often retains control of carpentry while subcontracting the remaining work. The firm's labor force i s usually small, and the firm has the advantage that i n slack periods i t may slow the rate of production to enable i t to r e t a i n key men. He may get better terms from h i s subcontractors to the extent that they benefi t by his s i z e , as i n saving time t r a v e l l i n g between jobs, possible bulk purchases, possible tightenings of schedul-ing production and contro l s . The chances f o r r e p e t i t i o n and s i m p l i f i c a t i o n may also cut supervision requirements*.^ In the matter of controls, while he i s able to account f o r supplies on a more systematic footing and thus develop a useful set of figures f o r control purposes, these controls 32 can r a r e l y be made s u f f i c i e n t l y d e t a i l e d to a i d him i n plan-ning. Most checking and planning remains very casual and h i t or miss. The chief factors i n h i b i t i n g firm s i z e are thus some-what d i f f e r e n t i n nature to those r e s t r a i n i n g the small firm. Since these firms have usually changed t h e i r structure to an operative one. and expanded t h e i r management, they are not l i m i t e d by these problems, e s p e c i a l l y that of maximum manage-ment spanV Instead, land problems, lack of c r e d i t and an unwillingness to assume greater r i s k s , p r e f e r r i n g a degree of s e c u r i t y i n t h e i r operations are probably the main r e s t r a i n t s here1; Many are also pressing the l i m i t s of r i s k permitted by f i n a n c i a l i n s t i t u t i o n s . Another factor i s that an increase i n production of a few units may be impossible, and a large jump i n production cannot be undertaken by the f i r m ^ This tends to keep firms a t one l e v e l u n t i l they have accumulated enough resources to jump to the next l e v e l . The Large Firm The large housebuilder has been favoured with the most research and p u b l i c i t y of the three main categories of b u i l d e r . In North America he appeared as an important f a c t o r i n house f a b r i c a t i o n mainly a f t e r the second world war. Their growth i n the San Francisco area has already been mentioned, and a s i m i l a r growth occurred across the United States and i n Canada. Maisel a t t r i b u t e d the sudden r i s e to prominence of large firms to 33 The metamorphosis of the market [caused by] a tremendous demand kindled by easier financing and the b i g l a c k l o g from the war, when housing . production f e l l f a r behind new family formation. ' Large firms were e s p e c i a l l y suited to cater to t h i s market because the l e a s t expensive houses, stripped of extras nat-u r a l l y l e n t themselves to large-scale production. These houses were usually at a minimal l e v e l i n q u a l i t y and d e t a i l , aM frequently b u i l t on newly developed land which was the l e a s t expensive obtainable. The f i f t i e s saw spectacular growth i n large house-b u i l d i n g firms as t h e i r market share rose from the thirty-two per cent i n Maisel's study to seventy-four per cent i n i 9 6 0 , a development whioh occurred across the United S t a t e s . ^ Herzog noted that the one house out of four not produced by the large builders i n the Bay area included the combined pro-duction of medium firms, small firms and owner-builders. The N.A.H.B. estimated i n 1 9 5 9 that s i x t y - f o u r per cent of new houses were b u i l t by large builders i n the United States. a f i g u r e very close to Herzog's findings a t the same time i n California-. This indicates a general a p p l i c a b i l i t y of Herzog and Maisel's f i n d i n g to the entire American industry. The large-scale f i r m was analyzed i n d e t a i l f i r s t by Maisel, and l a t e r by Herzog, with a very active decade vary-ing i n economic condition separating the two studies. Maisel found several types of firms. There was the older firm that 34 had b u i l t i t s e l f up during the years and had l a t e r managed to expand- into large-scale work'. The newer firms n a t u r a l l y d i s -played a more dynamic growth with the owners w i l l i n g to take greater r i s k s and operate on lower e q u i t i e s . C h a r a c t e r i s t i -c a l l y , the l a r g e r firms were divided into a number of business entities'. The m u l t i p l i c a t i o n of e n t i t i e s are used to spread r i s k , to help with tax problems, as "front firms" f o r b u i l d i n g supply purchases and sometimes to avoid unions and union res-t r i c t i o n s . In these multiple corporations the management and the operation i t s e l f w i l l act as i f the firm were one company. In many of these firms, advance land planning, estimating and the performing of other administrative functions become so great that a somewhat l a r g e r f u l l - t i m e professional and c l e r i -c a l s t a f f are required. 1 Large builders are two types, r i s k - t a k i n g leaders and followers who follow the l i n e of l e a s t resistance. In the Bay area, l o c a l builders were more free to innovate because they were not bound to the Cape Cod type of house". In addition, the firms were forced to innovate new land use patterns because of the more d i f f i c u l t t e r r a i n of the area. Maisel found that market analysis was generally r e s t r i c t -ed to the "back-of-an-envelope" type with the occasional spe-c i a l i s t or consultant c a l l e d i n and directed toward estimating the number of fam i l i e s within c e r t a i n income brackets who might 50 be p o t e n t i a l buyers of a c e r t a i n type of home. Herzog noted 35 a decade l a t e r that large firms s t i l l made v i r t u a l l y no market surveys, and spent l i t t l e on advertising or promotion on a per house ba s i s . The use of model homes had perhaps Increased s l i g h t l y and salesmen, as a r u l e , were i n the employ of the 51 housebuilding firm i t s e l f . Most large firms are p r i n c i p a l l y owned by several men who serve as the top executive group. Very often each of these men w i l l s p e c i a l i z e i n some p a r t i c u l a r aspect of building, such as design, construction, land development, finance, purchasing or s a l e s . ^ 2 These firms generally have a lack of good Junior executives since such positions seldom o f f e r prospects of advan-cement and decision making i s highly centralized, because of the nature of the men who run these companies.^ This lack of middle management i s probably one of the reasons that even the lar g e s t builders make extensive use of subcontractors. Another problem of the large firm i s t h e i r laek of access to the s k i l l e d craftsmen who are availa b l e to the small buil d e r . Unlike the small builder, and even many medium firms, the large b u i l d e r who i s using h i s own large crews f o r a s i z e -able portion of production, cannot hold on to t h e i r most s k i l l e d and s a t i s f a c t o r y tradesmen.-^ Unable to keep many of t h e i r employees between projects, large firms may slow t h e i r rate of production temporarily, use foremen as regular trades-men or even give paid vacations i f required. They can, on the other hand, often u t i l i z e mass-production techniques and 36 u t i l i z e e f f e c t i v e l y l o w - s k i l l labor. They can break down work and s i m p l i f y i t f o r new men, so that a f t e r two or three months of working together and e s t a b l i s h i n g work standards on a large development, labor costs may f a l l so that a large f i r m can save up to twenty-six per cent i n labor costs as opposed to the small builder's costs-.^ He noted that the large builders had developed new channels and methods of d i s t r i b u t i o n and established new relationships with subcontractors. In a d d i t i o n to being able to absorb material of l e s s consistent q u a l i t y than a small b u i l d e r could, he observed that the large operator apparently required f a r l e s s s e r v i c e . Ten years l a t e r , Herzog could state that large-scale firms had moved away from t h i s system and generally no longer purchased t h e i r own supplies i n volume. A f t e r an i n i t i a l shake-down period dealers passed on volume discounts and savings to the builders and recaptured most of t h e i r l o s t business. The large builders found that problems of inventory, p i l f e r a g e , breakage, and obsolescence were more than a n t i c i -pated and were only too happy to l e t l o c a l dealers assume t h e i r functions once again.^ 7 This indioates that a t l e a s t , i n C a l i f o r n i a and probably elsewhere, the established marketing In the area of purchasing, Malsel f e l t that The most important progress toward increased economy r e s u l t i n g from increase i n scale of operations has taken place i n the f i e l d of 37 channels f o r b u i l d i n g supplies were unable to exert a monopol-i s t i c control on supplies and p r i c e s , and therefore would not be a prime f a c t o r hindering the development of large-scale firms. In subcontracting, Maisel predicted a gradual tendency f o r the large builders to e s t a b l i s h t h e i r own crews and slowly displace the subcontractor.^ Yet, he a l s o noted that as b u i l d -ers grow i n s i z e h i s subcontractors also advance, and i n some cases the builder helps the contracting firms to hold crews to-gether, Improve t h e i r controls and techniques, and even to a s s i s t promising i n d i v i d u a l s s t a r t t h e i r own business. Herzog noted l a t e r that There does not appear to be any tendency f o r large-scale builders to integrate v e r t i c a l l y and thus do away with subcontracting.59 He also noted a trend to have a l l construction work subcontract-ed. In the matter of techniques there have been no dramatic breakthroughs but there have been some modest innovations. In 1 9 5 9 , a general statement on the industry noted that ••. even the l a r g e s t firms i n the homebuilding f i e l d have l i m i t e d opportunities f o r mechanization .•• • In a system p r i m a r i l y based on wood tech-nology, the human hand with simple tools i s more or l e s s unbeatable even on the l a r g e s t s c a l e . 0 0 Herzog noted some quiet developments of the f i f t i e s . One-third of the firms used pre-assembled wall sections and roof trusses i n i 9 6 0 , more than double the percentage of firms 38 using them i n 1 9 5 0 . Pre-cut lumber and pre-fabricated oabinets moved from a r a r i t y to the generally accepted procedure and there was a l s o an increase i n the use of pre-hung doors. Labor s p e c i a l i z a t i o n remained constant, and general p r e - f a b r i c a t i o n remained unpopular.^ 1 In the area of production and accounting controls, the 62 majority of large firms use only the most rudimentary methods. Maisel f e l t that i t was an advantage f o r firms to know costs, outlays and deviations from schedules as soon as possible i n order to act i f corrections were needed. He f e l t that a good control system would r a i s e t h e i r return on investment and strengthen t h e i r c a p i t a l p o s i t i o n by guarding against cash shortage. J Herzog found, however, that Most builders who shun formal production -control - and - cost accounting systems reason that the biggest part of t h e i r actual production oosts i s already controlled through the use of subcontracts.64 Another p o s s i b i l i t y was a "carry over" e f f e c t from the large builder's previous days as a smaller b u i l d e r with no records. In the area of financing, the large firm i n some ways resembles the smaller firms. The builder usually acquires his equity c a p i t a l through personal investment, with p u b l i c l y financed companies being rather exceptional. The company must provide not only i t s own working c a p i t a l but r a i s e funds f o r his customers as w e l l . Herzog found that the large firms r e l i e d heavily on l o c a l suppliers of money, usually banks and 39 Savings and Loan companies f o r construction financing. The permanent or take-out financing i s often necessary to complete a s a l e . In most oases, I n s t i t u t i o n s w i l l not lend construction money unless there i s a commitment f o r the take-out financing. Herzog found that builders hesitated to proceed with the development of a t r a c t without f i r m commitments, ... since without them i t i s impossible to estimate costs or the p o s s i b i l i t i e s f o r s e l l i n g the proper-t i e s when they are completed. The market Is f a r from c e r t a i n with financing, without i t the uncertain-t i e s are i n t o l e r a b l e . 6 5 In Canada, f i n a n c i a l i n s t i t u t i o n s w i l l not give these commit-ments f o r permanent financing. Herzog also found an overwhelming dominance of the large-scale firm i n government sponsored take-out financing. This development occurred mainly a f t e r 1 9 5 5 when, during a t i g h t money p o l i c y , large firms with advance commitments fared better and small firms absorbed the d e f i c i t i n funds.°^ In addition, i n the ensuing periods of r i s i n g i n t e r e s t rates and the r e s u l t -ing discounting of Federal Housing Administration (F.H.A.) mortgages, the small firms were often unable to absorb the added cost, while l a r g e r firms could. Large firms could often make extra p r o f i t s with t h e i r financing because i n o r i g i n a t i n g a large volume of loans, the large builder often obtained lower f i n a n c i a l charges. I t was noted that large-scale builders could r e s i s t downswings better because of greater e f f i c i e n c y that enabled them to cut prices while small builders took the brunt of the decline. 40 68 The key fa c t o r working against d r a s t i c changes i n the large builder's output i s his longer than average planning horizon. The small builder, s p e c i a l i z i n g i n spot development and short-term contracts usually has no commitments beyond the houses currently under construction. The large operator often has advance commitments f o r financing, s t a f f , and subcontractors f o r several months i n advance. The smaller b u i l d e r may f i n d h i s c r e d i t dwindling i n response to business conditions, while the large b u i l d e r has contractual commitments to carry him f o r 69 several months. In the area of general finance, long-term funds are usually obtained from earnings retention. Usually no further funds can be ra i s e d from the owners and few firms can or w i l l f l o a t public stock. Many use mortgages on t h e i r raw land. The most important source of financing i s the construction loan, since only a few of the larg e s t firms with high f i n a n c i a l r a t -ings can obtain public money or borrow funds on unsecured notes 70 from banks.' Trade c r e d i t i s al s o used, and Herzog found that where a two per cent discount was offered f o r payment within ten days i t was seldom taken. In the area of land a c q u i s i t i o n , K e l l y f e e l s that one key to a successful land development operation i s a large 71 scale organization.' He goes on to say that the t y p i c a l 41 smaller volume buil d e r finds land i n short supply, and f o r any t r a c t he could purchase, the landowners have already a n t i c i p a t -ed the development and he w i l l have to pay accordingly. In contrast, the large land developer ••«•'• i s able to buy very large land areas, well i n advance of any appreciation i n value, and on favorable terms.? 2 He also, because of his size , i s the only type of build e r who ... can a f f o r d to carry out a long-term program of land a c q u i s i t i o n based on some degree of r a t i o n a l market or community analysis .73 In addition, i f the large builder, with his s p e c i a l s i m p l i f i e d techniques of b u i l d i n g runs a f o u l of zoning laws or building codes, he w i l l .v. tend to avoid the issue by moving into out-l y i n g areas where the controls are weak or non-existent.74 Herzog found that ninety per cent of the large builders b u i l t only on land they had purchased raw and developed them-selves. The key consideration i n land purchasing were the expected volume of production and the av a i l a b l e c a p i t a l . Their purchases were based on estimated volume within the next year, and most firms were very reluctant to t i e up t h e i r funds f o r more than a year i n raw holdings.'-' The a v a i l a b i l i t y of raw land i s considered to be one of the most c r u c i a l variables i n 76 large-scale b u i l d i n g . ' Maisel concluded that 42 Only part of the "building process i s determined by the housebuilders own organization. A s i g n i f i c a n t part of i t i s shaped by his factors of supply — factors such as materials, labpr, subcontractors, financing, and land. The house-builder's freedom of choice i s l i m i t e d by the a v a i l a b i l i t y of production factors he can purchase and the prices he must pay f o r them.7? One example of an important component which i s beyond the con-t r o l of the builder i s lumber. Its behaviour i s much l i k e that of a farm commodity, with changes i n demand causing sharp fluctuations i n prices. 7® Another problem often mentioned i s the large-scale builder's problem with a m u l t i p l i c i t y of l o c a l b u i l d i n g codes with each municipality, even i n one metropolitan area, having a d i f f e r e n t code. The l o c a l governments are the agencies that issue the licences and permits, authorize the use of the land, and oversee the i n s t a l l a t i o n of u t i l i t i e s . In general, there are few r e a l c o n f l i c t s of i n t e r e s t between builders and l o c a l governments, except i n the area of approval f o r new s i t e s , where the b u i l d e r i s interested i n new housing at the lowest cost while the government i s Interested i n aesthetics and long-run considerations. The other problems r e l a t i n g to b u i l d i n g codes seem to stem l a r g e l y from the general slowness of muni-c i p a l i t i e s to update t h e i r codes and r a t i o n a l i z e them. The area of Maisel's study generally had adopted a standard code, the Uniform Building Code of the P a c i f i c Coast Building O f f i c i a l s Conference. While t h i s s i t u a t i o n i s more uniform than i n most of the United States, there were s t i l l areas which d i d not use the code, used older, unrevised ver-sions of the code, or had made substantial a l t e r a t i o n s to the code. I t was noted, however, that l o c a l b u i l d i n g o f f i c i a l s u sually would allow use of changes which appeared i n the new 79 editions even i f the municipal code had yet been amended. He found that Although some instances of delays and a r b i t r a r y r ulings were reported, most builders i n the area stated that neither was of any consequence i n the t o t a l cost of the b u i l d i n g . " 0 In general, the areas i n which the greatest amount of building occurred had adopted the uniform code and kept i t updated.^1 In other words, where volume builders were operating and the code was i n constant use, i t had been updated and s i m p l i f i e d . The apparent problem of b u i l d i n g codes c l e a r l y do not apply i n a l l areas, even when there may appear to be diverse codes and municipalities slow i n adopting changes. There remains the question of determining the optimum size of the b u i l d i n g f i r m . Both Maisel and Herzog reached s i m i l a r conclusions, conclusions which seem to have been l a r g e l y borne out by subsequent trends. Maisel noted that There i s no Indication that further Important reductions i n costs would occur i f large firms continue to increase i n s i z e , unless further growth brought a complete change i n the house-bui l d i n g process.82 He f e l t that most d i r e c t costs had approached t h e i r minimum 44 l e v e l In e x i s t i n g firms, except f o r costs of materials which might drop s l i g h t l y lower. He concluded that the optimum out-put was two or three houses per day, and that the cost curve l e v e l l e d o f f here with only a very s l i g h t further decline, go while i n d i r e c t costs would begin to turn up. He indicated that i n land costs, a very c r u c i a l item to the large builder, ... f a r from bringing about any saving, increased scale would cause costs to r i s e ; f o r i t becomes progressively harder to f i n d good, unused land i n t r a c t s of the s i z e required f o r large-scale opera-t i o n . Even now, the l a r g e s t firms usually b u i l d i n several separate areas i n an attempt to overcome t h i s problem. o Other factors that Increase costs were also mentioned. The l a r g e r management and firm s i z e would increase the firm's i n e r t i a , and hinder i t i n making necessary rapid adjustments to market changes. There i s the problem as well that firms have developed t h e i r expertise i n a l o c a l market, and moving to a new market causes d i f f i c u l t i e s and high costs f o r a firm i n choosing new s i t e s , negotiating f o r land, getting approvals, and f i t t i n g the houses to l o c a l tastes. To obtain t h i s new data i s c o s t l y and r i s k y . Another i s that of r e c r u i t i n g and t r a i n i n g new labor, and the l o c a l prejudices and customs that may have to be overcome i n t h i s area. In addition, further expansion would have more r i s k f o r t h e i r c a p i t a l s i t u a t i o n , and as a r e s u l t of taxes may not greatly increase the builder's personal income. 0 0 However, the problem that Maisel f e l t was 45 decisive i n keeping the industry from going national was the merchandising problem. He observed that In general contracting, where the marketing problem does not a r i s e , experience shows that firms can spread over the whole nation without s i g n i f i c a n t losses of e f f i c i e n c y . I t i s the merchandising problem f o r houses that causes the main cost increases.°7 Among the builders themselves, the consensus was that unless some personal force was d r i v i n g toward increased s i z e , expansion was unnecessary a f t e r a volume of one hundred or more was attained. A f t e r t h i s point, the c a p i t a l p o s i t i o n of the firm could be allowed to improve, and often, other related investment opportunities were found, such as property owner-ship which might have a better a f t e r - t a x gain. Herzog a l s o placed the optimum output f o r the San Francisco area builder at two or three per day f o r an annual output of around 7 5 0 8 9 u n i t s . While the l a r g e s t firms that developed i n the Northern C a l i f o r n i a area were i n the 700 to 800 u n i t range, l a r g e r firms developed elsewhere. In the early f i f t i e s L e v i t t and Sons be-came widely known on the eastern seaboard and started 7 , 0 0 0 homes i n 1 9 5 3 i n Levittown, Pennsylvania. The l a r g e s t builder i n 1 9 5 7 was Centex Construction Company which b u i l t 1 7 , 5 0 0 units 90 i n f i v e states. These builders developed large tracts of at l e a s t 25© to 400 units, and often provided a l l the other com-munity f a c i l i t i e s as w e l l . There seemed to be, however, inherent weaknesses i n these huge housebuilding; firms that e i t h e r caused t h e i r collapse or forced them to change the nature of t h e i r operations, so much so that by 1 9 6 3 the editors of House and Home, a pu b l i c a t i o n concerned with housebuilding, could say that the Most v i v i d of the changes [ i n the industry] i s the v i r t u a l disappearance of the giant builder of, say, 2 , 0 0 0 homes a year on a single s i t e They noted the reduction of L e v i t t and Sons production from the high of 7 , 0 0 0 units i n 1 9 5 3 to a t o t a l of 1 , 5 0 0 units i n 1962 at three separate s i t e s , and a s i m i l a r reduction i n the output of some of the other r e a l l y large builders of the f i f t i e s . An exception was Webb and Knapp, a firm run by Zeckendorf which produced 3,800 units i n 1 9 6 2 , but went bank-rupt several years l a t e r . Another large b u i l d e r was heralded by the magazine as the leading edge of a "new wave" of builders i n a feature a r t i c l e i n 1 9 6 l . ^ 2 The a r t i c l e dealt i n favorable terms with the Lusk Corporation, which at that time produced 5 0 0 units per year, and whose owner f e l t he had developed new tech-niques. One idea was to "buy raw land f a r i n advance of construction needs . . . " 9 3 to protect the firm against land p r i c e increases caused by the firms success. He bought up areas as large as 4 , 0 0 0 acres and held them fo r future use. He also subcontracted out a l l work and developed "team" management techniques. In 1 9 6 6 the firm went bankrupt, i n 47 large part caused by miscalculations i n the land inventory and l i q u i d i t y requirements. I t was concluded he had r e l i e d too much on land speculation p r o f i t s and had increased out-94 put beyond the l i m i t of h i s c a p i t a l resources. I t was noted In 1963 and l a t e r that there seemed to be an increased movement of w e l l - c a p i t a l i z e d , large indus-t r i a l firms moving into both the large housebuilding market and land d e v e l o p m e n t . T h i s trend has never r e a l l y material-ized i n a way very s a t i s f a c t o r y to these firms, and the picture of the large-scale b u i l d e r as established by Maisel and Herzog, with an output of from 700 to 800 units per year i s probably the most highly developed and the optimal firm i n the American industry today. In 1965, P h i l i p S. Bordon noted that there were s t i l l no giants i n the Industry, with the lar g e s t firm probably producing no more than one-tenth of one per cent of the t o t a l market, and that rather than resembling most major manufacturing industries he f e l t that The general pattern of the industry •.. more cl o s e l y resembles that of service industries such as restaurants or laundries.96 He went on to note that public housebuilding firms had gener-a l l y not been successful i n expanding t h e i r operations to areas any great distance apart, p a r t l y because of managerial problems caused by the one-man nature of most firms and by the v a r i e t y of l o c a l problems and differences i n the new market that tend to n u l l i f y much of a builder's experience.^? 48 In Canada there has been a s i m i l a r development i n the housebuilding industry. Large firms have emerged, generally i n the 200 to 300 units per year class i n nearly every c i t y of any size i n Canada. Ottawa has several large builders, Montreal and Toronto have them, as do Hamilton and Winnipeg. In Calgary and Edmonton I t i s estimated that four or f i v e firms produce about seventy-five per cent of a l l single fam-i l y dwellings.98 Most of the information a v a i l a b l e on Canadian housebuilding a c t i v i t i e s which i s relevant to t h i s topic i s contained i n the following section. PART II A. AREA STUDIED The builders i n t h i s study are a l l operating i n the metropolitan Vancouver area, although i n some cases t h e i r head o f f i c e s were located elsewhere. Metropolitan Vancouver i s one of the nineteen urban areas i n Canada designated by the Dominion Bureau of S t a t i s t i c s and the Central Mortgage and Housing Corporation (C.M.H.C.) as a census metropolitan area which has a minimum population of 1 0 0 , 0 0 0 and i s com-posed of a c e n t r a l or core c i t y with a minimum population of 5 0 , 0 0 0 and a l l incorporated c i t i e s , towns, v i l l a g e s and r u r a l m u n i cipalities ..• where at l e a s t 7 0 per cent of the labour force i s engaged i n non-agricultural occupations, within the defined metropolitan area.99 The Vanoouver Metropolitan Census d i s t r i c t consists of the following areas: Burnaby, Coquitlam, Delta, New Westminster, North Vancouver City, North Vancouver D i s t r i c t , Port Coquitlam, Port Moody, Richmond, Surrey, the University Endowment Area, Vancouver City, and a small unorganized area. Each municipal-i t y or c i t y has i t s own b u i l d i n g permit o f f i c e . The area i s divided i n the north by Vancouver Harbour which completely separates North and West Vancouver from the c i t y i t s e l f . South of Vancouver City, the area i s l a r g e l y composed of the f l a t d e l t a land a t the mouth of the Praser River. In the delta there are several branches of the r i v e r forming islands and separating many of the m u n i c i p a l i t i e s from 4 9 50 one another. The Fraser Valley i s a t r i a n g l e shaped area of r e l a t i v e l y f l a t land i n otherwise mountainous t e r r a i n . The metropolitan area i s bounded on the north by the mountains of the Coast range, with elevations of 3.000 to 5,000 feet i n the Metropolitan area i t s e l f . To the west l i e s the Gulf of Georgia with i t s shipping lanes, and to the south l i e s the inte r n a t i o n a l boundary with the United States. The natural area of urban expansion l i e s to the east of Vancouver, i n the Fraser Valley, an ever narrowing s t r i p of low land which stops 100 miles from the Coast. The area to the east of Vancouver's urban areas consists of small towns and farms. The entire area of the v a l l e y i s only 900 square miles. Since the v a l l e y lands are v i r t u a l l y the only ones occupied, the population density f o r the v a l l e y i s extremely high, higher than that of Holland. In other words, although Vancouver i s located i n the midst of a huge area of undeveloped land, i n an underpopulated province, the geography of i t s l o c a t i o n places very d e f i n i t e constraints on i t s geographical expansion. Because of the shape of the val l e y , i t i s usually not r e a l i z e d that i t s t o t a l area would form a c i r c l e only 34 miles across. The difference i n the nature of the t e r r a i n when com-bined with the d i v i s i v e e f f e c t s of the harbour and r i v e r branches and the general distances involved tend to encourage builders to sp e c i a l i z e i n bu i l d i n g i n one or two areas, but the builders can and often do overcome these d i v i s i v e forces and b u i l d i n any area where business i s developing. 51 The climate of the c i t y i s generally temperate with quite heavy r a i n f a l l and few extremes i n temperature. In many winters there i s no snowfall, and i n the summer the tem-perature seldom r i s e s above 80 degrees. The p r e v a i l i n g wind i s westerly, and the general rule i s that the closer the mountains are, the greater the r a i n f a l l , with the r e s u l t that annual p r e c i p i t a t i o n may vary from 30 inches to 120 inches per annum within the metropolitan area. The r a i n f a l l tends to be great-est i n the winter months, but can occur f o r quite long periods a t any time of the year. The mildness of the climate permits Vancouver to indulge i n the "west-coast" type of architecture common i n the P a c i f i c Northwest and C a l i f o r n i a . Not having to cope with intense winter cold, the buildings can be of l i g h t e r construction, more dispersed design and with greater use of glass-; While the designers of Vancouver houses must pay more heed to r a i n f a l l and heating considerations than those In C a l i f o r n i a , the r e l a t i v e s i m i l a r i t i e s i n general climate and t e r r a i n as well as the general c u l t u r a l a f f i n i t i e s have kept the designs somewhat s i m i l a r . Another e f f e c t of the mild climate i s that builders can usually operate year-round i f they wish. I f they are w i l l i n g to work i n the r a i n at the r e l a t i v e l y low winter tem-perature, they f i n d r e l a t i v e l y few obstacles i n t h e i r way when compared to the r e s t of Canada. Without the intense winter co l d they have l e s s trouble with materials and are not 52 required, to heat the operation. Nevertheless, there i s usually a lowering of a c t i v i t y i n Vancouver during the winter because of the added problems, most notably the greater amount of r a i n , which does hinder the erection of the frame and foundation work. With the wide range i n types of t e r r a i n , there i s a need f o r the bui l d e r and designer of houses to pay s p e c i a l a t t e n t i o n to the s i t i n g of the house and quite often there must be concessions made i n the design of the house to accommodate i t to the l o t . The three general types of t e r r a i n the builder must contend with are the ..marshy Fraser River d e l t a lands, often just s l i g h t l y above the water table; the h i l l y areas, usually forested with thin, rocky t o p s o i l which adjoin the d e l t a lands; and f i n a l l y the rocky lower h i l l s i d e s of the l o c a l mountains with t h e i r frequent rock outcroppings and vary-ing slopes. In the areas adjoining the mountains, care must be taken to leave some f o r e s t cover or else rapid water runoffs w i l l r e s u l t i n severe erosion and flooding near streams. In these areas i n p a r t i c u l a r , Individual a t t e n t i o n must be paid to the s i t i n g of each house to get a suitable s i t u a t i o n on the l o t s , which often, because of t h e i r slope, must be somewhat larg e r than i s required on f l a t t e r land'. I t i s generally more expensive to i n s t a l l roads and services as well, and i n most cases generally higher priced homes are b u i l t there. The t o t a l population of the Metropolitan area i s 53 currently estimated a t somewhat over 900,000. The area has been one of quite rapid growth, increasing from 665,000 i n 1956 to 892,000 i n 1966, an Increase i n that decade of 3^ per cent as compared to a population growth of just under 25 per cent i n Canada as a whole. The median family Income i s approximately one-sixth above the national average, and com-parable to family income i n Toronto. Although there are c e r t a i n regional differences among the various areas of Canada, Vancouver i s not divorced from the general trends of Canadian l i f e . I t resembles i n general standard of l i v i n g , wages, l e v e l of economic a c t i v i t y and culture that area of southern Ontario where most of the nation's business i s conducted. With the same general type of population and growth, there i s a v a l i d basis f o r the com-parison of urban a c t i v i t i e s i n the two areas. I t should be borne i n mind, however, that Vancouver i s the only large Canadian c i t y surrounded by rugged, mountainous t e r r a i n and that the other c i t i e s have been located i n a g r i c u l t u r a l re-gions whose extent was f a r greater and whose impact on the growth of the c i t y was more important than the agricu l t u r e of the Fraser Valley on Vancouver. Vancouver i s the t h i r d l a r g e s t c i t y i n Canada, and has a population of just under one m i l l i o n . Montreal and Toronto each have a population of about two and a ha l f m i l l i o n , and the next l a r g e s t c i t i e s are i n the h a l f a m i l l i o n or les s range. 54 (See Table I, Population of C i t i e s ) . Although Vancouver i s s i g n i f i c a n t l y smaller than Montreal and Toronto, i t i s a large market f o r new houses, and i t s annual production of new single family houses i s usually a t the same general volume as that of Montreal and Toronto. (See Table II, Single Family Dwelling S t a r t s K Most large Canadian c i t i e s , including much of Vancouver, are situated on f l a t land or low h i l l s , usually on a r i v e r or lake. As f a r as the structure of urban government i s concerned, Vancouver, with twelve municipal governments, i s neither well of f nor unusually overburdened by a m u l t i p l i c i t y of separate c i t i e s , towns and mu n i c i p a l i t i e s compared to the c i t i e s f o r which information has been gathered f o r t h i s study". Montreal, with a very large number of p o l i t i c a l e n t i t i e s (about 70) i s perhaps the most divided urban area, while Toronto has incorpor-ated nearly the ent i r e metropolitan area under one government, and s i m p l i f i e d the old municipal structure". Ottawa has been generally a well-controlled c i t y , with a small number of suburban e n t i t i e s growing up on both sides of the r i v e r as the c i t y has grown1. S i m i l a r l y , Hamilton has a group of suburbs growing around i t , but i n a f a i r l y ordered manner. In the case of Calgary and Edmonton, the c i t y has almost always expanded i t s boundaries f a r ahead of the growth of the c i t y , and there i s b a s i c a l l y only one government f o r the entire area s. 55 TABLE I POPULATION OF SELECTED CANADIAN CITIES Ci t y Population (1966) Calgary 330,575 Edmonton 401,299 Hamilton 449,116 Montreal 2,436,817 Ottawa ^94,535 Toronto 2,158,496 Vancouver 892,286 Source: Dominion Bureau of S t a t i s t i c s A(6), Pages 92-610 TABLE II STARTS OP SINGLE DETACHED FAMILY DWELLINGS IN SELECTED CITIES, 1 9 5 9 - 6 8 Period Calgary Edmonton Hamilton Montreal Ottawa Toronto Vancouver Canada 1968 2 , 4 4 7 2 , 6 1 0 1 , 927 4,218 2 , 3 9 6 5*555 5,146 75,339 1 9 6 7 2 , 2 1 5 1 , 9 08 2 , 3 5 8 4,406 1 , 6 6 7 6 , 7 8 9 5 , 9 8 0 7 2 , 5 3 4 1 9 6 6 2 , 1 1 2 2 , 1 2 3 2 , 1 6 2 6,707 1,670 7,246 4 , 3 2 5 70,642 1 9 6 5 2 , 3 3 5 2,776 2 , 0 5 6 6 , 3 7 1 1 , 6 9 1 7 . 1 0 1 3 , 9 2 3 75,441 1 9 6 4 2 , 2 3 7 2 , 6 0 7 2 , 0 2 3 6 , 7 2 3 1,809 8,014 4 , 1 2 9 77,079 1 9 6 3 1 , 990 2 , 8 9 0 2 , 0 1 5 7 , 2 1 6 2,028 7 , 9 4 7 3 , 7 8 8 7 7 , 1 5 8 Source: Canadian Housing S t a t i s t i c s 1 9 6 8 . VJI ON 57 These s i x other Canadian c i t i e s were selected f o r com-parison to Vancouver with several objectives i n mind. A l l of them, with the exception of Vancouver, are known to have large-scale builders operating i n them, with an output of 250 units or more per year. While exact figures are d i f f i c u l t to obtain, there are Indications that a very large percentage of new houses i n these smaller c i t i e s are erected by a small number of l a r g e r b u i l d e r s . 1 0 0 In the area of municipal b u i l d i n g codes, Vancouver does not appear to be appreciably worse o f f than many of the other c i t i e s i n Canada. The acceptance by the municipalities sur-rounding Vancouver of the National Building Code has been some-101 what better than average. While there i s no uniform b u i l d -ing code governing the metropolitan area, since not a l l areas have updated the code, even i f they have adopted i t , there i s apparently a t a c i t acceptance of the code whereby something permitted by the l a t e s t code w i l l usually be accepted by the municipality i f a b u i l d e r wishes i t . Other metropolitan areas i n Canada generally adhere to the national code even l e s s , with the exception of Calgary and Edmonton, where the entire c i t y operates under the newest code. While i t has often been stated that numerous b u i l d i n g codes i n one area w i l l hinder the large builder, t h i s does not seem to be a c r u c i a l f a c t o r . While such code sit u a t i o n s almost c e r t a i n l y may r a i s e the cost of housing somewhat, the large b u i l d e r seems to be able to overcome them. In Montreal, which probably has the widest va r i e t y of codes, one of the l a r g e s t builders i n Canada has been b u i l d i n g an 102 average of 500 homes a year f o r ten years. I t might be noted that the actual volume of housebuilding i n Montreal has been near the same l e v e l as Vancouver. The general lack of large-scale builders i n the Vancouver area has been observed by the industry a t large, which notdd that A number of major housebuilding firms have t r i e d projeot b u i l d i n g i n volume i n the Vancouver area — as we know i t i n other major urban areas i n Canada — but very few have been successful and the trend has almost always returned to the small volume bu i l d e r ... .1°3 There i s a general acceptance that I t has always been a f a c t of the homebulldlng scene i n B r i t i s h Columbia that there i s a prepon-derance of small volume builders ... to an extent that i s not known anywhere else i n Canada.104 In order to consider the question of why the house-b u i l d i n g Industry i n Vancouver d i f f e r s from the r e s t of Canada i n the scale of i t s builders, one must f i r s t obtain a c l e a r picture of the l o c a l s i t u a t i o n and the builders them-selves. That i s the purpose of the next section of t h i s paper which i s l a r g e l y based on data obtained from a survey c a r r i e d out f o r the purpose by the writer. I t may be assumed, however, that e e r t a i n factors apply equally i n most of the 59 l a r g e r c i t i e s In Canada. The general economic climate may be assumed to be the same f o r a l l the c i t i e s under consideration, with the possible exception of Montreal, as a l l the remaining c i t i e s are located i n Ontario or the West. In general, prices and wages, e s p e c i a l l y i n unionized indu s t r i e s , are r e l a t i v e l y high i n Vancouver. Vancouver has consistently had the highest wage rate of the c i t i e s sampled, both f o r general labour as well as the key bu i l d i n g trades of carpenters and e l e c t r i c i a n s . In nearly a l l cases, the wages i n Vancouver are su b s t a n t i a l l y higher than elsewhere. (See Table III, Wage Bates, Pages 6 0 and 6 l ) In spite of t h i s fact, the cost of bui l d i n g new single family dwellings has been gen-e r a l l y the same i n Vancouver as elsewhere, with costs becoming noticeably higher i n Vancouver only since 1 9 6 6 . (See Table IV, Cost Per Square Foot, Page 6 2 ) When comparing consumer pr i c e indexes, one could also conclude that p r i c e s i n general have moved clo s e r together i n Canada as a whole and Vancouver, since the cost of l i v i n g index has moved r e l a t i v e l y slowly i n Vancouver. (See Table V, Cost of L i v i n g Index, Page 6 3 ) . In comparing Vancouver to the San Francisco Bay area on these points, i t i s important to note that while San Francisco i s a l s o an area with somewhat higher wages and prices than usual, the housebuilding industry i s almost completely unionized TABLE III WAGE BATES FOB SELECTED JOBS IN SELECTED CITIES IN CANADA 1957-68 Period Calgary Edmonton Hamilton Montreal Ottawa Toronto Vancouver 1 9 6 7 General Labour^*; 2.17 2.10 2.28 2 .06 2 .03 2.20 2.58 Carpenter 2.98 2.87 3.10 2.79 2.99 2 .90 3 .25 E l e c t r i c i a n 3.32 3.29 3.. 33 3.01 3.41 3.14 3.46 1 9 6 6 General Labour 2.06 1.98 2 . 1 7 1.89 1 .92 2 .03 2.39 Carpenter 2.59 2.65 2.93 2.56 2.78 2.66 3.06 E l e c t r i c i a n 2.81 3.05 3.17 2 .72 3.22 2.95 3.32 1 9 6 5 General Labour 1.85 1.81 2.06 1.73 1.74 1.94 2 .24 Carpenter 2.48 2 .50 2.68 2.37 2.63 2.47 2.88 E l e c t r i c i a n 2.75 2.83 2 . 9 1 2.55 3.05 2.78 3.05 1964 General Labour 1.86 1.75 1.95 1.67 1.58 1.80 2 .13 Carpenter 2.45 2.33 2.54 2.26 2.38 2.40 2.72 E l e c t r i c i a n 2.71 2.66 2.77 2.42 2 . 7 6 2.63 2.92 1963 General Labour 1.84 1.68 1.89 1.64 1.58 1.78 2 .03 Carpenter 2.40 2.32 2 . 5 1 2.19 2.42 2.33 2 .60 E l e c t r i c i a n 2 .67 2 .63 2.75 2.36 2.81 2.53 2.74 1962 General Labour 1.78 1.58 1.88 1 .57 1.53 1.71 1.97 Carpenter 2.38 2 .25 2.46 2 .16 2.33 2 .27 2 .52 E l e c t r i c i a n 2.61 2.52 2.67 2 .30 2.75 2.47 2.65 Source: Wage Rates, Salaries and Hours of Labour, Economics and Research Branch, Canada Department of Labour, Ottawa, Canada. *A11 industry average includes manufacturing, non-manufacturing,transportation, trade, p u b l i c administration, services. TABLE III - Continued WAGE BATES (AVEBAGE EARNED) PGB SELECTED JOBS IN SELECTED CITIES IN CANADA 1957-68 Period Calgary Edmonton Hamilton Montreal Ottawa Toronto Vancouvez 1961 General Labour 1.69 1.59 1.79 1.52 1.48 1.66 1.94 Carpenter 2.30 2.22 2.36 2.10 2.23 2.23 2.44 E l e c t r i c i a n 2.54 2.50 2.58 2.21 2.58 2.38 2.62 I960 General Labour 1.67 1.53 1.73 1.46 1.38 1.59 1.90 Carpenter 2.20 2.04 2.37 2.02 1.99 2.16 2.41 E l e c t r i c i a n 2.47 2.28 2.55 2.13 2.38 2.28 2.51 1959 General Labour 1.56 1.60 1.70 1.44 1.25 1.57 1.80 Carpenter 2.20 2.04 2.24 1.95 1.99 1.99 2.40 E l e c t r i c i a n 2.41 2.34 2.44 2.15 2.25 2.22 2.43 1958 General Labour 1.58 1.50 1.68 1.43 1.14 1.57 1.77 Carpenter 2.13 2.04 2.14 1.86 1.93 1.97 2.24 E l e c t r i c i a n 2.31 2.31 2.34 2.06 2.07 2.17 2.27 1954 General Labour 1.40 1.25 1.42 1.29 1.05 1.30 1.52 Carpenter* 1.95 1.95 2.10 1.80 1.75 2.25 2.22 E l e c t r i c i a n * 2.05 2.25 2.25 1.90 1.95 2.43 2.38 ' 1 '•' 1 *Based on construction industry only. TABLE IV COST OP SINGLE FAMILY DWELLINGS PER SQUARE FOOT IN CANADA (FINANCED UNDER N.H.A.) Period Calgary Edmonton Hamilton Montreal Ottawa Toronto Vancouver Canada 1968 $13.23 112.87 #13.55 $12.82 #13.98 $13.38 #14.51 $13.68 1967 12.42 12.84 13.10 12.11 12.94 12.48 13.55 13.04 1966 11.99 12.07 12.31 11.70 12.35 11.86 12.36 12.56 1965 11.13 11.13 11.36 10.89 11.68 10.77 11.66 11.62 1964 10.77 10.85 10.76 10.46 11.45 9.90 10.72 11.01 1963 10.69 10.72 10.28 10.30 11.18 9.46 10.37 10.68 1962 10.61 10.62 10.17 10.14 11.00 9.37 10.33 10.56 1961 10.57 10.53 10.39 10.13 11.10 9.85 10.56 10.61 I960 10.40 10.49 10.58 10.39 11.11 9.74 10.87 10.65 1959 10.51 10.86 10.72 10.92 11.29 9.85 10.00 10.78 Source: Canadian Housing S t a t i s t i c s 1968. TABLE V CONSUMES PRICE INDEX FOR * VANCOUVER AND CANADA (DECEMBER EACH YEAR) PERIOD CANADA: VANCOUVER: A l l Transpor- A l l Transpor-Items Food Housing t a t i o n Items Food Housing t a t i o n 1968 158.0 154.4 I6I.2 162.7 151.2 149.4 151.4 159.0 1967 151.8 148.6 153.8 159.6 146.7 144.7 146.9 156.5 1966 145.9 144.7 147.2 152.6 139.9 139.9 138.4 152.7 1965 140.8 139.6 142.4 148.8 136.4 136.7 135.3 149.8 1964 136.8 133.2 139.6 142.6 133.7 131.6 136.1 140.6 1963 134.2 131.4 137.0 140.6 131.9 130.5 134.7 139.0 1962 131.9 127.8 135.7 140.2 130.6 137.6 134.8 138.4 1961 changed components of index 136.1 139.2 1961 129.8 124.5 133.8 141.1 130.1 125.1 i960 129.6 125.3 133.2 141.4 130.7 126.1 134.8 138.4 1959 127.9 122.4 142.7 — 129.6 124.4 138.5 mum 1954 116.6 112.6 128.2 — 118.3 111.6 126.1 — 1949 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Source: Canada: Prices and Price Indexes, Dominion Bureau of S t a t i s t i c s 64 t h e r e , 1 0 5 while i t i s almost completely non-union i n Vancouver. This factor, however, should not "be given too much weight when considering the Vancouver industry, because the construct-ion industry i n general i s strongly unionized and the house-builders must compete with the industry i n general to a c e r t a i n extent to obtain s k i l l e d workers. One should also note a com-ment made on the construction industry as a whole, which stated that the ... large group of firms [ i n the industry] greatly weakens employer unity i n any negotia-t i o n s . I t i s recognized that In the case of any disagreement these firms are l i k e l y to come to terms with the unions independently of other employers.1 Q6 The general f i n a n c i a l framework the builders operate i n i s generally the same, with f e d e r a l l y chartered banks, and the f e d e r a l l y run Central Mortgage and Housing Corporation operat-ing i n a l l areas. The municipal structures, already discussed, are generally s i m i l a r i n nature and operation, possibly with the exception of Montreal^ The laws are generally the same outside Quebec, although the land tenure system i s s l i g h t l y d i f f e r e n t i n the West from that of Ontario. The federal govern-ment's f i s c a l p o l i c i e s , i t may be assumed, a f f e c t a l l the regions under discussion more or l e s s equally, and In general there have been b a s i c a l l y s i m i l a r demand and product trends. The freedom of entry and e x i t i s also probably quite constant f o r a l l c i t i e s , and although i n actual f a c t I t may not be the case, i t Is also assumed that the wholesale d i s t r i b u t i o n system, the general p r i c e structure, and competition among firms are generally s i m i l a r i n the c i t i e s and w i l l respond i n s i m i l a r ways to market developments. As f a r as i t i s possible to determine, then, the Canadian housebuilding industry has followed the general trends of the American industry. While i t has never produced a L e v i t t , i t has produced large builders which operate on a scale commensurate with the si z e of t h e i r c i t y , and i n a man-ner s i m i l a r to other large b u i l d e r s . I t remains to be seen, then, what d i f f e r e n t i a t e s the s i t u a t i o n i n Vancouver from that of the other c i t i e s . 66 B. THE VANCOUVER HOUSEBUILDING INDUSTRY Vancouver has a housebuilding industry that i s gener-a l l y analogous to the Industries of the other areas already described. The industry here i s generally quite separated from the commercial construction industry. No housebuilders belong to the Amalgamated Construction Association of B. C , a trade association concerned with medium and heavy construct-ion. Housebuilders, i f they belong to any association, belong to the l o c a l chapter of the National House Builder's Associa-t i o n where they exchange information and keep i n contact with each other. Another fa c t o r separating the two areas of con-s t r u c t i o n Is that while the commercial builders are almost completely unionized, there i s v i r t u a l l y no unionization among housebuilding firms. Another f a c t o r i n d i c a t i n g a separation i s the general lack of housebuilding firms with a c t i v i t i e s i n non-housebuilding areas. Of the firms i n the study sample, only two firms indicated they c a r r i e d on s i g n i f i c a n t a c t i v i t y i n an area not linked with housebuilding, while only f i v e firms were housebuilding with the aim of accumulating c a p i t a l to move into commercial construction and these were almost a l l small firms. The m i l i e u i n which Vancouver builders operate i s gener-a l l y the same as i n any c i t y , that i s , a large number of b u i l d -67 lng firms, subcontracting firms and sp e c i a l i z e d supply outlets e x i s t which make i t possible to assemble a wide range of men and materials as the p a r t i c u l a r construction project d i c t a t e s . The builder's function i s b a s i c a l l y to organize and co-ordinate the operation, evaluate bids, and make decisions on methods. Some of the findings of the survey applied equally to builders of a l l sizes and generally follow the basic pattern of indus-t r i e s elsewhere. There appeared to be a tendency which was not found to be as prominent i n other c i t i e s studied, and that was a gener-a l p o l i c y of firms to take advantage of ten-day discounts when they were offered by suppliers. In general builders were very prompt i n paying t h e i r b i l l s , usually within t h i r t y days f o r suppliers and within t h i r t y days i f not immediately f o r sub-contractors. (See Table VI, Page 68) In general the larger firms were equally as prompt as smaller ones. A common pro-blem builders shared was the f l u c t u a t i n g p r i c e of lumber which forms the major material input of nearly a l l houses i n Vancou-ver. This product, which tends to fluctuate i n p r i c e i n a manner s i m i l a r to that of an a g r i c u l t u r a l product, i s a consi-derable item i n the costs to a builder, and makes i t that much more d i f f i c u l t to plan ahead f o r any long period. In the area of prefabrication, there are no r e a l l y decisive correlations between fi r m s i z e and p r e f a b r i c a t i o n techniques. In general, i t appears that there i s widespread TABLE VI PERCENTAGES OP FIRMS PAYING BILLS WITHIN GIVEN TIME SPANS 1 — Type of Obligation Time f o r Pay-ments - lOOJg Suppliers Sub-Contraotors 1 - 3 0 days 91.3 94.0 31 - 60 days 7.1 6.1 6l dr more days 1.0 0.0 Total 100.0 100.0 Number of Firms i n Sample (98) (98) 69 use of complete window assemblies (usually aluminum), consi-derable use of p r e - b u i l t roof trusses and pre-assembled cabin-ets. Pre-cut lumber appeared to have a very l i m i t e d use as did pre-hung doors. Only two firms i n the entire survey employed any modular construction techniques, and these were small scale firms. With the data ava i l a b l e there was l i t t l e p o s s i b i l i t y of determining any possible correlations between firm s i z e and p r e f a b r i c a t i o n techniques. The only notable trend that appeared was the greater use of "packages" (which usually consist of prefabricated wall sections and frames) by the l a r g e r firms. (See Table VII) TABLE VII USE OP "PACKAGES" BY SIZE OF FIRM* Size of Firm (Starts/Year) Number Tested P o s i t i v e Number Percentage 1 - 2 4 88 2 2.3# 25 - 99 11 2 1S.2# 100 and more 5 3 60.0# * The method of carrying out the questioning on p r e f a b r i c a t i o n techniques did not y i e l d very s a t i s f a c t o r y r e s u l t s . I f the buil d e r subcontracted the work, he was not questioned on pre-f a b r i c a t i o n techniques because i t was f e l t the answers might be u n r e l i a b l e . In addition, i t was discovered part way through the survey that many builders did not consider some types of p r e f a b r i c a t i o n as p r e f a b r i c a t i o n a t a l l . The general r e s u l t was that most of the figures were f a r too low to give an accur-ate picture of the extent of prefabrication, with the except-ion of the above p r e f a b r i c a t i o n technique. 70 A problem among firms of a l l sizes, but e s p e c i a l l y among lar g e r firms i s that of financing land purchases and inventory. I t i s assumed that the builder attempts to avoid paying cash, except f o r some of the smaller builders who must own the land before f i n a n c i a l i n s t i t u t i o n s w i l l lend them money, or who do not wish to assume the added r i s k . D i f f e r -ent means of financing the land included agreements f o r sale, mortgages, and "builder's terms" or a type of mortgage con-s i s t i n g of an i n i t i a l payment and one or two payments of the balance anywhere from four to s i x months l a t e r . The r e s u l t s Indicated that i t may a c t u a l l y be easier to finance land pur-chases here than elsewhere. As might be expected, the larger f i r m had greater opportunities f o r financing land purchases, and t h i s was borne out by the data. The majority of the i n t e r -mediate and large firms obtained such financing, and although a sizeable number of the small builders did as well, they obtained land financing l e s s often. (See Table VIII, Page 71) On the other hand, i f a b u i l d e r was using construction financ-ing i n the building of his houses, i t was usually necessary f o r him to invest an amount equivalent to the value of the l o t and construction costs to the f l o o r l e v e l before any finance money would be released. The data r e l a t i n g to t h i s question, and i n p a r t i c u l a r to financing and loans was very sketchy, due i n large measure to a lack of consistency i n the figures given by the builders, a problem which could only be solved by d e t a i l e d discussion or a close analysis of each builder's 71 f i n a n c i a l statements. Such close examination of i n d i v i d u a l firms was not f e a s i b l e f o r t h i s p a r t i c u l a r study. This system of financing appears s i m i l a r to those found elsewhere. TABLE VIII FIRMS WHO COULD OBTAIN FINANCING FOR LAND PURCHASES (INCLUDING AGREEMENT FOR SALE, MORTGAGES, TERMS) Positive Size of Firm Number (Starts/Year) Tested Number Percentage 1 - 9 66 32 31.8 1 0-24 22 10 45.4 25 - 99 9 6 66.7 100 or more 2 2 100.0 25 - 99* 11 8 72.7 100 or more* 4 3 75.0 * Includes the large firms not i n the survey sample. As i n most areas, there are three general categories of builders, the owner-builder, the contract builder, and the operative builder. The findings of the survey Indicates that the proportion of housing produced by owner builders i s rough-l y comparable to the l e v e l of a c t i v i t y found by Maisel i n the 107 Bay area. Of the builders drawn i n the sample, approxi-mately twenty per cent were people b u i l d i n g or organizing 72 the construction of t h e i r own home, and these were not i n -cluded i n the study. (See Table IX) TABLE IX THE DISTRIBUTION OF RESPONSES FROM RANDOM SAMPLE Type of Response Per Cent wner-occupier supervising or bui l d i n g 20.0 [Tied In to fir m previously Interviewed 1.0 [House Building firms responding . 61.0 Total 100.0 Number of Firms i n Sample (105) Generally speaking, among the commercial operators, approximately 70 per cent of the smallest builders retained carpentry functions such as framing and f i n i s h i n g , interme-diate builders tended more to subcontract everything and some of the la r g e r builders retained t h e i r own framing crews while subcontracting the r e s t of the work. The small firms i n gen-e r a l performed more major functions than the la r g e r firms (See Table X, Page 73) although a substantial amount of work was subcontracted i n a l l cases, e s p e c i a l l y i n the "trades", plumbing, e l e c t r i c i t y , and so on. Most builders apparently generated t h e i r working c a p i t a l from t h e i r own resources, and 73 many small operators expressed concern about overextending themselves f i n a n c i a l l y . TABLE X THE PERFORMANCE OF TASKS BY THE FIRM'S OWN EMPLOYEES (NOT SUBCONTRACTED) Size of Firm (Starts/Year) Number Tested (A) (B) Retained Carpentry and/or F i n i s h i n g Performed Two or More Functions With Own Men (May Include Non-car-pentry Functions 1 - 9 66 69.7% 54.5^ 10-24 22 54.5# 50.0% 25 - 99 9 11.1$ 11*1% 100 or more 3 66.7% 33.3# 25 - 99* 11 9.1% 9.1# 100 or more* 5 60.0% 40.0$ * Includes the large firms not i n the survey sample. The Small Builder The small contract b u i l d e r generally bought small num-bers of Individual l o t s , r a r e l y more than two or three at a time, or the customers provided t h e i r own l o t . Assembling land was no problem f o r t h i s group as they could b u i l d economi-c a l l y In any location, and did not r e l y on economies of sca l e . 74 Some builders drew up t h e i r own plans and drawings, and would work with the owner throughout the bui l d i n g process• He generally uses interim financing to pay f o r the work complet-ed on the house, which i s usually obtained from a bank or tr u s t company, or may come from the owner of the house. In the area of overhead expenses, costs are kept very low, with h i s o f f i c e located usually i n h i s home, and h i s wife or part-time help doing the s e c r e t a r i a l work. He generally does not question the building codes or c i v i c o f f i c i a l s s e r i o u s l y as he does not wish to antagonize them. The small speculative b u i l d e r i s somewhat s i m i l a r i n nature to the contract builder, usually working out of his home, and financing himself i n a s i m i l a r manner. He generally builds a f a i r l y standard type of house which he w i l l s e l l a t any stage of construction. He usually builds on developed l o t s , often acquiring several l o t s a t a time i n a new sub-d i v i s i o n . I t i s usually t h i s builder, i n the under twenty-f i v e houses per year group, who work most cl o s e l y with r e a l estate firms, development firms and t r u s t companies i n a sub-ordinate p o s i t i o n , although there i s a greater incidence of intercorporate t i e s among the large firms interviewed. (See Table XI, Page 75) • Among the small firms the r e l a t i v e l y short average age (See Table XII, Page 76) indicates the high turnover of firms caused by the ease of entry and e x i t into the business, 75 TABLE XI FIRMS 11 TIED-IN" WITH OTHERS BY SIZE Firm Size Starts/Year Number Tested Positive Number Percentage 1 - 9 66 12 18.2 10 - 24 22 10 40.8 25 - 99 9 8 89.0 100 or more 3 2 66.7 25 - 99* 11 9 81.8 100 or more* 5 4 80.0 * Includes the large firms not i n the survey samples. 76 TABLE XII AVERAGE AGE OP FIRMS BY SIZE Size of Firm (Starts/Year) Average Age Of Firm (In Years) Number of Firms i n Category 1 - 9 5,61 66 10 - 24 7.00 22 25 - 99 9.78 9 100 plus 8.91 3 25 - 99* 9.19 11 100 plus* 13.15 5 * Includes the large firms not i n the survey sample. n and the extremely short time many small firms had been operat-ing was c l e a r i n the survey data. The small firms often worked with the same crews» suppliers and subcontractors. While t h e i r small scale d i d not permit them to take advantage of some of the economies open to larger builders i n the area, t h e i r main advantage appeared to be i n t h e i r low overhead costs. In addition to using t h e i r home as an o f f i c e , these small builders questioned indicated they worked very long hours, performing most of t h e i r executive and organizing functions i n the evening a f t e r supervising at the s i t e during the day. The builders d i d not seem to include t h i s time i n t h e i r cost calculations, and d i d not expect much monetary reward f o r i t . While many builders f e l t they could make a l -most as much money working f o r someone else, many stated that they found t h e i r work more i n t e r e s t i n g and l i k e d the indepen-dence. This payment i n psychological s a t i s f a c t i o n was indicated i n Maisel's e a r l i e r study as w e l l . One difference indicated by the study i s the r e l a t i v e l y l a r g e r numbers of houses b u i l t on speculation by t h i s group i n Vancouver. (See Table XIII, Page 78) As i t was noted e a r l i e r i n the study, Maisel found that i n the Bay area, t h i s s i z e of f i r m was almost exclusively doing contract work. The firms i n the ten to twenty-four category displayed some d i f f e r e n t c h a r a c t e r i s t i c s . Bather than b u i l d i n g custom or custom-type homes on i n d i v i d u a l l o t s , they would work more 78 TABLE XIII PERCENTAGE OP FIRMS BUILDING LAST HOUSE ON CONTRACT BY SIZE * Size of Firm (Starts/Year) Number Tested Positive Number Percentage 1 - 9 66 21 31.8 10 - 24 22 7 31.8 25 - 99 9 6 66.6 100 or more 3 2 66.6 25 - 99 ** 11 6 54.5 100 or more 5 2 40.0 * For the l a r g e r firms t h i s was usually a s i t u a t i o n where the customer ordered h i s house but the f l o o r plans and the basic houses were the same, with only options and minor design points d i f f e r i n g . Four out of f i v e of the l a r g e s t firms worked i n t h i s manner. They usually had the property and basic plans f o r each house and t r i e d to have a customer when they started work. ** Includes the large firms not i n the survey sample. 79 In subdivisions, often b u i l d i n g a home with general appeal* The b u i l d e r would usually be found doing l e s s physical work on the s i t e , and would be a l i t t l e more ready to experiment with d i f f e r e n t techniques. The survey r e s u l t s indicated that i n general these builders tended to b u i l d somewhat l e s s ex-pensive homes than the smaller contract b u i l d e r s . (See Table XIV) TABLE XIV PRICE OF LAST HOME SOLD BY SIZE OF FIRM 1 Size of Firm (Starts/Year) Price of Home (August - September 1969} Number of Firms i n Category 1 - 9 $34,800 63 10 - 24 30,300 21 25 - 99 30,100 9 100 or more 30,500 2 25 - 99 • 28,600 13 100 or more * 26,600 4 * Includes the large firms not i n the survey sample. I t was found i n the study that a greater proportion of thi s category of firms had decided they had reached t h e i r optimum si z e (See Table XV, Page 80)» an in d i c a t i o n that a consider-able number of these firms' owners d i d not wish to expand 80 t h e i r operation, and were drawing a s a t i s f a c t o r y income from the business. Some of the builders had consciously r e s t r i c t -ed t h e i r production i n order to produce a quality type of home and to keep t h e i r operation on a more personal l e v e l . TABLE XV PERCENTAGE OP FIRMS WHOSE OWNERS FEEL IT IS AT "OPTIMUM" SIZE, BY SIZE OF FIRM Size of Firm (Starts/Year) Firms Tested Positive Number Percentage 1 - 9 s 66 12 18.2 10 - 24 27 7 31.8 25 - 99 9 1 11.1 100 plus 0 0.0 In t h i s category there i s al s o a greater tendency f o r firms to e s t a b l i s h l i n k s with r e a l estate firms and other firms i n rel a t e d businesses, a c h a r a c t e r i s t i c of larg e r firms. (See Table XI, Page 75). As f a r as t h e i r general overhead structure works, however, these firms are about the same as those firms i n the smallest category. In the area of interim financing, i t i s i n firms of t h i s size category that d i f f i -c u l t i e s i n obtaining s u f f i c i e n t construction loans s t a r t 81 Increasing, a problem of a l l larger housebuilding operations. (See Table XVI). TABLE XVI PERCENTAGE OP FIRMS REPORTING DIFFICULTY IN OBTAINING THE DESIRED NUMBER OP BUILDING LOANS Positive Size of Firm (Starts/Year) Number Tested Number Percentage 1 - 9 6 6 3 0 2 7 . 2 1 0 - 24 2 2 1 8 4 5 . 4 2 5 - 9 9 9 4 4 4 . 4 1 0 0 plus 2 1 5 0 . 0 2 5 - 9 9 * 1 1 5 4 5 . 4 1 0 0 plus * 4 3 7 5 . 0 * Includes the large firms not i n the survey sample. In other c i t i e s studied, when the small builder Is erecting a house, he w i l l often put a "for sale" sign i n the window, and unless he already has an exclusive s e l l i n g agree-ment with a r e a l estate agent, he w i l l s e l l the house at any point during construction. In Vancouver, however, while the bui l d e r may sometimes put his own "for sale" sign on a house, (See Table XVII, Page 82) i n general the greatest number of 82 houses are sold through r e a l estate agents. This may r e f l e c t a somewhat greater a c t i v i t y of r e a l estate firms as land developers, or i t may indicate a general preference of b u i l d -ers to avoid the problems of s e l l i n g the house, e s p e c i a l l y i n a subdivision, and f o r the added services the agent may pro-vide. TABLE XVII PERCENTAGE OP LAST HOUSES BUILT SOLD BY BUILDER BY SIZE OP FIRM Size of Firm (Starts/Year) Po s i t i v e Number Tested Number Percentage 1 - 9 66 25 37.9 10 - 24 22 7 31.8 25 - 99 9 3 33.3 100 plus 3 0 0.0 25 - 99 * 11 3 27.3 100 plus * 5 0 0.0 * Includes the large firms not i n the survey sample. The small builders, when questioned about factors l i m i t i n g t h e i r growth, mentioned a number of matters other than that of 'optimum s i z e ' which was previously discussed. A number of builders indicated that they f e l t there was a plateau around the twelve houses per year l e v e l , and that to b u i l d beyond that point required an expansion of management and money to such a point that the next "optimum" volume was around twenty-four un i t s per year. Many builders f e l t that t h i s was too large a jump i n volume f o r them to make unless they were very well c a p i t a l i z e d . Other builders f e l t they wouldn't be able to get and hold s u f f i c i e n t s k i l l e d workers and subcontractors to expand at a very rapid rate, and a num-ber mentioned the i m p o s s i b i l i t y of obtaining r e l i a b l e financ-ing. The problem of small firms and t h e i r take-out financing i s d i f f e r e n t i n Canada than i n the United States, because there i s no way to get advance commitments here. I t i s poss-i b l e f o r a banker to promise a bu i l d e r a mortgage on a house, and then f a i l to supply i t when the house i s near completion, leaving the b u i l d e r with a house very d i f f i c u l t to s e l l . The s i t u a t i o n i s somewhat better f o r l a r g e r firms who are more l i k e l y to be dealing with the Central Mortgage, and Housing Corporation. The corporation w i l l a l l o t mortgages on a year to year quota basis, so a large builder with more consistent volume w i l l have a better idea of the long-term financing he can obtain. In general, then, one may conclude that, except f o r small differences caused by minor va r i a t i o n s In the s e t t i n g , the small b u i l d e r i n Vancouver i s t y p i c a l of small builders i n other North American c i t i e s , and as f a r as the data gathered f o r the study makes comparison possible, there are no major differences i n the findings here and those of e a r l -i e r studies elsewhere. The Medium-Sized Builder (25 - 99) The medium-sized buil d e r also appears s i m i l a r i n nature to those found elsewhere. In most cases they appear to be operative builders, and a l l the l a r g e r builders b u i l t houses only on speculation. This b u i l d e r i s more powerful i n r e l a -t i o n to h i s subcontractors and a number of them employed "mass production" techniques and occasionally employed more extensive p r e f a b r l c a t i o n techniques. Some of the firms were older ones which had s t e a d i l y b u i l t up to t h e i r present volume. The firms which s t i l l d i d a large amount of custom work were con-centrated a t the lower volume end of the group. Nearly a l l of these firms were t i e d i n with others i n r e l a t e d f i e l d s such as r e a l estate agencies or land developers. These builders, e s p e c i a l l y the l a r g e r ones, usually had an o f f i c e , often at the s i t e of one of t h e i r projects, and hired some f u l l - t i m e s t a f f , which s t i l l may have been only a secretary or a sales-man. I t was several of these firms that produced the lowest pri c e d houses and the group as a whole produced r e l a t i v e l y inexpensive homes. (See Table XIV, Page 79) Land was much more of a problem f o r t h i s size b u i l d e r . They require a considerable number of l o t s i n the same area i n order to r e a l i z e t h e i r p o t e n t i a l advantages i n f a b r i c a t i o n and management techniques. The lar g e r firms i n th i s group reported p a r t i c u l a r d i f f i c u l t y i n assembling large enough areas of land and keeping up a steady supply of l o t s . Over h a l f of t h i s group developed t h e i r own land and v i r t u a l l y a l l of the la r g e r builders d i d . (See Tables XVIII and XVIII(a) ). TABLE XVIII PERCENTAGE OF FIRMS DEVELOPING THEIR OWN LAND (PERFORMING THREE OR MORE TASKS) Size of Firm (Starts/Iear) Number Tested Pos i t i v e Number Percentage 1 - 9 66 5 7.6 10 - 24 22 4 18.2 25 - 99 9 5 55.5 100 or more 2 1 50.0 25 - 99 * 11 7 63.6 100 or more * 4 3 75.0 * Includes non-sample large firms. 86 TABLE XVIII (a) PERCENTAGE OP FIRMS PURCHASING LAST LAND PROM REAL ESTATE AGENT 1 Size of Firm (Starts/Year) Percentage - Pos i t i v e 1 - 9 5 1 . 5 * 10 - 24 59.0 25 - 99 55.5 100 plus 33.3 25 - 99 * 45.4 100 plus * 20.0 * Includes non-sample large firms. Tables XVIII and XVIII (a) indicate a discrepancy between firms developing t h e i r own land and purchasing land from r e a l estate agents. The agents must be s e l l i n g undeveloped land and not holding i t f o r o l i g o p o l i s t i c purposes. S i m i l a r l y , the l a r g e r — and presumably better financed -— firms show a tendency to buy t h e i r land p r i v a t e l y , a further i n d i c a t i o n that r e a l estate firms do not control the land supply. 8? Several of these firms mentioned that lack of a v a i l a b i l i t y of a steady stream of land was the chief f a c t o r holding them at t h e i r present s i z e . There were several firms i n t h i s group who appeared to be very well c a p i t a l i z e d and had the managerial c a p a b i l i t y to expand, but had not. They f e l t that they could e a s i l y produce double t h e i r current volume i n any one year, but t h i s would involve "gearing up" to the new l e v e l of, f o r example, 150 houses per year. They f e l t that i t was impossible to acquire t h i s annual number of suitable l o t s on a continuing basis and, therefore, i n one or two years would have to cut back again and the gains made by l a r g e r volume bu i l d i n g would be cancelled by the expense and d i s r u p t i o n of expanding and contracting. There i s also the p o s s i b i l i t y that the assembly of the land i t s e l f i n t h i s volume i s simply too expensive. In the Fraser Valley, the average farm si z e i s one-quarter to one-twentieth of the s i z e of farms surrounding other Canadian Metropolitan areas'; (See Table XIX, Page 88) This unusually small farm si z e indicates generally small-sized landholdings. Since the intermediate and large b u i l d e r must work on a s i z e -able p l o t of land i n order to r e a l i z e t h e i r economies of scale, they w i l l have much greater d i f f i c u l t y . Instead of negotiating with one farmer, a number of owners must be dealt with, and they w i l l probably not a l l agree to s e l l at the same time. The r e s u l t w i l l be more expenses involved i n arranging f o r purchase of the land, a longer time period f o r assembly, with added .88 c a p i t a l costs, and. an unsteady supply of land. TABLE XIX AVERAGE FARM SIZE IN AREAS ADJACENT TO METROPOLITAN CENSUS AREAS City Average Farm Size (Acres) Calgary 668 Edmonton 300 Hamilton 110.5 Montreal 121 Ottawa 199 Toronto 139 Vancouver - Entire Fraser Valley 37.0 - Eastern Fraser Valley 38.2 Aside from the somewhat greater d i f f i c u l t i e s i n assemb-l i n g land i n the Vancouver area which a f f e c t s the la r g e s t firms i n t h i s group, they represent a normal picture of medium-sized firms 1. A number of them had t h e i r own salesman or, l e s s com-mon, some arrangement with a r e a l estate agent-. Some used mod-e l homes f o r sales purposes or even sold t h e i r homes by merely s e t t i n g up an o f f i c e on the s i t e , p r i n t i n g a brochure,:and running a few advertisements i n the newspaper. These firms generally performed very few of the actual construction 89 functions, r e l y i n g instead on subcontractors f o r nearly every-thing, with only one firm doing any major work such as framing. Several of these builders f e l t they could take advantage of a better organization of labor, and i n some cases they could use more p r e f a b r i c a t i o n . There were indications that these b u i l d -ers were better able to keep track of t h e i r costs, not only because of t h e i r higher l e v e l of o v e r a l l management, but also because of the generally simpler, more basic product. Some of these firms f e l t that they were a t an optimum si z e , or that i f they were to expand, they had to expand con-siderably to make i t worthwhile, and that t h e i r resources were not adequate. I t should be noted, however, that these i n t e r -mediate firms are very often already minature large-scale firms'. They are usually run on an operative basis, and have a more d e f i n i t e management structure with a greater span than the smaller firms 1. Prom the sample r e s u l t s (See Table XX, Page 9©,) nearly ten per cent of the firms operating i n the Vancouver area f a l l under th i s category". In general, the firms In t h i s category appear to be b a s i c a l l y s i m i l a r In nature to the same s i z e firms operating elsewhere which have been previously described. Not a l l of the Intermediate firms operating i n Vancouver can have owners who f e e l at an optimum si z e , or are a f r a i d of the increased c r e d i t r i s k . Some of these firms are s t a f f e d by highly competent men pressing to continue the firm's expansion, \ 90 TABLE XX DISTRIBUTION OP FIRMS SURVEYED BY SIZE Size of Firm Percentage (Starts/Year) of Firms 1 - 9 66% 10 - 24 22 24 - 99 9 100 or more 3 Total 100 Of the firms 100 and over, the la r g e s t firm (250) was not based In the lower mainland and only b u i l d i n g 57 houses i n the Metropolitan area i n a developed subdivision on an experimental basis*. Of the remaining firms, one's volume was 128 and the remainder were a l l 100, thus these firms were a l l just barely within the category. Top volumes, including a l l large firms located, were 250, 128, 100, 100, 100, 85, 75, 70, 40 ... and make the next step up to the large-scale b u i l d e r . I t re-mains to be seen what the s i t u a t i o n of the large-scale builder i s i n Vancouver. The Large Builder This Is the point a t which comparison, between Vancouver's housebullders and other metropolitan builders breaks down. The simple f a c t i s that Vancouver has almost no indigenous large-scale builders and even the ones that e x i s t are barely more than s l i g h t l y enlarged medium firms, manufact-urers of "packages", or branches of firms located elsewhere. In the Metro Vancouver area, no firm has exceeded a volume of 1G0 houses per year, and only one builder based i n Vancouver has produced more than 100 homes and then only when his t o t a l Fraser Valley output i s considered. There have been large-scale firms operating i n the area, but t h e i r main operations have been located outside the Fraser V a l l e y . An attempt was made i n the survey to locate a l l large-scale firms (those b u i l d i n g 1 0 0 houses or more per: year) i n the metropolitan area. Only f i v e firms were found operating a t that l e v e l . The l a r g e s t firm was a general r e s i d e n t i a l construction f i r m based i n another c i t y , producing approxi-mately 2 5 0 units per year. They were b u i l d i n g f i f t y - s e v e n u n i t s i n Vancouver as a p i l o t project. The management of the f i r m f e l t that i n t h e i r case the problems of t e r r a i n prevented them from b u i l d i n g a true t r a c t type of house on which they 92 could gain economies of scale. As a r e s u l t , they were very undecided about t h e i r future i n the area. The remaining f i r m s 1 volumes a l l approximated one hundred units per year. Of the indigenous Vancouver firms, only one had an output of more than one hundred units a year. This firm, based i n Vancouver, operated i n the entire Fraser Valley and Its volume was 128 units per year. Of the other large firms, one was a bui l d i n g supply firm that sold house "packages" and would undertake to erect them i f the buyer supplied the l o t . Another fi r m was a branch of a large eastern firm which also sold a number of "packages", but had not attained the volume I t had planned. The remaining large f i r m had only been i n operation f o r nine months and appeared to be linked to a large r e a l estate firm, although there was no p o s i t i v e confirmation of t h i s . One may conclude that these firms, Just barely i n the "large" category, are merely fragments of a large-scale industry, representing the very maximum size Vancouver firms have been able to obtain. Some of these operations supported by large firms elsewhere, are often a scaled-down version of e a r l i e r plans. I t may then be concluded that the housebuilding industry i n Vancouver i s t y p i f i e d by the small operative builder In the under twenty-five units per year category. I f one were to consider the industry i n general as a spectrum of firms ranging i n volume from one to one thousand houses per year output, then 93 Vancouver can be considered to be simply missing the upper part of the spectrum'; The c h a r a c t e r i s t i c s of the firms sur-veyed f i t i n t o the general patterns determined by e a r l i e r writers i n other studies, such as those outlined i n the f i r s t part of t h i s paper, the only difference here being the lack of t r u l y large-scale firms*. I t has previously been noted that large-scale firms have operated successfully In other Canadian c i t i e s f o r a num-ber of years, and the question i n e v i t a b l y a r i s e s as to what the reason i s f o r t h e i r v i r t u a l absence here. Many reasons have been c i t e d as preventing large-scale builders from getting a firm p o s i t i o n i n the industry here, while i n other North American c i t i e s they have achieved a dominant role i n the pro-duction of new houses. Among the reasons most often c i t e d are the "stranglehold" r e a l estate firms hold by their^preemption of undeveloped land and t h e i r function as land developers, the Impossibility of obtaining future commitments of mortgage financing, the high costs of the area (including materials, labor and land), a low p r o f i t i n large-scale b u i l d i n g here, a f a i l u r e by l o c a l supply firms and i n s t i t u t i o n s t o recognize housebuilders as a regular type of business, d i f f i c u l t t e r r a i n of many types, the expense and d i f f i c u l t y of obtaining N.H.A. financing and passing a l l the inspections, and the possible resistance of the market to tract-type housing. In addition, there were c e r t a i n problems encountered by large-scale builders 94 who have attempted to operate i n the Vancouver area and f a i l -ed, such as the unfamiliar types of t e r r a i n , a very d i f f i c u l t type of hardpan, the higher r a i n f a l l which often l a s t s many days and hinders operations, a shortage of suitably experienc-ed labor f o r them when they f i r s t s t a r t operating, and a poor market a n a l y s i s . A complaint of the lar g e s t builders operat-ing here was the problem of acquiring suitable volumes of land at a p r i c e f e a s i b l e f o r t r a c t housing and assuring a f a i r l y steady flow of land, problems which were rel a t e d and had often caused firms to c u r t a i l t h e i r a c t i v i t i e s here. Many of these causes may be i n t e r r e l a t e d , or merely symptomatic of the general s i t u a t i o n , rather than causes. The following discuss-ion considers a number of the problems c i t e d and t r i e s to put them into the general context, while considering some of the experiences of la r g e r firms i n the area. A number of builders indicated that they would not ex-pand because there was not enough money i n large-scale house-bui l d i n g to make i t worth-while. The implication of t h i s i s that some variable (or variables) i n the production of large t r a c t s of housing i n Vancouver creates a d d i t i o n a l expense to such a degree that the economies of scale achieved are c a n c e l l -ed out by r i s i n g costs at a much lower l e v e l of production than elsewhere. The question i s which variable, I f any, can be i s o l a t e d as the most probable cause of the Increased ex-pensed 95 One suggestion has been that there i s a lack of accep-tance by the Vancouver market of tract-type housing, and examples are often c i t e d of consumer resistance, most notab-l y a large firm that b u i l t a number of houses i n 1964 and f i n a l l y l e f t with i t s project h a l f completed amid a large amount of adverse p u b l i c i t y . This firm, which had operated successfully i n Eastern Canada and the United States, obtained a large area of undeveloped land quite near Vancouver i t s e l f , and proceeded to b u i l d a number of i t s most successful models sold i n the Toronto area. Although the houses met National Housing Act standards and the l o c a l b u i l d i n g code requirements, the development was attacked by the public and the media a l i k e f o r shabby qua l i t y and monotonous s t y l i n g . A f t e r a number of setbaoks, the firm sold the remaining l o t s to p r i -vate builders and l e f t the area, c i t i n g adverse p u b l i c i t y and d i f f i c u l t i e s i n obtaining s u f f i c i e n t s k i l l e d labor as the reasons f o r t h e i r problems. I t has been said that the unusual geography of the c i t y , coupled with f l e x i b l e frame construction and the general wealth of the area has spoiled the consumer of housing i n Vancouver so that he demands a custom home. Since t h i s has not proved the case i n other c i t i e s i n Canada and the United States, since many people moving here from other c i t i e s are probably w i l l i n g to accept t r a c t housing, and since cheap, monotonous housing was accepted here immediately following 96 the Second World War, there i s l i t t l e reason to believe that there i s an indigenous resistance to t h i s type of housing. In the case of t h i s p a r t i c u l a r company, the bad p u b l i -c i t y was p a r t l y a r e s u l t of misjudging the general public's acceptance of housing t r a c t s , a public wary because there were so few tract-type developments i n the area. Another poss-i b l e f a c t o r was a lack of market research into the tastes and preferences of the area, preferences which demand small v a r i a -tions i n the house and decide whether i t i s "poorly b u i l t " or acceptable to the consumer. This was a case where the builder l o s t his advantages of experience and better management by moving to a new area and not being prepared f o r i t s idiosyn-c r a s i e s . Another problem was a shortage of suitable labor, and t h i s may a l s o have been poor judgment on the part of management, but more l i k e l y i s a common problem f o r a firm of t h i s nature. Other problems that are alleged to hinder out-of-town large-scale builders i s the considerable amount of r a i n f a l l , and unfamiliar types of t e r r a i n and hardpan. I t would appear that the r a i n f a l l i s not a severe problem, as l o c a l builders have adapted to i t . I t could be a f a c t o r that might increase an unprepared builder's costs, but i t does not seem to be an insurmountable problem. S i m i l a r l y , the unfamiliar types of t e r r a i n only mean that the incoming builder must adequately 97 research the area. In some instances builders have purchased very h i l l y areas of land that proved too costly to develop f o r t r a c t housing. This merely points out the need to be ca r e f u l when s e l e c t i n g a s i t e and the l i m i t a t i o n s of c e r t a i n types of land when i t comes to large-scale b u i l d i n g . Financing problems were also mentioned by builders as holding them at t h e i r present s i z e . While the f i n a n c i a l i n -s t i t u t i o n s across Canada are the same, i t does appear that large firms have some advantage when obtaining finance under the National Housing Act. This advantage may occur i n a t i g h t money period when previous c l i e n t s receive preference on mort-gages i n proportion to t h e i r previous years volume of N.H.A. mortgages. This procedure would tend to favor the large-scale firms with t h e i r steadier production and longer planning horizon. Herzog noted a s i m i l a r phenomenon with large-scale firms and F.E.A. financing i n the United States. (See Page 29) A complaint of smaller builders concerned the extra expense of N.H.A. financing caused by delays while waiting f o r i n -spection and the problems of s a t i s f y i n g t h i s second inspector. These problems would be much l e s s severe f o r the large builder, who i s b u i l d i n g a standard product i n a concentrated area. These factors then indicate an advantage large firms may often have i n being able to use N.H.A. financing, an;advantage Important because i t appears that t h i s may be a form of guaranteed financing where a builder may buy his land i n 98 advance and s t a r t planning with a reasonable expectation of the minimum l e v e l of financing he w i l l be able to obtain. While the small builder, then, w i l l not have t h i s take-out financing s t a b i l i t y , i t i s l i k e l y that t h i s i s merely a symptom rather than a cause of a lack of large builders i n an area. This l i n k i n g of C.M.H.C. a c t i v i t y to large builders i s somewhat borne out by C.M.H.C. data which shows extensive mortgage a c t i -v i t y by t h e i r agency a t various times i n every other c i t y i n d i -cated, but generally very l i t t l e a c t i v i t y i n Vancouver. (See Tables XXI and XXII, Pages 99 and 1G0). Another problem c i t e d i s the high cost of inputs i n the area. The cost of labor and materials are generally quite high i n the area, athd Vancouver has often been one of the most expen-sive c i t i e s to b u i l d houses i n . (See Table IV, N.H.A. Cost Per Square Foot Bungalow, Page 62). While some builders f e l t that sudden changes i n material prices such as lumber, were disruptive and hindered t h e i r planning and cost estimating, none indicated t h i s as a reason f o r lack of large b u i l d e r s . In situations where suppliers of materials t r i e d to maintain p r i c e s and not pass along volume discounts to large builders, Herzog concluded that a f t e r an i n i t i a l shake-down, suppliers usually became quite competitive. Any problems i n a suppo-sedly r i g i d wholesale d i s t r i b u t i o n pattern are a l s o usually symptomatic of the s i t u a t i o n at large, rather than being a fa c t o r i n h i b i t i n g the growth of large firms. S i m i l a r l y , when TABLE XXI SINGLE FAMILY DETACHED DWELLING STARTS FINANCED UNDER N.H.A. IN SELECTED CITIES Period Calgary Edmonton Hamilton Montreal Ottawa Toronto Vancouver Canada 1968 s 1,935 1,662 438 2,690 960 479 376 27,264 1967 1,550 1,479 1,222 3,168 , 1,032 1,467 1,462 28,518 1966 1,654 1,647 1,174 5,131 1,089 2,399 1.373 28,423 1965 1,853 2,268 1,141 4,376 859 1,990 791 32,271 1964 1,857 2,093 1,126 4,845 1.138 3,800 968 33,525 1963 1,604 2,559 1,345 5,129 1,441 4,724 764 38,946 Source: Canadian Housing S t a t i s t i c s 1968 VO TABLE XXII SINGLE FAMILY DWELLING STARTS FINANCED UNDER N.H.A. AS A PERCENTAGE GF TOTAL IN SELECTED CITIES Period Calgary Edmonton Hamilton Montreal Ottawa Toronto Vancouver Canada 1968 79.0 63.7 22.8 63.7 40.1 8.6 7.3 36.2 1967 61.3 77.5 51.8 72.0 62.2 21.6 24.4 39.3 1966 78.3 77.5 54.2 76.4 65.2 33.4 31.8 40.2 1965 79.5 82.0 55.6 68.5 50.8 28.0 20.2 42.7 1964 83.0 80.2 55.5 72.0 62.9 45.2 23.4 43.4 1963 80.5 88.5 67.0 71.0 71.2 59.4 20.1 50.4 Source: Canadian Housing S t a t i s t i c s 1968. H o o 101 one considers the high p r i c e s of commodities and labour, one need only consider s i m i l a r high-price areas which have support-ed a large-scale b u i l d i n g industry such as C a l i f o r n i a or Southern Ontario. The expense of land i s a d i f f e r e n t type of problem. A number of builders f e l t land prices were too high i n the area f o r large-scale buildings, e s p e c i a l l y when compared to land p r i c e s i n some American c i t i e s . The f a c t remains that unlike other areas which enable a build e r to move farther out when land p r i c e s r i s e , there are very f i n i t e l i m i t a t i o n s on the amount of suitable land a v a i l a b l e f o r t h i s type of building i n the Vancouver area, a l i m i t a t i o n that keeps builders from moving farther out. The suitable land i s i n the shape of an elongated t r i a n g l e , with the urban centre on one side of the base, a s i t u a t i o n tending to push builders into the constantly narrowing v a l l e y to the east i n search of raw land. Thus, large-scale builders are competing f o r land that very r a p i d l y becomes quite distant from the c i t y i t s e l f and which i s already f a i r l y b u i l t up and has r e l a t i v e l y small-sized land holdings. This s i t u a t i o n imposes l i m i t s not usually found elsewhere on the av a i l a b l e suitable land. Builders and the general public have often blamed r e a l estate development companies and i n p a r t i c u l a r what are termed "land speculators" f o r buying up much of the raw land and 102 exerting a stranglehold on land development and the builders, often by demanding exclusive r i g h t s of sale and by financing the b u i l d e r as w e l l . This does not appear to be the case. Given the d i f f i c u l t y of assembling reasonably large blocks of land In the area, because of the r e s t r i c t e d supply and the necessity of persuading a number of owners to s e l l , land assem-bly i s a d i f f i c u l t procedure which the r e a l estate firms are better equipped and more able to handle than most bu i l d e r s . These firms often have the c a p i t a l available f o r t h i s type of undertaking, have greater continuity of operation and i n p a r t i -c ular have a market or i e n t a t i o n and contacts both f o r the pur-chase of land and Its resale. The r e a l estate firms doing development work appear to be providing a service which gives the minimum l e v e l of o v e r a l l development and consistency f o r a neighbourhood which customers demand, a service most builders are unable to provide because of the general land s i t u a t i o n and t h e i r c a p i t a l p o s i t i o n . In actual f a c t , the Intermediate firms with a good c a p i t a l p o s i t i o n do develop t h e i r own land, often purchasing i t i n the raw state from r e a l estate firms that may have assembled i t . (See Table XVIII (a) Page 86) The impor-tance of r e a l estate firms then probably r e f l e c t s that t h i s i s the most e f f i c i e n t method of land assembly i n t h i s area. One can r e a d i l y see both the importance of large areas of low-priced, undeveloped land to the large volume builder, and the heavy impact i f t h i s land i s not a v a i l a b l e . I t was 103 e a r l i e r noted that large builders r e l i e d on being able to buy land that has not r i s e n greatly i n value because of the ap-proaching urbanization and develop a complete community. This i s c l e a r l y impossible here. The large builder also moved fur-ther out to avoid troublesome c i t y councils and r e s t r i c t i v e zoning and b u i l d i n g code practices, advantages denied to the l o c a l builders i n Vancouver. The most important aspect of t h i s land-short s i t u a t i o n , however, has already been mentioned, and that i s the f a c t that large firms are not able to maintain a steady stream of l o t s f o r t h e i r use at p r i c e s s u f f i c i e n t l y reasonable to b u i l d t r a c t houses and s e l l them at t r a c t p r i c e s . This e r r a t i c quality i n t h e i r land supply destroys one of t h e i r greatest advantages and what they must have to succeed, a long-range planning horizon. Without a long range planning horizon they are almost as vulnerable to sudden economic changes as small firms, and one of t h e i r major advantages i s l o s t . PAST III CONCLUSIONS 104 In the production of t r a c t housing, i t Is apparent that d i v e r s i t y of product i s s a c r i f i c e d f o r a lower cost per unit , and t h i s i s t h e i r major s e l l i n g point. I t i s obvious that p a r t i c u l a r problems could increase expenses f o r the large-scale firm, problems which might not a f f e c t the smaller builders at a l l . I t has been estimated that by taking advan-tage of wider technological p o s s i b i l i t i e s and reorganizing and r a t i o n a l i z i n g t h e i r labour force, intermediate firms may save approximately twelve per cent and large firms may save about twenty-five per cent of labour cost. Even when the other savings of scale are added to t h i s , i t i s obvious that even a few areas of d i f f i c u l t y can quickly eliminate the large b u i l d -er's advantage. Although problems such as obtaining crews, d i f f i c u l t s o i l conditions, rough t e r r a i n , and many others could be more of a problem to the large b u i l d e r than the small, the key variable here c e r t a i n l y appears to be that of land supply. I t has been generally noted that ensuring a steady supply of land i s almost no problem f o r the smallest builders, and s t e a d i l y increases as the builder's volume grows. There-fore, any s i t u a t i o n which s i g n i f i c a n t l y increases the d i f f i -c u l t y , and hence the cost, of assembling suitable volumes of land i s c e r t a i n to lower the maximum economic size of a b u i l d -ing f i r m . The r e s u l t i s that i n some c i t i e s with the r i g h t combination of land a v a i l a b i l i t y , market si z e and demand, 105 and entrepreneurial talent, the maximum size i s about 750, i n other areas i t i s about 250, while In Vancouver, l a r g e l y be-cause i t i s a land-poor area, the maximum size Is around 100. units per year. 106 SUGGESTIONS FOR FURTHER STUDY In r e l a t i o n to thi s p a r t i c u l a r study, further research could be done r e l a t i n g to farm sizes i n the area around Vancouver i n comparison to other c i t i e s , a breakdown consider-ing the existence of la r g e r farms and t h e i r owners, whether occupiers or investors waiting f o r suitable time to develop or s e l l . A confirmation of small land holders would indicate the expense of assembling raw land. S i m i l a r l y , a study of the bui l d i n g firms themselves and the costs involved i n assembling land here could be i n s t r u c t i v e . This would permit the establishment of cost curves f o r the f i r m s 1 land a c q u i s i t i o n s at d i f f e r e n t volumes, and help f i n d the optimum firm size f o r the area. Study on the e f f e c t of N.H.A. financing would also be in s t r u c t i v e to determine whether large firms i n Canada do have a sizeable advantage i n obtaining t h e i r funds, and what e f f e c t t h i s has on the growth of firms. An important point would be whether N.H.A. financing hinders the growth of small firms into large ones at the present time, p a r t i c u l a r l y i n Vancouver. A f i n a l comment i s i n reference to the fa c t that t h i s study would have more relevance i f there were other studies on other Canadian c i t i e s f o r the purpose of comparison. The almost complete lack of information on other c i t i e s could be considerably remedied, and should be i f there i s to be informed discussion on government p o l i c i e s . APPENDIX: A 108 METHODOLOGY OF STUDY The general aim of t h i s study has been to determine the general p r o f l i e of the housebuilding industry i n Vancouver, i n order to compare i t to the industry elsewhere, put i t i n a general context, and determine on a systematic basis i t s d i f -ferences, i f any, to other s i m i l a r areas. In order to estab-l i s h a picture of the Vancouver Industry based f i r m l y i n fa c t , i t was necessary to run an Independent survey. This was necessitated by the lack of relevant data on the subject that can be obtained f o r t h i s area. A great amount of information has been accumulated about housing by various government agencies, but most of i t could not be used. In many cases the figures applied to the entire nation or province or a l l types of dwellings, includ-ing apartments, would be combined. In some instances, the data would apply only to the a c t i v i t y of the agency rather than to the entire industry, and d i d not r e f l e c t the industry as a whole, a problem that occurred with most of the C.M.H.C. data. Wherever possible, ava i l a b l e data has been incorporated into the study. The Dominion Bureau of S t a t i s t i c s provided basic information such as populations, consumer pr i c e indexes, and information on ag r i c u l t u r e surrounding the c i t i e s . The Department of Labour provided s t a t i s t i c s on wage rates. One of the main governmental agencies used was the Central Mortgage and Housing Corporation, which provided data on house and duplex s t a r t s , cost of single family dwellings i n Canadian centres, a construction cost index, land cost e s t i -mates, housing s t a r t s under the Federal Housing Act (F.H.A.), and t o t a l dwelling s t a r t s . Many of these figures were impor-tant i n determining the general background of the industry and r e l a t i n g Vancouver to the other centres. These sources appear l a t e r i n the appendix. Their data, while h e l p f u l , offered no information on the a c t i v i t i e s of the i n d i v i d u a l builders, and very l i t t l e on Vancouver i n p a r t i c u l a r . I t was necessary, by means of a questionnaire and personal interviews with the firms to obtain the necessary information. U n t i l t h i s study, no one could state with any degree of p r e c i s i o n what the nature or siz e of the operations of housebuilders was i n Vancouver. The number of firms, the l o c a t i o n of t h e i r a c t i v i t y and t h e i r s i z e of operation were unknown. The survey i n t h i s study was undertaken to provide s t a t i s t i c a l l y r e l i a b l e information on c e r t a i n aspects of the industry that were considered e s s e n t i a l to e s t a b l i s h the basic outline of the industry. 110 An i n i t i a l survey of bu i l d i n g permits, contracting licences and trade l i s t s y ielded a population of approximate-l y 650 firms, or e n t i t i e s erecting houses, with no guarantee that these were a l l the builders active i n the metropolitan area. The actual population used was compiled from the b u i l d -ing permits issued by the municipalities Involved f o r the months of May and June, 1969* Building permits are required by a l l m u n i c i p a l i t i e s f o r a l l improvements made to property i n t h e i r j u r i s d i c t i o n . Every new bu i l d i n g to be erected must appear on these permits, and they are used by the Central Mortgage and Housing Corporation as a basis f o r new housing s t a r t s . In th i s manner each firm or e n t i t y appeared i n the population only once unless they appeared under more than one name. The population f o r the two month period was 524 e n t i -t i e s , which included i n d i v i d u a l s b u i l d i n g t h e i r own home as well as bu i l d e r s . I t was decided, because of l i m i t a t i o n s i n time and funds, to obtain a sample of one hundred firms, and interview as well any known lar g e r firms'. I t was important to eliminate homebuilders-occupiers from the industry study as they would tend to bias the r e s u l t s and obscure any conclusions. There i s always the danger when choosing a point i n time to study an industry, that the period w i l l not be a t r u l y represen-t a t i v e one1. I t was f e l t that the two month sample at a normally I l l busy time of year would y i e l d a representative cross-section of the industry, and as f a r as can be seen, the population was representative. In spite of increasing, record high i n t e r e s t rates and a federal government t i g h t money p o l i c y , housebuilding a c t i v i t y remained a t a high l e v e l i n 1969. just s l i g h t l y below that of 1968. During the period r e l a t i n g to the study, a c t i v i t y was comparable to that i n 1968. One may then assume thatthere were no major factors a l t e r i n g the nature of the industry during the study period and that as f a r as the economic background i s concerned t h i s represents a t y p i c a l s i t u a t i o n f o r housebuilders i n Vancouver. A small p i l o t study served to check the v a l i d i t y and p r a c t i c a l i t y of the questionnaire and contact procedures, and then the working samples were drawn. From the o r i g i n a l population which was arranged i n alphabetical order, a f i r s t sample of twenty per cent was drawn, which t o t a l l e d 105 e n t i -ties-. A l e t t e r was sent to each builder o u t l i n i n g b r i e f l y the nature of the study and Introducing the interviewer. Where possible, a telephone c a l l was made to the i n d i v i d u a l within a week, and i f i n f a c t i t was a commercial housebullder he was asked i f he would agree to the interview, e i t h e r on the telephone or i n person. The telephone interviews were not s i g n i f i c a n t l y impaired i n quality compared to personal i n t e r -views as there was no v i s u a l information to be conveyed. The questionnaire was never l e f t at the builder's o f f i c e to be 112 f i l l e d In or mailed to him unless he gave no a l t e r n a t i v e . The personal interview technique was highly e f f e c t i v e , y i e l d i n g the very low r e f u s a l rate of 8.6 per cent i n the f i r s t sample drawn, and a low "no further contact" rate of 9.5 per cent In an industry where many firms are constantly moving and d i s -appearing. A second sample was drawn "by the same method, and the same procedure was followed u n t i l one hundred interviews were obtained with commercial bui l d e r s . At that point, the remaining known lar g e r firms were interviewed by the same pro-cedure . The survey was designed to obtain basic Information concerning the siz e and nature of the firms, t h e i r financing, a c q u i s i t i o n of resources, r e l a t i o n s with other firms, basic operating methods and s e l l i n g procedures. In the resource area, a v a i l a b i l i t y of land was considered, Including the scale of land purchases and the sources open to the bu i l d e r . The i n i t i a t i o n of projects was considered and operations were c l a s s i f i e d as contract or speculative. In the area of finance, terms of land purchases, construction loans and use of trade c r e d i t were included. In addition, an open question ended the questionnaire which enabled the builder to explain his ideas on the industry i n general, and why his firm was operating a t Its present s i z e . The questionnaire i t s e l f consisted of twenty-two questions, with some containing several points within them. For a reproduction of the introductory l e t t e r and the question-113 naire see Pages 11.6 to 119, The greater part of the section on Vancouver's Housebuilding Industry i s based on the data generated by t h i s questionnaire. In a d d i t i o n to the points considered i n the question-naire, consideration has been given to the r e l a t i v e p r i c e l e v e l s i n the industry and i n Canada, farm sizes adjacent to various metropolitan areas and general l e v e l s of a c t i v i t y i n the period during which the sample was taken and the interview-ing c a r r i e d out, a period extending from the beginning of May to the end of September. In general, those builders contacted were very co-operative and candid, and almost without except-ion answered a l l the questions to the best of t h e i r knowledge. A f t e r the questionnaire r e s u l t s were gathered, the population was graded according to s i z e , and l a t e r into sub-groups". Firms were graded according to s i z e because i t was the most f e a s i b l e method, and has generally been used i n s i m i l a r studies and i n the industry i t s e l f . Other possible methods of c l a s s i f i c a t i o n were by the value of production, value of assets, number of employees or type of management. Maisel found that The degree of c o r r e l a t i o n among these various methods i s so high that choosing any one w i l l give r e s u l t s varying only s l i g h t l y from any of the others.108 The complete data was recorded i n a form which could be used f o r preparing tables suitable f o r i n c l u s i o n i n the study. 114 While i t was possible to use the t o t a l sample f o r d i s t r i b u -tions, there was a problem i n the sub-groups when considering sample siz e f o r meaningful population d i s t r i b u t i o n s . In these cases, the judgment of the observer i s r e l i e d on, and while t h i s i s somewhat les s desirable than a rigorous s t a t i s t i c a l a nalysis, Maisel stated that i n his own study and experience ... An observer f a m i l i a r with the f i e l d and armed with supplementary information may draw inferences from sparse data which prove as v a l i d as those based on more extensive surveys, p a r t i c u l a r l y i f nonnormal d i s t r i b u t i o n s p r e v a i l . 1 0 ? 115 APPENDIX: B INTRODUCTORY LETTER We are currently engaged i n a study of the housebuilding industry i n metropolitan Vancouver. Our aim i s to obtain an accurate picture of the d i s t i n c t i v e c h a r a c t e r i s t i c s and problems of the industry here i n Vancouver. Recent events, notably the "housing c r i s i s " have brought a great deal of attention to your Industry, and much of the discussion has been based on an Inaccurate picture of the s i t u a t i o n . One reason i s a lack of basic facts and know-ledge of the housebuilding industry. A p r a c t i c a l study which sheds l i g h t on the v i t a l operations of the housebuilder and developer w i l l obviously benefit both the builders and the p u b l i c . This study i s being c a r r i e d out under the supervision of a number of the Faculty of Commerce at the University of B r i t i s h Columbia as part of the requirements f o r a Master's Degree i n Business Administration. We are contacting selected members of firms active i n your industry and wish to interview a member of your firm. The interview w i l l consist of a few b r i e f questions about con-s t r u c t i o n techniques, land assembly, financing and firm s i z e . The interview may be conducted over the telephone, or by personal interview a t your convenience. Naturally, a l l information obtained w i l l be kept s t r i c t l y c o n f i d e n t i a l . When the study i s completed, the r e s u l t s w i l l be av a i l a b l e to a l l p a r t i c i p a t i n g firms. The report w i l l reveal nothing about i n d i v i d u a l firms or persons. Would you be w i l l i n g to p a r t i c i p a t e ? A study useful to the housebuilding industry depends on the co-operation of the selected firms. We w i l l contact you by telephone i n the next few days and look forward to your co-operation. We w i l l be pleased to give you further information on the study should you request i t . Sincerely yours, E. V. Price 116 APPENDIX: C QUESTIONNAIRE HOUSEBUILDER INTERVIEW University of B r i t i s h Columbia Faculty of Commerce Masters Program Date Interviewer NOTE: Last Project means the l a s t house completed and sold and the larger development ( i f any) of which i t form-ed a part. 001 How many housing s t a r t s did your firm make i n the l a s t year (July 1, 1968 - July 1, 1969)? 002 Is t h i s an estimate? Yes No 003 When d i d you begin b u i l d i n g under your present set-up? 004 What was the size of the larg e s t piece of land purch-ed or assembled by your firm f o r housebuilding (one l o t equals land f o r one house)? ANS. LOTS 005 What was the t o t a l size of the land assembled f o r your l a s t housebuilding project (Please see the d e f i n i t i o n above i n Note)? ANS. LOTS 006 Would you have purchased more land f o r t h i s project i f i t had been available at a s i m i l a r price? Yes No 007 From what source d i d you obtain t h i s land (e.g. r e a l estate agent, customers own, etc.)? ANS. 008 Did your firm develop the land f o r your l a s t project? i n what ways? - 2 - 117 Grading and l e v e l i n g s i t e Surveying the p l o t s l t e ( s ) Constructing basic roads _______________ Paving Boads ' I n s t a l l i n g curbs ________________ I n s t a l l i n g sidewalks I n s t a l l i n g s t r e e t l i g h t i n g _______________ I n s t a l l i n g sewers ( i f any) 009 What types of work did your firm do i n the actual con-s t r u c t i o n of the house i n your l a s t project? Please l i s t functions. Supervising & Co-ordinating • Framing and Rough Construction _________________ Cleaning up Others 010 What pre-fab techniques d i d your f i r m use i n your l a s t housebuilding project? YES NO a) Pre-cut lumber ( ) ( ) b) Pre-assembled frams, wall sections, etc. ( ) ( ) c) O f f - s i t e f a b r i c a t i o n by your firm ( ) ( ) Please specify d) Pre-fabricated module (bathrooms? etc .) ( ) ( ) e) Pre-assembled cabints ( ) ( ) f) Pre-hung doors ( ) ( ) g) Complete window assemblies ( ) ( ) h) Other, please specify 011 Did you b u i l d your l a s t l house on speculation or to order? 1) Speculation ___________ 2) Order 012 How d i d you s e l l your l a s t house ( f o r example: through a r e a l estate firm, newspaper ad, etc.)? ANS. 013 What was the sale price (on completion) of your l a s t house? $ 014 In what municipality was t h i s house located? ANS. ; 015 Do you have any regular t i e - i n to other firms In your business? - 3 - 118 Example r e l a t i o n s h i p s : 1) Owner has f i n a n c i a l i n t e r e s t i n other firm. 2) Works exclusively with other firm. 3) Other firm has f i n a n c i a l i n t e r e s t i n buil d e r . 4) Other, please specify Types of firms: Specify r e l a t i o n s h i p 1) Land Development firm: • 2) Seal Estate Firm: 3) Other: please specify nature of firm and nature of spe c i a l r e l a t i o n s h i p : ^ FINANCING: 016 For your l a s t land purchase were you able to arrange a mortgage with the owner or some type of agreement f o r sale? ANS. 017 Have you been able to get as many bui l d i n g loans as you wanted th i s year? Ies No 018 On your l a s t house, how large a construction loan could you get? ANS.Jj 019 How much money d i d you have to put out on construction i n your l a s t house before the construction loan started coming? ANS. J 020 What terms do you get from your major suppliers? ANS _ _ Lumber _______________________________^^ Cement Other . 021 On your l a s t house, what terms d i d you get from your sub-contractors ? ANS. Roofers ________________________ E l e c t r i c i a n s Painters ------------------^ Plasterers - 4 - 119 Plumbers _______.^ __, Heating Contractor Framing Other 022 Why didn't you b u i l d more houses l a s t year? 1 2 0 FOOTNOTES ^"Sherman J». Maisel, Housebuilding i n Tr a n s i t i o n . University of C a l i f o r n i a Press. Berkeley and Los Angeles, 1953. 2 ' . . -John P. Herzog, The Dynamics of Large-Scale House- b u i l d i n g . University of C a l i f o r n i a , Berkeley, 1963. 3Maisel, P. 2 1 . ^Herzog, p. 2 0 ^Burnham Kelly, "Problems and Potentials - The Housing Industry Today", and "The Future Builders" from The Design and Production of Houses, Edited by Burnham K e l l y . McGraw-Hill Book Company, Inc., New York, 1 9 5 9 . pp. 1 - 5 6 , 348-363. Urban Housing, Edited by William L. Wheaton, Grace Milgram, and Margy E l l i n Meyerson. Free Press, New York, 1 9 6 6 . ?G. W. Bertram and S. J . Maisel, I n d u s t r i a l Relations  i n the Construction Industry. I n s t i t u t e of I n d u s t r i a l Relations, University of C a l i f o r n i a , Berkeley, 1 9 5 5 . 8 M a i s e l , p. 16'. 9 M a i s e l , p. 1 7 . l°James G i l l i e s and Frank Mitielbach, Management i n the  Light Construction Industry. Real Estate Research Program, University of C a l i f o r n i a at Los Angeles, 1 9 6 2 . Reprinted i n Urban Land Economics, pp 3 1 4 - 3 1 6 . i : L I b i d . , p. 3 1 5 . l 2 I b i d . , p. 3 1 5 . 1 3 i b i d . , p. 316'. 14 Herzog, p. 6 . l ^ I b i d . , p. 7 . 1 6 I b i d . , p. 7 . 1 7 I b i d . , p. 14. 121 1 8 I b i d . , p. 17 ^ I b i d . , p. 17 2 0 M a i s e l , p. 19 2 1 A l b e r t G. H. Dietz, Castle N. Day, and Burnham Kelly, "Current Patterns of Fabrication", from The Design and Production of Houses, Edited by Burnham Kelly, McGraw-Hill New York, 1^59- p. 138-145. 2 2 I b i d . , p. 145 2 3 i b i d . , p. 145-148 2 Z f K e l l y , "Problems and Potentials", p. 26. 2^John T. Dunlop, "Labor-Management Relations", from The Design and Production of Houses, Edited by Burnham Kelly, McGraw-Hill, New York, 1959. p. 278. 26 2 7 I 28. 29-30-31; 32. 333 34, 35-36. 37; 38-39, 40-Kelly, "Problems and Potentials", p. 33< Maisel . P . 22 Ibid., P. 32-33 Ibid., P. 34 Ibid., P. 36 Ibid., P. 37 Ibid., P. 60-61 Ibid., P. 45-46 'Ibid., P. 49-50 Ibid., P. 64 Ibid., P. 64 Ibid., P. 67 Ibid., P. 68 Ibid., P. 69 Ibid :., P. 70-71 1 2 2 41; 42. 43. 44-45; 46. 47. 48j ^ Q»The Home Builder — What Does He Build?", The Journal of Homebuilding, March I 9 6 0 , quoted i n Herzog, p. 2 0 , 5°Maisel, p. I l l Herzog, p. 74 ^ 2 K e l l y , "Current Patterns of Fabrication", p. 149.,. -^Herzog, p. 63 ^ M a i s e l , p. 114 5 5 I b i d . , p. 114 5 6 I b i d . , p. 150 •Ibid., P. 71 Ibid., P. 75 'ibid., P. 77 'Ibid., P. 79 Ibid., P'» 80 Ibid., PP . 88-89 Ibid., P. 95 Herzog, P . 20 5 7Herzog, p. 68 5 8Maisel, p. I2i 59nerzog, p. 69 60] 61, Kelly,"Current Patterns of Fabrication," p. 153. LHerzog, p. 73 6 2 I b i d . , p. 65 ° 3Maisel, pp. 126-128 6 i fHerzog, p. 69 ° 5Herzog, p. 40 123 6 6 I b i d . , p. 40-41 6 7 M a i s e l , p. 193 ^Herzog, p. 22 6 9 I b l d . , p. 25 7°Ibid., p. 72 7 1Burnham Kelly, "The Future Builders", from The Design  and Production of Houses, Edited by Burnham Kelly, McGraw-H i l l , New York, 1957, p. 358. 7 2 K e l l y , p. 358 73Kelly, p. 119 7**Kelly, p. 159 7^Herzog, p. 66 7 6 K e l l y , p. 112 7 7 M a l s e l , p. 134 7 8 I b i d . , p. 140 7 9 I b i d . , p. 163 8 0 I b i d . , p. 249 8 l M a i s e l , p. l6j 8 2 I b i d . , p. 221 8 3 I b i d . , p. 221 8 i + I b i d . , p. 216 8 5 I b i d . , pp. 216-217 86 Ibid., p. 130 8 7 I b i d . , p. 217 8 8 I b i d . , p. 131 89 Herzog, p. 27 124 9°Kelly, "Current Patterns of Fabrication", p. 148-149 9 1"The Emerging Giants", House and Home, Vol . 23, Number 1, January, 1963* PP« 67-68. 92 "New Management Man", House and Home, Vol . 191 Number 1, January, 1961, pp. 124—134. 9 3 I b i d . , p. 125 94 "Why the Roof Collapsed on the Lusk Corporation", House and Home, Volume 29t January, 1966, p. 80. 95»njhe Emerging Giants", House and Home, Volume 23, Number 1, January, 1963, p. 68. Also P.S. Bordon, The House-bu i l d i n g Industry - Present and Future. University of Washington Business Review, V o l . 25, Number 1, October, 1965* pp. 78-80. 96 Bordon, p. 65 9 7 I b i d . , p. 75 98C.M.H.C. Office, Vancouver. Personal Interview, Mr. A. Skuce. "Canadian Housing S t a t i s t i c s , Central Mortgage and Housing Corporation, 1968. p. 84. 1 0 0 " S u r v e y 69 — Single Detached Houses", Canadian Builder, Volume 19, Number 3, March, 1969. Page 44, 46. Volume 19, Number II , November, 1969. page 35. Central Mortgage and Housing Office, Vancouver. 1 0 1 "The National Building Code",' The Canadian Builder, Volume 19, Number 4, A p r i l , 1969. PP 36-38. 102 "Survey 69 - Single Detached Houses", Canadian Builder, Volume 19, Number 3, March, 1969, p. 46. 1 0 3 I b l d . , p. 53. 1 0 l * I b i d . , p. 53. 1 0 5 M a i s e l , p. 155 10^G.W. Bertram and S.. J . Maisel, I n d u s t r i a l Relations i n the Construction Industry, I n s t i t u t e of In d u s t r i a l Relations, University of C a l i f o r n i a , Berkeley, 1955. 125 1 0 7 M a i s e l , Table 6, p. 342. : 1 0 8 M a i s e l , p. 21 1 0 9 I b i d . , p. 310 126 BIBLIOGRAPHY A. BOOKS Bertram, G. w., and Maisel, S. J . , I n d u s t r i a l Relations i n the Construction Industry. I n s t i t u t e of I n d u s t r i a l Relations, University of C a l i f o r n i a , Berkeley, 1955. Borden, P h i l i p S., The Home Building Industry - Present and  Future, University of Washington Business Review, Vol. 25, Number 1, October, 1965. Colean, Miles L., and Newcomb, Robinson, S t a b i l i z i n g Construction: The Record and the P o t e n t i a l . McGraw-H i l l Book Co. Inc., New York, 1952". Herzog, John P., The Dynamics of Large-scale Housebuilding. University of C a l i f o r n i a , Berkeley, 1963. K e l l y , Burnham, The Design and Production of Houses. McGraw-Hill Book Co. Inc., New York, 1959. Maisel, Sherman J., Housebuilding i n T r a n s i t i o n . University of C a l i f o r n i a Press, Berkeley and Los Angeles, 1953. Wheaton, William L., Milgram, Grace, and Myerson, Margy E l l i n . Urban Housing. Free Press, New York, 1966. B. PUBLICATIONS OF THE GOVERNMENT, LEARNED SOCIETIES, AND OTHER ORGANIZATIONS Canadian Housing S t a t i s t i c s , Economics and S t a t i s t i c s D i v i s i o n , Central Mortgage and Housing Corporation, Ottawa, 1959-1969. Census of Canada, The Dominion Bureau of S t a t i s t i c s , Published by the Authority of the Minister of Industry, Trade and Commerce, The Queen's Printer, Ottawa, 1951-68. 

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