The Seeds of our Discontent

A generation ago, there was a man named W. Edwards Deming that embraced the principles set out, in short, TQM. Total Quality Management was not his idea, but he was its Apostle. As the story goes, he went to American auto manufacturers about these principles and was summarily dismissed. Dr. Deming was told that they (auto manufacturers in the 50's and 60's) produced what they did and the American public just bought them. End of story. They evidently dismissed the [Ford] Edsel as some type of gross anomoly. Discouraged but nonetheless convinced of the TQM model, Dr. Deming went to Japanese manufacturers like Toyota and they were impressed. So much so that they adopted the TQM model. At that time, Japanese cars were somewhat of a joke. The same joke that their toy manufacturing was before it took over the world.

TQM basically proposes that whatever you produce should be produced in an environment that continuously reviews processes and procedures against the actual experience of the end user. In effect, you find your market, the price at which that market will buy your product and worry about profits later. As your refine your processes and product quality the profits follow. This in and of itself was probably what sent the American auto manufacturers into fits of roaring laughter. Our auto industry was supremely arrogant, blind and now, 50 years later, insolvent. With one-sixth of our economy tied to it, we all suffer for their myopia. What the heck does this have to do with real estate?

With home building and resale real estate in melt-down, what lessons can we learn from the auto industry and Dr. Deming? Simply this: Homebuilders and real estate firms have followed the same models for decades. They never change. They simply wait for the market to cycle through so they can continue building and marketing crap for us to buy. Since everyone is building the same crap, what choice do we have? The answer is not promising. Forgive the threadbare adage, but the Chinese symbol for problem is the same symbol for opportunity. We all need to reinvent our ideas about what we demand in our homes. We did it in automobiles and now Toyota is the number one auto manufacturer in America. They listened and responded to what we demanded.

The only way to get homebuilders and the real estate industry to listen is to demand that we change the way we build our homes. If we don't, we will be paying more for our utilities than we do for our mortgage in 10 years. If we don't, we will pay far more for homes built out of the same materials and with the same processes they are today in another 10 years. There are some decent starts to the solutions out there: water cistern systems that recycle rainwater; solar power breakthroughs by a Chinese company that makes it more efficient and affordable; energy-saving building techniques that are quite affordable and make energy consumption a fraction of the typically built home; recycling efforts that are in their infancy; heating and cooling technology that promises far less energy consumption and better interior air quality; architectural designs that better protect the home from catastrophic weather events and ordinary wear and tear.

What will have to happen is that everyone begins to demand of the builders and more importantly, of their representatives in government, building codes that define those instruments of change that must be implemented to give our children and grandchildren the chance at having the same, no, better quality of life than we have enjoyed.