Monday, July 14, 2008
N.M. builder finds affordable housing solution for border workers by converting containers
By Andrew Webb
Journal Staff Writer
Three years ago, Albuquerque native Brian McCarthy was a high-flying executive for a major homebuilder with several local developments.
That all changed after a business school tour of Mexican maquiladoras took a shortcut through sprawling slums where low-income workers — whom these factories depend on — live.
"It was amazing to me that people who have regular wages and employment at Fortune 1000 companies had such a low standard of living," he said of Colonia Anapra, a neighborhood west of Ciudad Juárez where an estimated 20,000 people live in ramshackle houses of scrap wood, cardboard and other scavenged materials without adequate plumbing, electrical service or other infrastructure.
"I thought, 'There has to be a better solution.'" McCarthy's 4-man company, PFNC Global Communities, aims to use surplus shipping containers — yes, you read that right — to build homes for the more than 1 million low-income workers employed by U.S. companies at factories in northern Mexico and, eventually, around the world.
The proposed 320-square-foot homes sleep five to six members of a family and feature windows, doors at each end, a bathroom with a shower, a full kitchen and a self-contained heating, air-conditioning and electrical system. Under PFNC's proposal, which is modeled on a home ownership program developed by auto parts giant Delphi, the condo-style shipping container homes would be purchased by the employers themselves and sold to employees through earnings withholdings.
PFNC vice president Pablo Nava says offering home ownership as an employee benefit could help reduce rampant turnover.
"They're all having major struggles with retention," he says. "Their employees will go to the factory next door for just another 2 cents."
PFNC stands for Por Fin, Nuestra Casa — which roughly translates to "finally, a home of our own."
McCarthy says he conceived of the idea in 2005 while reflecting on his work as a division president for Vantage Homes and after the maquiladora tour sponsored by the Anderson Schools of Management, where he later received his MBA.
Vantage builds homes around the country that range from affordable to high-priced. At one time, the company was building homes in Albuquerque for less than $80,000.
"After you've helped someone through the home-buying process, they're so appreciative," McCarthy said. "Buying a first home is a life-changing event."
In Mexico, though the government has tried to catch up to rapid urbanization by building small $20,000 to $25,000 concrete block homes for low-income workers, the average $2-an-hour wage means ownership of such a home would take up to three paid workers to qualify. Furthermore, applicants for such homes face waiting lists thousands strong.
"The growth of traditional real estate in Juárez has never kept up with urbanization," said PFNC's Mackenzie Bishop, who also joined the company from Vantage.
McCarthy said he read about the growing architectural use of the sturdy, inexpensive shipping containers in a home building industry magazine.
In countries such as the U.S. and Europe, where cheap consumer goods are typically imported, shipping containers are often in great surplus, because it is more cost-effective to build more than to send them back empty to countries where such goods are manufactured.
"I started researching it, and I found all sorts of projects using shipping containers," he said.
In fact, another local company, water purification startup Altela, uses orphaned shipping containers to build self-contained systems that clean brackish water produced as a by-product of oil and natural gas extraction.
McCarthy ran his idea by Nava, a dual U.S./Mexican citizen who was completing a business degree at Notre Dame University. Nava is also McCarthy's cousin.
They drew up a two-page summary of their concept and entered it in a 2007 Notre Dame business plan competition, which they ultimately won in the social venture division — something that came as a bit of a surprise, McCarthy said.
"We thought we'd let the experts cut some holes in our concept," he said.
The contest gave them access to mentors and potential investors, and a business was born. PFNC moved into a one-room Corrales office this year.
General Electric, through its shipping subsidiary SeaCo, donated two containers, and PFNC hired contractors to renovate them, a process that includes the application of special insulation paint, interior walls, windows and flooring.
New Mexico Community Capital, a Bernalillo-based "dual bottom line" venture fund that aims to invest in New Mexico businesses with the goal of job creation and investor return, introduced them to a similar, undisclosed fund based in Atlanta, which has since traveled with PFNC to Juárez, where the company has been talking to maquiladora executives about its plans. The prototype was shipped there in late June.
To account for staggering land prices in Juárez, PFNC plans to stack the homes 4 stories high around central squares, with playgrounds or other amenities. The company aims to build communities of about 120 homes.
McCarthy says PFNC hopes to build a large-scale manufacturing plant, either in the New Mexico border community of Santa Teresa, or in Juárez itself, where the containers could be retrofitted into homes for sale for less than $10,000.
SeaCo has offered to sell containers in bulk for as little as $1,500, and the company says it hopes to have a stockpile of containers and begin building the homes by the end of this year.
McCarthy says initially, some in Mexico balked at the idea, especially that the corrugated steel containers would get too hot. But with the paint, which also reflects the sun's light, the containers actually have an ambient temperature much cooler than the air outside, McCarthy says.
"Having a prototype has really changed minds," McCarthy says. "It's been well-received. It's a lot better than cardboard and old pallets."