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Habitat in Hungary: Promotion Opportunity for U.S. Wood Exporters
By Maria Nemeth-Ek
For a week last August, staff from the U.S. Department of Agriculture’s (USDA) Foreign Agricultural Service (FAS) rolled up their sleeves and worked alongside volunteers who built wood-frame houses in Hungary with the Jimmy Carter Blitz Building Project, sponsored by Habitat for Humanity International.
More than 500 volunteers came from Europe and the United States to help build 10 homes for moderate-income Hungarian families in Vac, Hungary.
But USDA workers had an additional motive in mind while helping with the obvious humanitarian intent of Habitat. The project provided unique opportunities for U.S. wood products exporters. It was a highly publicized event that could popularize wood-frame housing technology, and, at the same time, provide the means to survey the needs of the Hungarian construction industry.
During the months preceding the event, FAS worked with Habitat to provide contacts for U.S. suppliers of lumber and other building materials and facilitated the participation of five U.S. builders in the construction project.
Local PR Firm Generates Interest
FAS also worked with a local public relations company, P&V International, headed by a former Cochran fellow,1 to help publicize the project and educate consumers about the benefits of wood-frame housing construction.
The firm placed articles in key professional journals and daily papers, prepared a list of builders and construction firms, did direct mailings and arranged telephone interviews.
P&V also prepared information packets for firms that met with USDA staff and private sector experts and coordinated logistical details for the meetings.
Pilot Builders’ Project Underway
In Hungary, USDA staff and technical experts met with more than 40 companies to share information on the technology being used to build the houses, U.S. lumber, wood and building products, and potential contacts for joint venture partners. The visitors also were able to tour the construction site.
As a result of substantial local interest, USDA plans follow-up technical seminars. A U.S.-bound buyers’ mission of Hungarian firms was organized in conjunction with the National Home Builders Association’s annual convention in January 1997.
The local technical university in Budapest, the builders’ association, and several other Hungarian and U.S. companies expressed interest in participating in this program.
Work on this pilot project is a part of the expanded Central European wood-frame project funded by FAS’ Emerging Markets Office.
Marketing Insight of Hungarian Market
The Habitat project provided an opportunity for U.S. wood exporters to acquire marketing data on Hungarian housing needs, consumer tastes and expectations and their receptivity or resistance to new technologies. The experience also provided first-hand knowledge of the impediments Hungarian citizens face in their efforts to obtain decent housing.
Hungarian Firms Eager for New Technologies
Hungarian companies wanted to learn more about U.S. wood-frame building methods and were positive about the prospects for modifying them to suit Hungarian tastes.
Company owners and employees were looking for specific information on product characteristics, strength, house plans, prices and contacts for joint-ventures and trade partners. Several companies expressed interest in building model homes.
USDA hopes to build on the initial interest generated by the project to develop long-term market prospects for U.S. wood and building products.
Certification by EMI Necessary
Every product used in residential buildings must be certified by the Epitoipari Minosegellenorzo Intezet (EMI), the product quality control institute under the Hungarian Ministry of Industry and Trade. The certification process is fairly transparent. With time and financial commitment, companies have a good chance to have their products certified.
A few U.S. products have already secured this approval.
Meetings at the Habitat work site included EMI representatives who viewed the work in progress. U.S. marketing efforts could benefit by inviting EMI officials to come to the United States and see first-hand the safety and quality of U.S. wood and building products.
Marketing to a Growing Middle Class
Demand for new housing and improvements in existing homes in Hungary could be as high as 40,000 units annually. A large segment of the population — middle class with moderate incomes — is seeking alternative solutions to apartments and conventional brick houses that take too long to build.
This group would be receptive to purchasing U.S. wood products, if wood-frame houses can compete in price and creative financing is available.
Hungarian consumers have concerns about fire safety, noise level, energy efficiency and the longevity of wood-frame housing. Any marketing efforts would have to address these concerns, which have been successfully dealt with in other countries. The availability of financing would also be crucial to the success of the technology.
Some construction firms consider shortened construction time to be a major plus for wood-frame building methods. Other firms estimate cost savings of 15-18 percent using wood-frame construction over traditional methods.
U.S. exporters will have to compete with the price and quality of wood products from Russia, Slovakia, Western Europe and Canada.
Canada already promotes wood-frame construction, with show houses and attractive financing options for prospective home buyers. These model homes appeal to consumers, but are considered pricey for the Hungarian market.
U.S. companies providing similar houses at competitive prices would likely find a market for their products.#
Maria Nemeth-Ek is an agricultural marketing specialist with USDA’s Foreign Agricultural Service. Tel. (202) 720-3623; Fax (202) 690-4374.
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