Construction Informer

You have to admit the Chinese drywall story has its share of questions swirling around it. First the questions centered mostly on why it was causing the problems it was causing.

Then, more questions were raised when NPR reported a final investigation into the issue found no definite link between the drywall and the health and environmental issues being associated with it. One CDC official even went so far as to suggest the drywall in itself may not be the problem, but rather some other substance that comes into contact with the drywall. On the heels of that, five senators from the states hardest hit by the problems introduced a resolution encouraging lenders to delay or suspend mortgage payments from affected homeowners.

But getting a fix on the enormity of the problem is still largely an exercise in futility. The group of U.S. Senators mentioned above claimed it affects 1,300 homeowners in 26 states and the District of Columbia. A recent article in the Miami Herald put the number at 1,900 in 30 states and the District of Columbia. By this account, 2,000 homeowners have lodged complaints with the Consumer Product Safety Commission. Other reports throw out estimates as high as 100,000 homes affected.

When I originally wrote about this story a couple of people responded quite heartily about the troubles they had gone through because the drywall was in their homes. One even suggested that my reference to “heightened drama” in the original post had to be ignorant on my part because of the litany of problems she was facing. You can read some news accounts about what those issues were, here and here. One of those commenters also responded to a story about the potential fire hazard of the products, and talks here about the family’s relief after moving out of their home and getting away from the affects of the drywall.

But in reality, my initial remarks regarding the potential overstatement and “drama” associated with this, were related to the not-so-uncommon feeding frenzy that surrounds these kinds of events. And, if we are entirely honest about it, these kinds of events cause people to see dollar signs. Besides a boat load of experts hanging out their shingles to help homeowners determine if they have Chinese drywall installed in their homes there are also hotels offering reduced and complimentary lodging for those affected and there is even a DIY Chinese drywall test kit that homeowners can now buy. A post at Law.Com sums up how some lawyers view it.

Law firm interest in drywall cases on the plaintiffs’ side should be obvious: potential prestige and a huge financial payoff. As Darren Inverson of Norton, Hammersley, Lopez & Skokos told the Bradenton Herald,
“This could be a $100 million case, and [lawyers] could get 35 percent” of any settlement or judgment if they’re the lead attorney.” Not surprisingly, firms have stocked up on keyword-based Internet domain names to recruit potential clients, while other lawyers are going directly to construction contractors who are inspecting homes to determine whether there are drywall problems.

In addition to plaintiffs’ work, firms are also finding clients on the defense side — manufacturers, suppliers, builders and contractors who are the likely targets of class actions.

Figuring prominently in the news over many months related to Chinese drywall, is the Chinese Drywall Complaint Center, part of the Americas Watchdog group of Web sites. I visited Americas Watchdog website, and couldn’t find out who was funding this “non-profit” operation, or even who was behind it. I was curious about that because after all, suppose it was getting money from domestic drywall manufacturers, or lawyers. I’d take that into consideration when I rated the objectivity of the information it was supplying. But I’m not the only one who has wondered about Americas Watchdog. I came across some other questioning here, and another publication interviewed the person behind Americas Watchdog, here.

I exchanged a couple of emails with M. Thomas Martin of Americas Watchdog but didn’t really get any new information about the organization beyond what is already included in the links above. Martin did however expand upon his thinking in relation to a wider issue he associates with the Chinese drywall. Americas Watchdog is encouraging whistle blowers to contact it and report contractors who are, or were, hiring and using undocumented workers on their jobs. Here’s how the organization links undocumented workers to the Chinese drywall problems.

M. Thomas Martin: We do not think that US unionized drywall hangers would have ever hung toxic Chinese drywall. It is well known in organized construction labor unions circles that undocumented workers, typically from Mexico, were used by large nationals and small local homebuilders as workers in all facets of residential, and some commercial construction. At its peak in 2005, perhaps a million or more undocumented workers from Mexico or Central America were used in US residential construction and for the most part no one paid any taxes on the workers because of the 1099 tax fraud scheme I have spoken of. The US organized-labor (drywall) hangers we think, would have instantly seen a problem with the Chinese drywall and walked off the job. However, this never happened. They never got the job (since) the job was given to an undocumented worker who was never paid overtime and (who) did not have a vote if Chinese drywall was making him sick. He was poor and he was trying to feed his family in Mexico, or in Central America.

Martin also wonders who will pay the health costs for those workers sickened from installing the drywall. Most references to workers being sickened though, that I was able to find, originated with Americas Watchdog.

While the inevitable jockeying for positions continues with all involved trying to achieve outcomes in their favor, along with the inevitable capitalist drive to make a buck, it is hard to read the stories of the homeowners who have been affected and not realize that for many people Chinese drywall has forever changed their lives. The questions as to whether home builders knew they were installing defective products, and whether or not there were schemes to defraud the government of taxes on wages, will undoubtedly end up on court dockets across the country. Construction companies were hiring undocumented workers for years before Chinese drywall came on the scene and some have argued the government was a willing partner in that fraud simply by turning a blind eye.

Whether or not the negative effects of Chinese drywall is evident in 2,000, or 100,000 homes, would appear to hinge on whether some, or all of the imported product was contaminated with the substances being claimed to be causing the problems. But from strictly an industry standpoint, when you start adding up all the potential costs of moving this issue through its inevitable lifespan, the fading supply of money to do it, and adjustments and litigation related to things like insurance, it just may be this will reshape the U.S. homebuilding industry in those states most heavily affected. Perhaps the takeaway for any builder is to not only know a lot about the materials you are using, but also to have systems in place that will help to detect changes in material quality as quickly as they happen.