Observations Observations

September 1, 2001

Houses on the go

Texas businessman damon beyer found his long-sought-after dream house while flying from Arizona to Florida. The 1880s Victorian mansion located in Biddeford, Maine, was featured in This Old House magazine at the very attractive price of $1. The catch? The house doesn’t come with the land on which it stands. Delaware-based Historic Relocations will move Mr. Beyer’s house to its new location in Blue Hill, Maine, by cutting the walls at the joints and then transporting the flat pieces, stacked like a deck of cards, on a flat-bed truck.

House moving is not new. The initial settlement on Nantucket Island was moved from the north several miles eastward in the eighteenth century when the original harbor silted up, according to Elizabeth Oldham, a researcher at the Nantucket Historical Association. In a rare occurrence, “one Nantucket house was dismantled and went around the Horn on a ship bound for the California gold fields,” says Oldham. Today, increasing information sources are making it easier to match available houses with house hunters across a broader geographic area. Mr. Beyer’s house was also advertised on MustBeMoved.org and BuildingMovers.com, and he was one of hundreds to inquire about it.

Still, moving a house “is like orchestrating a big parade,” says Jim Nickerson (a.k.a. “Captain Groovy” ) of Nickerson Building Movers in Kingfield, Maine. Gutting, moving, and restoring the property will add another $400,000 to Mr. Beyer’s price tag. Most building movers transport a house in one piece, by inserting large beams through holes in the foundation and then jacking the house up and sliding it onto a truck. The process can take anywhere from four hours to a full day; building and highway permits must be in order, power lines taken down, obstacles removed from the truck’s path, traffic directed. And there is always the unexpected. Mr. Beyer encountered difficulties with Maine environmental law, and his move was held up until the trees on his property were counted and an adequately sized driveway was cut.

Given the complications, such houses are rarely “sold” for more than nominal amounts. Since most available houses are scheduled for demolition anyway, the owners are often content with merely saving on demolition costs, which average around $10,000.

But for some homeowners or sentimental neighbors, preserving the house and its historical value is reward in itself. Mike Barrett of Dartmouth, Massachusetts, recently posted a desperate “Must Be Moved!” message on Salvageweb.com when he learned that the developer who bought his property was planning to replace the 1860s farmhouse with a new pharmacy. Alas, greater information does not mean a match is guaranteed; as of October, Mr. Barrett had not found anyone to rescue his home. Any takers?—Leslie Mann


The inventory hot potato

Consumer taste is a challenge, at best, to forecast. But, in the past, manufacturers could at least count on their retail customers to place one large order for the entire season, giving them sufficient time to make and ship their products. Recent technological advances, however, have changed this equation. Now many retailers use sophisticated inventory tracking systems so they can reorder only when in-store supplies have dwindled, and manufacturers sometimes receive product orders only days in advance.

This rapid replenishment of inventory has obvious advantages for retailers—they have less need to worry about selling off large amounts of leftover merchandise at the end of the season or when demand slackens. However, while retailers may save on inventories, manufacturers potentially are stuck carrying more so that they can service retailers when demand picks up.

So manufacturers are now trying to improve their forecasts to reduce the risk of being left with lots of remaindered merchandise. New technology has facilitated forecasting inventory by individual Stock Keeping Units (SKUs) which refine goods to the smallest possible category (say down to color and size, in the case of clothing). Some manufacturers have also improved their estimates by openly and frequently sharing information with their retailers. David Stone, president of Sterilite Corporation, a plastic houseware manufacturer based in Townsend, Massa chu setts, spends a large portion of his time talking with customers about promotions and product placement in order to make more informed projections about demand.

Other manufacturers have opted for realigning their production process to account for differences in inventory costs. For instance, Warren Featherbone, a manufacturer of infant clothing, makes its infant christening sets at short-cycle production plants in the United States because they are high-ticket low-volume items that have a volatile sales record, says Gus Whalen, president and CEO of the company. Heavy volume products with lower inventory risk, like the infant’s white T-shirt—which isn’t likely to go out of style—are more cost-effective to produce abroad.

Even with the most sophisticated techniques, however, forecasts can sometimes be way off the mark. If they fall short, the largest retailers like Wal-Mart, Target, and Kmart can use their market power to insist they are first in line for supplies. Smaller retailers will be left with stock-outs. If these smaller retailers shared a bit more in the manufacturer’s inventory risk—perhaps by agreeing to buy a fixed amount of capacity ahead of time and specify later the particular SKUs produced—the payoff from reduced stock-outs would improve profits for both parties, says North Carolina State University professor Russell King. A hot potato is sometimes better shared than tossed around.—Matt La Penta