Vertical Integration

Four of Canada’s leading modular home builders have formed a purchasing organization, the Building Materials Buying Cooperative (BMBC). What’s intriguing about this is that one of BMBC’s partners, Kent Homes, is a subsidiary of J.D. Irving, the conglomerate whose owners might be Canada’s richest family and whose interests include forest products distribution, home improvement retailing, and shipping. The other members of the co-op, which is based in St. John, New Brunswick (Irving’s headquarters city), include Alberta-based Winalta, Ontario-based Guildcrest Building Corp., and Quebec-based Alouette Homes. “Combining with these major manufacturers across Canada should give us major combined purchasing strength,” said Winalta chairman Jim Sapara in a prepared statement. Details about the group’s organizational structure and management personnel were not available at press time. However, the co-op provides one more example of how suppliers of certain building product categories throughout North America are being pressured by home builder consolidation to expand their own purchasing clout in order to keep up with their larger customers and maintain their profit margins.