tional building systems by increased and continuous market demands and the resulting possibilities of significant increases in efficiency and improved management of those operations. In fact, I understand that the competition of industrialized building has led traditional builders in Europe to adopt some of the cost and time-saving and management techniques pioneered by the industrialized building community so that the competition between the two systems continues to be strong.

The prerequisite for industrialized housing of a massed or concentrated market of continuing duration was available in Europe after World War II. That war served as a grim determinant of the housing needs of many European areas and provided a large, aggregated market. This, combined with the labor shortage created by men working to rebuild industry, encouraged Europe to develop industrialized building. Many systems arose in Europe, but the majority of the industrially produced housing contracts went to a relatively few companies that have prospered. Some of these companies are now seeking acceptance in the United States under the FHA special construction methods bulletins. To date, two systems have qualified and four more are under consideration. All of these are concrete systems.

To be somewhat more specific on the status of European housing progress, as an assist in considering our own approaches, it should be recognized that only the U.S.S.R. builds more actual housing units per year than the United States. West Germany, the most productive country in Europe, is building 40 percent as many houses as we are and Sweden is building 7 percent as many. However, in terms of the number of dwellings completed per thousand inhabitants, which is a more significant figure, the countries of Western Europe, as well as the U.S.S.R., are outbuilding the United States.1

For example, West Germany over the last 5 years has built at the rate of 10.1 dwellings per 1,000 inhabitants, while the rate in the United States has been 7.4. The United Kingdom is the only country in Western Europe where this rate (7.1) is less than in the United States. The rates in other countries are: Sweden, 11.8; The Netherlands, 8.9; Denmark, 8.3; and France, 8.0. In the Soviet satellite countries, this rate ranges from 6.3 in Czechoslovakia to 4.3 in East Germany. However, the U.S.S.R. builds at the rate of 9.8 housing units per 1,000 inhabitants and produces more housing units at a higher rate (though generally of a lower level of quality and smaller size, that quality has improved in recent years) than does the United States.

Eastern Europe has concentrated on multiple-family structures, both low-rise (three to five stories) and high-rise (eight stories and above). Western Europe presents a mixed picture with the United Kingdom, Denmark, and Norway building well over 50 percent of their housing as one- and two-family buildings, and France, Sweden, and Finland concentrating on multifamily production. West Germany and The Netherlands roughly split their housing production between these two types. In the United States construction is typically and predominantly one- and two-family dwellings (61.7 percent in 1968). It is difficult to obtain figures expressing specifically the production of industrialized housing in any one country. I understand that the

All figures quoted from tables 2, 5, 6, and 7 of the United Nations ECE Annual Bulletin of Housing and Building Statistics for Europe 1967 (latest edition). U.S. data are from the Bureau of Census.

only unequivocal statistic is for the United Kingdom where industrialized housing accounts for 35.9 percent of the dwellings in the highrise building and 29.6 percent of the low-rise buildings. France, in Western Europe, one of the pioneers in industrialized housing, appears to be obtaining under 20 percent of its multidwelling production through industrialized production and about 24.5 percent of its single and two-family dwelling construction by this means. It appears that housing production in Eastern Europe is mostly industrialized. Figures range from 60 to 97 percent for the satellite countries and from 80 to 85 percent for the U.S.S.R.2

Who pays for housing varies from country to country, and it does have an affect on the type of housing that is introduced? Government financing predominates in Eastern Europe and private investment predominates in Western Europe. Statistics do not provide definitive evidence since subsidy or other aid from government is often hidden. For example, United Nations statistics show U.S. housing as being 97.7 percent financed by private investment, counting only our public housing programs as government financed. Obviously, no account is taken of the FHA-VA programs which make possible, through the private sector, almost 20 percent of our housing. That does also include the Farmers Home Administration funding and both normal insurance coverage on mortgages as well as the subsidy and supplemental support given by our housing programs. This kind of aid, and that provided by U.S. Federal Income Tax provisions for owning a home, have their equivalents in other countries.

One of the problems in developing an industrialized homebuilding sector in Europe has been integrating it with the existing building industry structure. The homebuilding industries in Europe appear to be similar in many aspects to the U.S. homebuilding industry and they share similar or equivalent problems.3

Industrialized building has received strong government support in both France and the United Kingdom. In France, a "Reserve Sector" of government-sponsored housing must be obtained by means of industrialized or systems building. In the United Kingdom, the local governments, for example, The Greataer London County Council, provides an aggregated market. It has a preference for industrialized building systems. In Sweden, the market is organized around two large housing cooperatives which provide the market aggregation necessary for industrialized housing production.*

The fact that Sweden builds mostly multidwelling housing, and in concentrated areas, further aids the establishment of industrialized housing firms.

Obviously, an industrialized housing industry would be capitalintensive, whereas the homebuilding industry in the United States today tends to be basically labor-intensive. The shortage of skilled labor in our traditional building process emphasizes the need for supplementing present methods with systems that make better use of our total work force, but that will require greater capital investment. In Europe the building industry in general and the homebuilding industry in particular has borne the brunt of recessions. This, combined

2 Carl Koch, Russia's Housing Industry, Douglas Commission testimony. 8 ECE report, Structure of the Building Industry in Europe.

See Housing in The Nordic Countries.

with a segmented market, has caused cautious investment in capitalintensive equipment and plants, and has led to the alternative course of rationalizing traditional construction, preserving the existing industry structure while making use of cost and time-saving techniques. Interestingly enough, in many instances, traditional builders adopted these economical techniques only after they were faced with competition from industrialized building.

To summarize this brief statement of European experience, it appears that in Eastern Europe, where public investment is consistently the strongest, with heavy emphasis on subsidies and supplements, the trend has been to industrialized housing. Most of the production has been in multifamily structures. In Western Europe, industrialized building methods have been used for single as well as multifamily housing, financed both privately and publicly. However, it appears that industrialized production has not yet provided the full solution to the housing problems of Western Europe, although it has provided an important supplement to and influence on the existing building systems.

I should mention at this point that I have purposely kept these comments on the European systems brief. The subcommittee document entitled "Industrialized Housing" which was compiled by the staff of the Subcommittee on Urban Affairs serves as an excellent and complete review of the types of systems in use, their status and the factors considered in their application for Europe and also here in the United States. I do not believe it is necessary for me to repeat that material which has already been so effectively presented.

There are, however, a few additional comments I would like to make concerning improvements in our housing system that relate to increased use of standardized or prefabricated components, subsystems, and full systems.

The levels of production required to achieve the maximum benefit in cost, systems management, quality, flexibility in design, marketability within large areas of the United States, are not clearly definable at this time. Obviously, different parts of a housing system will require different production levels. For example, the optimum with the housing shell itself might be 5,000 units, but the optimum with regard to mechanical equipment and fixtures within that housing unit that require changing the interface, might be 15,000 units. I present these estimates to indicate some of the variations, although we do not exactly know what those optimum levels are.

I frankly doubt that enough continuous industrialized production has been done anywhere, with the possible exception of the U.S.S.R., to assure that levels approaching those that can provide the maximum benefits have indeed been achieved. As a result, the full benefits of improved methods are probably not yet factually demonstrated. Until such factual data are available, the various analyses that have been performed and the extrapolations of production experience must serve as the basis for our estimates of the benefits that are potentially available. Very frankly, I look forward to Mr. Biederman's comments along these lines, because I think Levitt probably has some of the most factual data available on large-scale operations, since they are a major building organization.

The request for proposals for Operation Breakthrough requests cost estimates from industry for various levels of prototype construction, for the minimum volume of an economic production run, really meaning the production run that would result in amortization of capital investment, the cost for a thousand units per year which is the minimum specified in section 108 of the Housing Act of 1968, and for the most economic production rate. Analysis and evaluation of these estimates will be factors in our selection process. They should add to our understanding of the benefits of high production scale. But I must caution that they will still be estimates, not actual accomplishments.

It is however, clear that the cost benefits and, I believe, the quality benefits that could be achieved require high-level production and continuous orders in the market. Dips in the requirement or demand for housing, delays in procuring land or in obtaining necessary approvals at the various government levels, delays in shipping or in availability of equipment and labor for erection, or anything that delays the required schedule, could reduce the advantages that could be expected and could eliminate many of these anticipated benefits. We just can't have a situation that provides for a buildup of housing through the production process in the warehouse or a storeyard but does not provide for actual erection of housing units on-site and delivery to the users in a timely way. Otherwise, the company is maintaining a large work force and large erection forces and costs mount beyond the optimum level. Therefore, introduction of large-scale industrialization requires strong, modern, and systematic management and cooperation of all of the involved groups.

Another point frequently raised in discussions of industrialization, prefabrication, or increased dimensional and interface standardization is the assumption that a lack of variety will result that will preclude marketability and pleasing site design. I do not accept this assumption. Even dimensional similarity can still allow design versatility. Further, we should distinguish between lack of variety or repetition and and monotony or poor design. One brownstone obviously looks like the next. The problem basically is good design and good appearance and it applies equally to site-produced as well as to industrially-produced housing. For example, when we view some of our suburban housing developments, we find that they sell well, though they are not noted for variety in design. Their use of land also does not usually impart any basic variety in approach. Indeed, variation and innovation in land planning and land use may be even more effective than arbitrary variety in housing design to the development of appealing and attractive site arrangements and reduced costs.

This was certainly my impression in a recent visit to the FHACHOICE program in Seattle. This is the program entitled "Costeffective Home Owners in an Improved Contemporary Environment." The CHOICE program has already demonstrated the effectiveness of close cooperation between Federal and local governments with innovative developers in Seattle. Here, moderate-cost, conventionally constructed homes, averaging about $16,000, were provided. I should mention that previous to the CHOICE project, the average moderatecost house was about $22,000. That cost was reduced. The minimum cost of housing in the area was reduced from $17,000 to $13,600 by the combination of improved housing design and better use of land. The inter

esting and effective use of the available land created variety, good appearance, open areas, and helped to reduce the cost per housing unit. This program is now being extended into Houston, Tex., and Montgomery County, Md.

Further, the development of an aggregated market with pooled orders for housing can permit even small elements of that pooled order to get the full variety of concepts that are developed. Good design and appearance, effective land use, and pooling of orders in an aggregated market are integral parts of Operation Breakthrough.

The approaches we are defining will require the collaboration and support of the industry, labor, government officials at all levels, and the consumer groups including sponsors and private developers. All will have much to gain if we are successful from the economic and social benefits that develop, but all may have to yield some prerogatives in this process. The discussions that we have been holding with various groups involved in the housing business indicate the interest of these groups and their desire to participate. The recent agreements made by the United Brotherhood of Carpenters and Joiners with the StirlingHomex Co. and the triparte agreement of the union, Stirling-Homex, and the Urban League in regard to training of local labor are clear indications of the readiness of the various groups involved in housing to contribute to the improvements that are needed if we are to meet the needs that are evident. We will certainly keep the committee informed of progress—I should add as well as the problems-made in these areas, and in our various programs.

Thank you very much, Mr. Chairman.

Chairman BOLLING. Thank you very much, Mr. Secretary.

Next, we will hear from Mr. Charles L. Biederman, vice president, Technical Services, Levitt & Sons Corp.

STATEMENT OF CHARLES L. BIEDERMAN, VICE PRESIDENT, TECHNICAL SERVICES, LEVITT & SONS CORP.

Mr. BIEDERMAN. Thank you, Mr. Chairman.

Earlier this week, I had submitted a formal statement to the subcommittee and I would like to take this opportunity merely to summarize in outline format the essence of that statement.

In our industry, we have thrown around the term "industrialized housing" quite a bit in recent months and the last 2 years. I have noted then even among the experts, and that is double underlined and quoted, there is some confusion as to what we mean by industrialized housing. I thought for purposes of clearing the air a little bit, perhaps we can define for the purposes of this conversation what we do mean, how we define industrialized housing.

We believe it can include prefabricated housing, mobile homes, and sectionalized houses. Prefabricated houses, as we understand it, are composed of two-dimensional wall components or roof trusses or floor sections. But the essence of them is that they are two dimensional. They are 2 by 4 wood studs, generally, and those wall panels, those two dimensional wall panels may come sheathed-that is, with the outer or the inner skin attached to them-with or without windows attached to them, acoustical or thermal insulation, wiring, gypsum wallboard. These two dimensional panels are generally made in a factory