Lennar builders, a national home contstruction firm, is settling litigation over reported problems with drywall that they obtained from China. I didn’t know that drywall came from China? Did you? Its a low value product, i.e. does not require a lot of engineering design, which makes it a candidate for manufacture outside of the US. But, it is also bulky and heavy which normally argues against foreign manufacture (other than from Canada where it can be shipped via rail.)

A common thread through these articles is that the current system of consumer protection does not work. It was not set up for so many items coming from so many places with such lose regulation, if any at all. I’m sure Lennar did not order tainted drywall but I am sure they went for the cheapest they could find. Maybe it “met” some specifications they gave. But maybe it did not. Or maybe they never thought to specify - “Oh by the way, don’t use any toxic chemicals in the manufacture of these.” Even if they did, the way China handles these cases the company could just fold up due to the litigation and then surprisingly open up again in the same facility and workers.

Ultimately, these had to become tainted if that was a cheaper manufacturing process than non-tainted material. Thus, in the quest to save a few bucks Lennar built with products that hurt people. How many other buildings of theirs contain these panels? Who else is at risk? This is consumer protection by ‘exception’, i.e., consumer protection after they’ve been caught. That is dangerous and scary.

JAMES R. HAGERTY  of the Wall Street Journal writes:

Lennar Corp. has identified 400 homes in Florida that have confirmed problems with defective Chinese drywall, and it has set aside $39.8 million to repair the homes, the Miami-based home builder said in a securities filing Friday.

The figures are as of May 31, Lennar said.

Complaints about odors and corrosion linked to defective drywall have been increasing for months.

The U.S. Consumer Product Safety Commission said in a letter to four U.S. Senators last week that it has received more than 600 complaints related to the drywall issue from 21 states and the District of Columbia. Most of the reports are from Florida, Louisiana and Virginia.

Bloomberg News

Lennar has found defective Chinese drywall in some of its homes in Florida.

Lennar and some other builders have been forced to gut homes, mostly built in 2006 and 2007, to replace drywall, wiring and other fixtures.

Lennar said that it hasn’t yet found defective Chinese drywall in homes it built outside of Florida and that it isn’t yet able to “reasonably estimate its future exposure” to the problem, which has led to a spate of lawsuits against drywall suppliers and builders.

The builder said it has a $20.7 million receivable for covered damages under its insurance policies.

Lennar said it is seeking reimbursement from subcontractors, insurers and others for costs the company expects to face in investigating the problems and repairing damaged homes.

Drywall, also known as wallboard, is made from gypsum coated with paper and is used in walls and ceilings.

The CPSC said recently that staff members who have visited some of the homes noted odors and metal corrosion inside the homes.

“While in the homes, they also consistently experienced some throat irritation, scratchy eyes, headache and other symptoms that tended to clear up or dissipate after some time outside the homes,” the agency said.

The CPSC and state agencies are investigating potential health and safety risks related to the Chinese drywall.