Thursday, July 2, 2015

Vermont Blurring the Lines Between Modular and Manufactured Homes

The USDA Rural Housing program has given the OK to 30 year mortgages to manufactured/modular homes in Vermont. These are not your typical HUD code manufactured homes but rather a highly energy efficient mobile without a steel undercarriage that will fit right in with its siblings in a typical mobile home community.

I think what the USDA is doing is a wonderful thing for those that need to replace their current HUD trailer because of high energy bills, with many exceeding $400 a month for a single wide, with new energy efficient homes. The problem is that if this works for Vermont, will it become the law of the land and open the floodgates for every HUD manufacturer to begin building these homes and calling them true modular homes?

The modular home industry has enough problem trying to establish itself as equal to and in most cases better than custom site built homes but now we are being dragged back to being equated with single wide mobile homes by the USDA and soon the powerful marketing machines of HUD manufacturers like Clayton, Champion and Cavco will begin churning out their new lines of "modular" homes.

If you haven't read about this, CLICK HERE to read what is happening in Vermont.

One home manufacturer, VERMOD, is already building these homes and using the USDA program to sell them. After visiting their website I still can't tell whether they are building a better HUD home or building a single wide modular that just happens to look exactly like a mobile home.

Either way, this could be another blow to modular homes just as we seem to be starting to agree on what we are going are going to call ourselves.

Wednesday, July 1, 2015

Forest City Ratner’s Modular Factory to Remain in Brooklyn Navy Yard

Forest City Ratner Cos. it plans to keep its Brooklyn Navy Yard factory running after the completion of a 32-story tower next to Barclays Center in downtown Brooklyn and hired Susan Hayes to run FC Modular and go after new business in the NYC area.

Susan Hayes

Forest City Ratner is currently building a 32-story modular tower known as B2 BKLYN near the corner of Flatbush Avenue and Dean Street. When completed, it will be the tallest modular building in the world—but construction has not gone smoothly.

They were originally constructing the tower with a U.S. arm of Swedish construction giant Skanska until last fall, when the two had litigious split prompted by delays and budget overruns on the building, which was originally billed as costing $116 million and was set to open in late 2014. At one point, the Brooklyn Navy Yard facility was shut down before Forest City bought out Skanska and resumed construction on its own.

A lot of things have worked against this project including high paid union workers trying to stop the project and force the company to hire union labor. That failed when the courts ruled in favor of Forest City Ratner and non-union workers returned to the job.

Congrats to Susan Hayes in her new position in the modular industry.

Andy "Speaks Out" About the June Modular Builder Breakfast

My breakfast meeting presentation in June didn’t go as I planned.  But I’m a modular home builder, so I’m used to that. 

There were so many comments and questions by builders and manufacturers about a variety of industry issues that I was only able to deliver a few of my points.  I promise to take more control of the discussion in October when I will continue to present my ideas.
Over the last two weeks I’ve been able to speak with several builders and manufacturers.  Most everyone wants to know how I propose to implement my ideas.  In fact, there has been more interest in “how” I see the changes happening than about “what” I think needs to change or “why”. 
Before I discuss the “how”, I want to make a couple of points about the “why”.
All the builders and manufacturers I’ve spoken with believe they would be better off if the type of information technology  (IT) I’ve discussed (see MHBA, Blog 1, Blog 2) was used to help them manage their businesses.  But I’m unsure whether everyone appreciates how big an improvement this would be.  Judging by the success enjoyed by many other industries who’ve implemented these types of IT systems, we could expect to see substantial efficiencies and cost savings. 
Start with the fact that our current systems require too many separate yet nearly identical actions by manufacturers and builders.  On the manufacturer’s side, for example, the CAD programs are mostly separate and disconnected from the specification and pricing systems.   An order processing person has to manually enter the data from the engineered plan into the pricing program even though current technology enables a plan’s specifications to automatically be fed into the manufacturer’s pricing program.
On the builder’s side, not only are the modular drawings, specifications, and prices done separately from each other.  So are the contractor drawings, specifications, and prices.  All modular plan details must be manually input into the builder’s modular pricing program and then all contractor plan details must be manually input into the builder’s contractor pricing program.  Not only are these two-step processes for generating the modular and contractor prices unnecessary, all four of these steps could be completed automatically as the modular and contractor plans are drawn.  This is especially true with Building Information Modeling (BIM) software, which incorporates time and cost into a true 3D program. 
These everyday practices by manufactures and builders result in a tremendous waste of effort that compromises three things for all parties:  time, cost, and quality.  Time and cost are obvious.  Quality is compromised in part because mistakes creep in when unnecessary steps are required and data needs to be entered several times by two different companies.  These quality problems in turn add to time and cost.  Our industry’s processes are plagued by these costly inefficiencies that hurt builders, manufacturers, and homebuyers alike. 
Actually I believe they hurt builders substantially more than manufacturers.  Once a sale is made, there are far more moving pieces for a builder to manage than is often acknowledged.  These include planning a delivery and set, ordering permits, arranging for customer financing, completing warranty work, shopping for subcontractors, specifying the scope of work for the button-up, and managing the turnkey schedule. 
Pick any one of these tasks and you can see that much of what’s needed to execute it is the information produced by the plans and specifications.  In fact, all of this information is interconnected because it uses the same facts and figures – modular and contractor plans, specifications, and prices.  For most builders today, however, the necessary details are separately identified, organized, and tracked for each function.  The “tools” most builders use to execute these tasks are paper and pencil, faxes and pdfs, emails and phone calls, and spreadsheets and calculators. 
If currently available technology were used, this builder information would automatically be generated by the drawing and pricing programs and then input into a Customer Relationship Management (CRM) Program.  I want to emphasize that the modular and contractor drawing and pricing systems by themselves will not help builders with all of their unique responsibilities.  The systems need to be integrated with a powerful, full-featured CRM program.  Such a program will provide trackable management of all builder tasks in addition to those involving marketing and sales – from delivery and set through turnkey construction.  The CRM system will organize the information so the builder has it readily available in a useable form. 
My primary point on behalf of modular builders is that helping them with these tasks – by integrating and automating the flow of information – will reduce their costs substantially. The efficiencies fostered by the IT systems will increase productivity, which in turn will reduce the need for sales and administrative help.  This will substantially improve each builder’s profitability.
The automated systems I’m advocating will help builders in another way.  They will enable builders to handle substantial growth with modest increases in overhead.  The higher volume will itself reduce unit costs further because economies of scale will kick in.  This most obviously applies to fixed costs, such as office space and model home centers, since the overhead gets spread out over the increased sales.
Manufacturers will benefit as well if each builder and their manufacturer share these programs so their information systems are integrated.  Certainly it will increase their productivity and reduce their costs.  But this pales in significance compared to what I point out below.
So “how” do we get there?
In my previous posts, I’ve emphasized bringing builders together to implement these changes.  Although several builders have expressed interest, I don’t believe it’s the best solution or the likely one.  I’m finding that most builders value their independence too highly to partner with others.  This is especially true now because many of them are doing better than they’ve done in years.  Why should they make changes now?
I believe the more realistic solution is for individual manufacturers to create the necessary systems and tools.  They are more likely to have the financial resources, and they can create a complete, vertically integrated IT solution.  Builders can only do this if they are also controlling the manufacturing side. 
Some manufacturers are candid that they don’t have the resources at this time to invest in the needed changes.  Others are not convinced the changes will get them a return.  They believe some builders are quite happy doing things as they always have.  Worse yet, many manufacturers understandably fear that builders will use the new IT to help themselves while buying homes from cheaper manufacturers unburdened by the IT investment. 
Fortunately there are manufacturers who realize that nothing will enable them more to recruit and retain builders than systems and tools that help builders manage their businesses more profitably and with fewer headaches.  In fact, this benefit is the most likely reason that manufacturers will ultimately make this investment. 
There’s a third option that I can’t handicap.  I’ve spoken to a few people who know investors interested in entering our industry.  One point of entry is for them to create these systems for builders.  They believe that if the information technology is created, they will be able convince a number of likeminded builders to band together.  This would provide the investors with enough volume to do one of two things:  partner with an existing manufacturer or open factories of their own.  Either way, the resulting builder consolidation and vertical integration would justify the expense needed to complete the IT systems.
In the meantime, I will continue to talk to builders, manufacturers, and investors, and I will continue to build a version of these systems for my own company.  If several builders are willing to take on this challenge and invite me to participate, I will gladly listen.  If an investor wants to bring several of us together, I’m all ears.  And if my manufacturer, Excel Homes, wants any help with the work they’re already doing, I’m ready, willing, and able.
Finally, because I strongly believe that integrated systems and tools will empower both modular builders and manufacturers to build homes faster, with better quality, and for less money, I strongly urge my fellow builders to press their manufacturers to take a leadership role in implementing these changes. 
I hope to see you in October!

There's More to Floor Plans Than a Third Party Stamp

Too many times a modular builder will find that the home they have contracted and ordered receive their stamped plans back from the factory with one or more "To be provided by builder" stamped on the foundation and elevations.

Most of you know that you have to provide the engineering for this after you get the factory's 'stamped' plans back but it takes time that can slow down your building the customer's house and you getting paid and making a profit.

The best way to avoid this bottleneck is to bring in an engineer in the beginning who can work with your factory side by side to ensure that you will know about problems before it's too late. There are just too many questions that need answered by an engineer before you submit your plans to local government.

Terri Heckman, Project Manager for Glenco

The July Modular Builder Breakfast will feature Terri Heckman from Glenco Engineering talking to modular home builders and factory folks about the importance of asking those questions and getting an engineer’s input before you sign a contract with your customer.

Terri Heckman, Glenco's Project Manager and Partner worked for multiple modular manufacturers before joining Glenco, Inc. in 2004. At Glenco, Inc., Terri is responsible for coordinating drafting and engineering services for submittal packages, utilizing spreadsheets that replace manual calculations, and providing design work to supplement engineering requirements.

Who else can help with things like:
  • Snow Drift conditions
  • Lot line and building setbacks
  • Fire separations
  • Flood zones and base flood elevations
  • Foam seal adhesive use
  • SIP panel design

Join us on Wednesday, July 15 from 8:00 AM to 10:30 AM for a great breakfast buffet followed by Glenco’s Terri Heckman speaking about the importance of getting an engineer involved early in the building process.

The Breakfast will be held at:
101 Hafer Road in Lewisburg, PA, 17837

one of the most unique venues in the entire state with two large hotels on the grounds for those needing rooms.

The cost is only $25 per person which includes the breakfast buffet.

CLICK HERE to make your reservation as seating is limited.

Stay next door to the Country Cupboard at the Best Western Plus for only $99 a night by mentioning that you are attending Modcoach's Modular Home Builder Breakfast.

Tuesday, June 30, 2015

Modular Tiny House Entered in the DOE's 2015 Solar Decathlon

The U.S. Department of Energy Solar Decathlon 2015 Western New England University, Universidad Tecnológica de Panamá, and Universidad Tecnológica Centroamericana team is seeking a blend in its Efficient, Affordable, Solar, Innovation—or EASI—House.

A first-time Solar Decathlon entrant, the team wants its project to reflect two geographical areas. The team also wants to ensure that its modular home is both energy-efficient and affordable. In fact, the team is aiming for a price tag of $80,000 to $100,000 for the structure—a goal made realistic by working with a modular home company to help build the design.

“The primary aspect of the house we’re focusing on is the affordability,” says decathlete Jacob Harrelson, the team’s project manager, on campus at Western New England University in Springfield, Massachusetts. “We’re making it a modular house design so it can be picked up and taken anywhere you want. And within the competition limits, we’re trying to keep it on the small side.”

Still, the team wants the compact two-bedroom, 680-ft2 house to be comfortable even with a minimalist feel.

“We’re trying to build a house that’s reasonable for the average Baby Boomers retiring or new family who still wants space for kids,” says decathlete Nathan Lane, a civil engineering major and also the team project engineer.

As such, the team is trying to balance the space for living rooms and bedrooms. The team is using space-saving furniture to maximize living space and custom-designed, high-performance windows to maximize solar heat gain.

The team will opt for a little more insulation in the walls, but that could be cut back in locations with warmer climates (such as Central America). Twenty 250-watt photovoltaic panels mounted on the roof will provide solar energy for the ultra-efficient house.

One hope is that the design serves as a model for modular home builders to replicate in the future—with the costs going down with increased scale.

“It won’t be cookie-cutter. You can take the design and make it your own,” Lane says.
Also, such a modular structure can be placed on a truck and brought to the competition ready to be hooked up with minimal assembly.

The Central American students will contribute decoration and other finishing touches for the inside. “They’re going to add interior finishes,” Lane says. “That’s their culture in our project.”

Monday, June 29, 2015

Nobody Does It Better Than the MHBA

In my recent article, My Thoughts About the June Builder Breakfast, I asked what the next step should be for the betterment of our industry. Comments came in quickly with several stating that our industry has never worked well together in the past and probably never will. There has been such a love/hate relationship between factories and builders that many builders simply change factories when they can’t take it all the problems they encounter.

Two comments bring to light the differences we all see. The first is the frustration I assume some of you feel about the way modular housing is promoted and marketed and the second is the reply from Tom Hardiman, Director of the MHBA.

Bob the Builder said...
The debate about who should do what for whom has raged on for more than 30 years in our industry. The BSC has not helped promote modular housing and that MHBA looks like a sad attempt to get something happening but it has always been and will always be up to the builders to promote themselves because the people that build our houses only care about one thing; selling as many as they can and not spending any money promoting builders.

Shortly thereafter came Hardiman’s reply:

Tom Hardiman said...
So as the director of the MHBA, I feel compelled to comment here. First, we sent a survey to our members on the topic of funding a national campaign. Only 11% indicated that they would support a "per module" fee to fund the campaign, preferring instead that the campaign be funded from member dues.

Here's the problem with that - not enough of your are members! MHBA is simply a representation of the industry as a whole. So if we are a sad attempt to get something happening, I would suggest that anyone in this industry that is not a member of MHBA shoulders some of that criticism. Far too many companies continue to take a "wait and see" approach to joining MHBA. What that really means is that they are content letting other companies carry the ball for them while they sit on their wallets.

Thank goodness for the companies that have stepped up and shown real leadership for without them, this industry WOULD NOT have an association.

Time to put your money where your mouth is all you "anonymous" posters.

I agree completely with Tom Hardiman and encourage every factory and every modular home builder consider joining the MHBA. It can’t be effective representing only a limited number of members while the vast majority sit on the side lines doing nothing to help the MHBA reach its full potential as the best way to promote and market our industry.

Tom’s lobbying efforts when it comes to championing the modular housing industry is well known but it could be so much more effective if legislators and regulators knew that hundreds of local modular new home builders and their factories were standing right behind him supporting these efforts.

Money and numbers talk when it comes to making changes in any industry and both are needed now by the MHBA.

If you are already a member of the MHBA, fantastic.

If you haven’t joined yet, today would be a great day to visit their website and join. It will help you and your fellow builders.  

Sunday, June 28, 2015

My Thoughts About the June Modular Home Builder Breakfast

More than week has passed since the June Modular Home Builder Breakfast where Andy Gianino, president of The Home Store, spoke about the future of the modular housing industry. During that time I have reflected on what happened. First, let me thank everyone that came to the breakfast and hopefully you had a good experience.  

When Andy began talking about improving our industry through consolidation of builders something rather magical happened. Everyone started talking. Not just talking about what Andy had to say but spontaneous discussions about every phase of the modular industry. It has been years since this has happened. It’s what’s needed right now for modular housing.

For more than a decade builders and factory owners and management have had no forum to speak at to get things off their chests. No meetings, no councils and certainly not any place where both factories and builders could speak their minds without bashing a single factory.

The timing was right and Andy was the catalyst that opened the floodgates of pent up frustrations. His talk, short changed by all the people wanting to speak, was indeed the best thing that could have happened. As I sat there listening to first one builder say something, then another followed by factory person after factory person, I marveled at the years of hard work, industry knowledge and entrepreneurship sitting in front of me.

Some people said nothing and that was OK as there were plenty that did. Was anything resolved? No. Were any plans made? No. What did happen was the germ of an idea that everyone can sit down and begin working on what Andy called the “betterment” of our industry.

The real question that needs answered is what is the next step? Well, that is a tough one, isn’t it.

Andy has agreed to return in October and hopefully we will have begun thinking about our future and this time let him guide us through his thoughts.

To better understand the direction Andy would like to see our industry go, Click Here to read his article which was the basis for his talk last week and what he will continue in October.