Monday, May 4, 2015

"Andy Speaks Out!" a New Contributor to the Blog

Modular Home Builder blog is pleased to announce the first of what I know will be many interesting and informative articles from Andy Gianino, owner of the The Home Store and author of the authoritative book on modular housing, The Modular Home, which I’m sure is on many of your desks.

"Andy Speaks Out about....."

An open invitation to modular home builders.
By Andy Gianino

When I started The Home Store 29 years ago I had a dream of creating the best and largest modular home dealership in the country.  Over the years I’ve put a lot of time and money into creating systems that can make this possible.  But although I’ve sold over 1,200 modular homes, I’ve never earned the necessary profits to implement my vision.  

I now accept that I am unable to do this on my own.  I don’t know whether some of you share my vision of a multi-location, modular home company, one that creates a national brand.  But I’m about to find out, since I’m posting this blog to ask whether any of you would like to join with me in creating such a company.  
Last fall at my presentation to the Modular Home Builders Association’s annual summit, I asked four questions about our industry:

  1. Why is our market share not growing?  
  2. Why is factory quality not improving? 
  3. Why does it take so long to order and build a modular home?  
  4. Why do we have so little cost advantage over stick homes?

First let me note that the manufacturers with which I’ve worked – Excel and Manorwood – have already done a lot in regard to the four issues, and they’re planning to do even more in the near future.  But as I said at my presentation, there is still a fundamental problem – namely, the absence of a committed relationship between modular manufacturers and builders.  This independence has meant that neither manufacturers nor builders have sufficient reason to invest in helping the other as much as they could.

I still believe this.  But here’s the problem.  I don’t think we can count on manufacturers to do enough any time soon to improve the situation.  For one thing the severe downturn in residential construction has drained most manufacturers of the cash needed to make the needed investments.  This is also true for most builders, including myself.  Therefore, we can’t expect many manufacturers to take a leadership role with regard to the following:

  • Team up with other manufacturers to advertise our industry

  • Build a strong brand name that helps you sell modular homes

  • Create automated systems to streamline your business transactions as a modular builder

    • These transactions include marketing, lead follow-up, modular pricing, contractor pricing, sales administration, construction project management, warranty service, etc.

    • Integrate  the systems they create for you with the systems they create for themselves
  • Provide complete and detailed instructions for how to set and turnkey your custom designed homes

  • Offer training for your staff and subcontractors

  • Use their production systems to make your button-up process faster and less costly

If we can’t count on getting help from our manufacturers, what can we do?

As individual builders, not much.  And that’s why I want to join forces with other likeminded modular builders to form a new company.  Our industry is ripe for consolidation of modular dealerships.  As long as we remain a fragmented group of relatively small players covering modest geographical areas, we will neither have the market clout with our manufactures nor – and this is critical – the financial resources to truly challenge the stick building world.

As you know, business consolidation of separate companies has happened in many industries.  Waste Management and Auto Nation are two examples of companies that were created out of multiple small players in their industries.  

Typically investors “roll-up” several independent companies into one new entity.  This can take different forms, most involving mergers or acquisitions.  Another strategy for joining companies is to create a franchise system, which preserves independent ownership.  At this point I’m not advocating for a particular strategy.  

Since investment money will be needed regardless of the approach, I’ve contacted Mark Sage of Wyndham Capital.  He’s been helping some modular manufacturers implement their own industry consolidation the last few years.  Mark is optimistic about generating investor interest.  

If there’s a lot of builder interest, more than one new company could be formed, each following its own strategy.  Some will likely coalesce around one manufacturer, while others will work with at least a couple of manufacturers.  

If some of you decide to join me, the investment money will enable us to implement significant improvements in our operations, including marketing, sales, costs, and profits.  We will also enjoy happier homebuyers, employees, and subcontractors – and less stress for ourselves.  And if our company grows as quickly and substantially as I anticipate, we can take our company public.  
Although I don’t know if my offer will interest any of you personally, I’m convinced that a consolidation amongst modular builders is inevitable.  Too many significant advantages are created when several companies join forces.  In addition, I think a builder/dealer consolidation will energize our industry.  
If you would like to learn more about my ideas, please read my complete presentation and join me at Coach’s June Breakfast Meeting.  

In the meantime, email your thoughts and questions to me at andyg@the-homestore.com.  I won’t be able to respond to most of them, but I will post at least one other blog before the Breakfast Meeting responding to your feedback.

Friday, May 1, 2015

"Domain Apartments" Named Best Project Utilizing Modular Construction in North America by Modular Building Institute

San Jose, Calif., Apartment Complex Named Best-in-Show in the Permanent Modular Buildings Category at the Annual Awards of Distinction Awards Ceremony

Guerdon Modular Buildings has won best-in-show in the Modular Building Institute’s 2015 Awards of Distinction competition for Domain Apartments, a five-story, 444-unit luxury townhouse-style complex in north San Jose, California. Domain was the first project in the state and the largest in the country to be constructed of pre-manufactured modular units placed on a post-tensioned parking podium.

Domain also won the Silicon Valley Business Journal’s Structure Awards for best residential project, in which it competed against site built construction projects. Equity Group Residential was the project’s developer.

The modular units were built at Guerdon’s manufacturing facility in Boise, Idaho, including all finishes and luxury upgrades such as 9-foot ceilings, granite countertops, stainless steel appliances and in-home washers and dryers. The units were trucked to the construction site and set in place using one of the largest production cranes in the nation. The only on-site construction required was exterior shear bracing and siding.

“The modular approach was also a win for Equity Group, given the tight time constraints created by the rapidly increasing demand for multi-family housing in their market,” said Lad Dawson, CEO of Guerdon Modular Buildings. “They estimated that our modular technology allowed the complex to go to market about nine months sooner and reach full lease stabilization one year earlier than if it had been site-built, while improving quality.”

The MBI Awards of Distinction contest is the commercial modular industry's premier awards program, offering competition in over 30 categories for MBI members: building manufacturers, dealers, and product and service providers. Entries are re-locatable, permanent, and renovated modular buildings as well as industry marketing pieces.

Every entry is reviewed by an impartial panel of industry and non-industry construction and code experts, architects and engineers, and marketing professionals. Building entries are judged on architectural excellence, technical innovation and sustainability, cost effectiveness, energy efficiency, and calendar days to complete. Green building designs are judged on eight criteria, from comfort and energy strategies to economic practicality.

About Guerdon Modular Buildings
Guerdon is the leading manufacturer of large-scale, complex modular construction projects and modular multi-family housing developments in the western United States and Canada. Guerdon’s innovative modular construction technology reduces build time and construction impacts while delivering significant improvements in quality, energy efficiency, noise reduction and cost-effectiveness when compared to on-site building methods. Guerdon’s construction experience, engineering, design expertise and manufacturing capacity is unrivaled in the industry. For more information, please visit www.guerdon.com.

57 Story Building Set in 19 Days

Broad Sustainable Building Co., a Chinese company, builds complete 57 story skyscraper in record 19 days which means 3 floors in a day. A 57-floor 2-million-square-foot (180,000-square-meter) skyscraper fully built with energy-efficient, factory-produced Lego-like blocks. He claims that they are now building these at a record three floors per day!

Even though it is not a modular building like the B2 Project at Atlantic Yards, it sure is impressive.

Wednesday, April 29, 2015

Join Us for the First Builder Breakfast in PA

It really didn't make a lot of sense to hold the monthly Modular Builder Breakfast in Frederick, MD when most of the modular homes are built in PA. I have listened to your requests and all future Builder Breakfasts will be held at the Country Cupboard on Rte 15 just North of Lewisburg, PA, right in the heart of the PA modular home industry. The campus is large with two hotels and one of the most unique shopping experiences in central PA.

Join us on Thursday, May 21st at 8:00 AM

This month's theme is:

"Stop Leaving Profit on the Table"

Skip this month's Builder Breakfast if you are satisfied with the profit you're currently making on your homes. We all know that adding $thousands$ to your bottom line is such a bother.

But if you think having another $10-$30,000 in your pocket at the end of the year is something you'd like to have, you need to hear this month's speaker, Rick Terry, Industry Consultant For Building Science And Project Management Resnet Hers, Insulating And Energy Needs, explain how to convert what you are probably already doing into a ton of cash in your pocket.

For years Rick has watched builders lose this additional money simply because they didn't follow some very simple rules.

The speaker joining Rick will be Milt Stolzfus, the Industrialized Housing Manager for the PA Dept of Community and Economic Development. Milt was a PFS inspector for many years and knows this industry very well. He is an advocate for modular housing.

Join with other modular industry professionals in making this first PA Modular Builder Breakfast a success.

As is their tradition, this is a HUGE Breakfast Buffet

Seating is limited, so make your reservations early. Cost is $25 per person which includes the breakfast buffet.

Country Cupboard Inc
101 Hafer Road

Lewisburg, PA 17837

CLICK HERE to make your reservation or use the "BUY NOW" button on the right hand column

Tuesday, April 28, 2015

Palm Harbor Homes Uses Video to Show How Green They Build

Palm Harbor Homes along with their sibling Nationwide Homes produced this video to help show why modular home construction is Green Built from Day One.

Even though Palm Harbor is a manufactured home company, the same Green values are used in the Nationwide Modular Homes factory in VA.

What We Need is a Modular Housing Hall of Fame

It’s not often that you will hear me say that what the modular housing industry needs is a Hall of Fame just like the manufactured housing people have.

Yes, there really is an Recreational Vehicle/Manufactured Housing Heritage Foundation located in where else but Elkhart, IN. Today is called the RV/MH Hall of Fame.

This 100,00 sq museum features a variety of recreation vehicles dating back 100 years and continuing through the 1980s. The oldest vehicle on display is a 1913 Earl Travel Trailer and is the oldest surviving specimen known. The museum is divided into areas that highlight key events in the history of RV’s, such as the introduction of the first microwave oven, the first indoor toilet and other features. Vehicles from the 1980s on are displayed at the Go RVing exhibition hall, within walking distance of the museum.

1958 Platt 10 x 45 home

Even though I’m not sure how many single and double wides are on display, there are enough RVs displayed to keep you there for hours.

Here are some of the historic RVs on Display.

GMC Motorhome - A Classic

Mae West's 1931 Chevrolet Housecar

Gearing Up for the Changing Modular Construction Market

25 years ago I remember driving to work as the Sales Manager for a custom stick builder in Central Pa and passing a real modular home ‘dealer’ that had 2 models on display. Both were ranch style homes. One was 48’ long, 24’ wide and the other was 54’ long and 26’ wide.

The sign on the small one read “This house on your lot for $39,900 complete.” I stopped one day and learned that I couldn’t do any changes to the house, could have it any of 3 vinyl siding colors and could have a light stain or dark stain on my cabinets. The price included excavation, set and finish on a full basement. There were hundreds of these homes throughout a 100 mile radius.

Times sure have changed. Very few builders have model homes, now most have designer showrooms and sales offices where you can design any home you want in any color and in whatever kitchen cabinet and stain you choose.

There is a saying in the modular home business. “Nobody buys from the plan book any more.”

Looking forward, new home buyers may soon be asking “Where did all the modular home builders disappear to?”

Small typical modular home builders are becoming scarcer than a winning lottery ticket. A lot of the modular builders that were in business just 15 years ago have given up on homebuilding and very few new builders are stepping up to fill the void.

So where does this leave the modular home factories? The answer is “In the perfect position for the future.”

The void that is left by aging and/or unprofitable modular home builders is being filled by another form of home, the manufactured house. Their numbers are finally on the rebound as more buyers are turning to them for affordable housing. They already reap the benefit of branding their homes “modular”. Clayton dealers feature big “modular” homes at the front of their lots and the single and double wides in the back.

Real modular home factories have been in a state of flux for some time and within the next few years, many will drop the builders that just buy 4 or 5 ranch, capes or 2 story, center-hall colonials opting for the market that modular has always aspired to; commercial projects, multi-family housing and large custom homes.

When you mention a “boutique” factory today you get some mixed answers. Some say that it only wants to build a couple homes a month mostly for Architect designers and their clients. Others say a boutique factory looks like Blu Homes with a unique product of their own design. But the truth is that soon many modular home factories will be faced with deciding what kind of ‘boutique’ factory they want to be.

Some have already chosen their boutique paths like Chip Smith’s Blue Ridge Log Cabins who wouldn’t build a vinyl covered, ‘two by’ home for a lifetime supply of lobster and porterhouse steak. He only builds custom designed log homes in his factory.

Guerdon Modular Buildings in Idaho wouldn’t do a ranch style home unless they could build 100 exactly alike as they work in the commercial field of man-camps, condos and multi-family, multi-story structures. They will build a “one off” for an Architect so that he/she can show the world the future of prefab construction. I can only assume that is not cheap.

Just about every modular factory on the East Coast has had huge commercial projects that have tied up the production line for weeks pushing the small builder’s home further back on the delivery schedule. 100 - 300 floor runs are common with some factories and a couple of the old traditional factories have begun actively going after that business to the exclusion of the small builder.

Quality Crafted Homes of Long Island

Several factories are now turning down “Plan book” homes in lieu of large custom homes. Modular homes of 10,000 to 15,000 sq are becoming expected from some factories. They love building them because of all the upscale options and custom features which allows greater margins.

I recently heard about an Architect that has a client about to pull the trigger on ordering a 40,000 sq ft modular home. This type of home cannot be given to a traditional old line factory still building those 48’ x 24’ ranchers. No, it will go to a factory that is able to gear up for unique features like 10’ - 14’ high ceilings and custom marble baths and flooring.

Soon there will be only four kinds of modular factories:
  • Commercial - Mostly steel construction
  • Commercial / Custom Residential - Custom and Automated wood construction.
  • Standard Single Family Homes - This will become the new niche market for many of today’s factories.
  • Clueless - Trying to be everything for everyone and if that doesn’t work, heavily discount the product to catch the traditional small modular builder.

Because commercial and community developers need projects completed in areas where the available labor is shrinking, modular construction will begin to take its rightful place at the construction table even though their market share for single family homes will remain in the 3-5% range, their share of the bigger commercial/multi-family market will begin to increase.

I was told several years ago that “Capacity is King.” Whoever has the capacity to satisfy this new market will be far ahead of the rest.