Simplex Open House

Friday, November 17, 2017

Good Salespeople Rarely Leave Their Company; They Usually Leave Their Boss

An article by Rich Chiarello, President of Above the Line, LLC

25 years in sales management and executive roles taught me the number 1 reason salespeople gave for leaving their current position was they didn't feel valued or appreciated by their manager. Money usually came in 4th, 5th or 6th on their reasons for leaving. Lack of career progression or potential came high on the list, usually 2nd or 3rd. But the most damning reason of all was sloppy management.

"I'm too busy to ..." are often the last words a bad manager utters before their top salesperson decides to leave their team.

Managers who have a top salesperson in their team should understand their job is to get the best out of them. Generally they require little management but when they ask for help, it is usually a bad mistake to leave them hanging in the wind. Even a worse mistake to make is to promise that you will make the time they need with you, and then keep breaking that promise.

"You're known by the promises you KEEP not the ones you make!"

Managers tied up with busy work quickly become a bottleneck if their  inaction, indecisiveness or inattentiveness prevents the salesperson from being able to move forward on a deal or to resolve a problem.

Do it once, and you might be forgiven. Twice even. But make it a pattern especially where the manager makes promises to take action and then does nothing, and they leave the salesperson with the sense that their manager cannot be relied upon when they are needed to clear the path, approve resources or make time for a meeting where the salesperson needs some help.

Look after your good salespeople and they will look after you, your target and your profits. Encourage them to leave by bad management, inaction, being a bottleneck, breaking your commitments to them or not giving them the time and attention they need and you will be hit by a quadruple whammy:
  • They'll leave
  • They'll go to your competition
  • If one top performer leaves, a second is 50% more likely to leave within 6 months
  • You will have to go through the pain and cost of recruiting a replacement

Love your great salespeople (but not enough to end up in court!).

Thursday, November 16, 2017

This is Just One More Reason to Join the Modular Home Builders Association

MHBA Weighs in on Michigan Legal Case

The MHBA Board of Directors recently voted to file an Amicus Brief on behalf of the Goyings family and their case scheduled to appear before the Michigan Supreme Court. At issue is whether a developer or subdivision can restrict an otherwise compliant home based on the manner in which it was constructed or assembled, directly addressing poor language used in decades old restrictive covenants.

Case summary: The Goyings built a system-built home through a local modular builder. Their neighbors then sued to have the house torn down, arguing that it violated restricted covenants that barred “modular or prefabricated homes” from the neighborhood. The Goyings’ home was of superior quality, and substantial parts of it were to be “stick-built” on-site. Unsurprisingly, then, the trial court agreed that the Goyings’ house wasn’t a “modular home” of the kind described in the restrictive covenants. But the Court of Appeals reversed, holding that the Goyings’ home was a modular home because it contained modular components.

The attorney for the family argues that the trial court’s reading is the right one: that “an entirely modular, premanufactured or prefabricated home” couldn’t be placed in this neighborhood—but the Goyings’ home falls outside that definition. He reads various provisions of the neighborhood covenants together, and he explains why the contrary reading—requiring 0% modular components—would eliminate a huge swathe of homes.

As amicus, MHBA’s role would be a little different, stressing the broader policy implications of the Court of Appeals’ approach: less consumer choice and less affordable housing options, with little benefit (given the high-quality and aesthetically appealing nature of today’s system-built homes).

The inspection and quality control process in Michigan is more robust for a modular home than for a conventional site built home. Furthermore, these restrictive covenants that prohibit “modular homes” do not prevent a site built home from being constructed in a poor manner and lowering the value of surrounding homes.

In this age where Fortune 500 companies and developers around the world have embraced modular construction, it’s absurd that we still have to deal with the misconceptions of the prior generation in these template-based covenants. Every home and building contains some degree of prefabrication or component from roof trusses, to mechanical subassemblies. Why should it matter HOW the pieces are assembled, when the focus should be on the final product.

In addition to the legal case, MHBA is considering having legislation introduced that would prevent banning the method in which a home is constructed. While these are longer term efforts, we feel they must be challenged on multiple fronts.

Started on November 13, 2017 by Tom Hardiman

Wednesday, November 15, 2017

Poland-based Polcom Modular Shipping Hotels to NYC

Two hotel companies from opposite sides of the Atlantic are employing sites on opposite sides of New York's East River to test the concept of modular, prefabricated room construction for micro-room hotels.

In Brooklyn, New York-based Pod Hotels is slated to welcome its first guests to the 254-room Pod Hotel Williamsburg Brooklyn. It will be the company's fourth hotel and its third in New York.

Meanwhile, on Manhattan's Lower East Side, Amsterdam-based CitizenM continues to build -- or in this case, stack -- the room modules at the CitizenM New York Bowery, which will be a 300-room hotel when completed next year.

In typical New York fashion, time is indeed money. With both companies using Poland-based Polcom Modular for the prefabrication process, the rooms can be constructed at a rate of between two and four per day, while shipping can take four to six weeks, according to Ernest Lee, vice president of development and investments for CitizenM's North America operations.

With such a time frame, Lee estimates that modular construction can reduce development time by as much as 35%, while Pod Hotels Managing Director David Bernstein says a project that would typically take two years to complete can be finished in as little as 18 months.

Of course, both companies enable such a process by specializing in hotels with smaller-than-average rooms. Bernstein said Pod rooms can be as tiny as 112 square feet. CitizenM's rooms are slightly larger, at between 150 square feet and 170 square feet, or about half the size of a typical U.S. hotel room. The company touts its concept as "affordable luxury" by including amenities such as higher-end furnishings, art collections in its lobby, in-room iPads ("MoodPads") for temperature and media controls, and full-service roof bars.

For CitizenM, the concept is tried and true. The company has used modular construction in seven of the dozen properties it has developed since opening its first at Amsterdam's Schiphol Airport in 2008, including both hotels it opened in London last year.

"We can offer a four-star hotel at a much more reasonable price," Lee said when speaking at the NYU International Hospitality Industry Investment Conference in June. "When you compare us with a traditional hotel, we can get 25% more keys than a traditional floor layout."

The smaller rooms and hotel footprint make modular construction more feasible for builders.

For Pod Hotels, the modular concept is a new one. Having opened its first property in Manhattan in 2007, the five-story Brooklyn structure is its first using modular construction because of its low floor count relative to Pod's other three properties.
Both Lee and Bernstein allowed that there is a learning curve for developers and contractors unaccustomed to the prefab process. For example, Bernstein said, the off-site module construction can create problems not normally encountered in his company's development process.

"They were using the wrong carpet glue," he said earlier this month. "We would've caught that after 15 or 20 rooms, not after the whole thing was done."

Still, both companies say modular construction will enable them to pursue more aggressive expansion than they would have otherwise considered.

CitizenM last month opened a 338-room Paris property and announced plans to enter Washington, D.C. Lee estimated in June that the company had about 15 properties in various stages of development.

Bernstein said Pod is "actively involved in Philadelphia right now" and is pursuing sites in Boston and Austin, Texas. The company is also putting the finishing touches on Manhattan's 670-room Pod Times Square and is slated to redevelop a 1920s hotel in downtown Los Angeles by 2019, though neither of those projects will use modular construction.

"The goal was to save time and money, and of course time translates into money," Bernstein said. "If this is really what we think it will be, it makes our whole Pod concept much more lucrative."

Tuesday, November 14, 2017

Disruptive Forces and Traditional Modular Construction

Over the past few years our industry has seen many forces trying to reshape not only how existing modular housing is done but how all things modular and prefab operate.

So much attention has been given to the “disruptive” forces at work to change the present market conditions and rapidly alter the way modular is perceived in housing and commercial construction that holding off these forces may prove futile.

There are many well-established segments of the modular industry suffering the ‘death of a thousand cuts by hi tech start ups all intent on taking business away and offering up more ‘viable and attractive’ propositions that meet specific needs of a customer base.

The attraction of new low-cost, good enough products is stripping away the identity of what modular used to mean to customers and replacing it with any new hi tech construction process being sold. Wall panel factories, flat pack homes, shipping containers, tiny houses and even manufactured homes are all calling themselves “modular”.

Modular factories are seemingly caught between sustaining their existing business models and approaches to market and those waking up increasingly to finding a different, more radical one as they sense real threat. Technology is driving the need to change. The pressure of ‘connectedness’ and the whole ‘network effect’ are forcing rapid rethinks of how to combat these different pressures.

Gone are the days of each factory being secretive and fiefdom-like in conducting business. These new disruptive forces are open and transparent sharing their latest hi tech ideas and processes with each other. They are highly connected and collaborative.

There are new conferences and seminars popping up every day across the world devoted strictly to what the future of modular construction will be. Attendees are gathering to talk about storming modular’s old guard castles. Very few, if any, old guard factory management is attending these events.

As modular factories and even their builders grapple with this new reality, they need to find ways to combat these threats. The ones that turn even further into becoming highly defensive, closed in, applying the fortress mentality seem to be doomed. It is working through how to open up, how to collaborate more openly, how to share and how to engage that is the key to survival.

Since the inception of this blog just before the 2008 housing crash I watched an industry lose its heart and soul just trying to keep the the doors open. For the past few years we have begun to rise again. Huge commercial projects like dorms, apartments and hotels are now a major part of our business model. Factories are once again hiring people for production, manage and sales.

However, while these are good things, there are hundreds of new hi tech and foreign factories beginning to chip away at our growth. Instead of being world leaders in modular, we are flocking to see what Sweden, China, Germany, England and even Australia are doing with robotics, light gauge steel, CAD and other hi tech things.

As discussed discussed above, there are multiple forces at work at reshaping the modular industry. We need to combine, scale and innovate through a collaborative force; built on an ecosystem of partners, enabled to connect more directly with customers, who share in wanting value. In other words, it’s time to start working together to meet the challenge posed by hi tech building methods that could erode what the US modular industry has accomplished over the past 50 years.

The primary operating system of the modular industry ecosystem is under threat. Mature industries must go to established lenders to get the money needed for replacing old worn out equipment and expanding their business into new markets.

The new hi tech visionaries circumvent the traditional systems and look for investors that will throw money at companies that use the latest hi tech innovations that want to take over entrenched industries. These investors love hi tech or perceived hi tech. Blu Homes got over a hundred million in investor money and blew through it trying to go national with their folding homes only to end up in Northern CA selling to people that can afford one of their homes.

But here is a problem our industry faces. What would any current modular home factory do with that same hundred million besides buying some updated equipment and doing additional marketing? The established modular housing factories do not have long range goals based on technology. They don’t have any way of implementing procedures to attract and train new builders and developers in the modular advantage. In fact, some factory managers look at all the new hi tech homes coming on line and say “It’s just a fad.”

Amazon, Google and Yahoo are all funding modular housing projects using the latest technology. How much of that is going to the traditional modular housing industry? NONE!

Microsoft’s Bill Gates just bought a huge plot of land in Arizona where he is going to build a new hi tech city. Will he choose the established modular industry to build it?
NOPE! It will be revolutionary and that definitely leaves us out of the loop.

To become part of these different ecosystems means making change forcing existing systems to radically alter their operating and business model thinking.

The emphasis of modular factories speeding up innovation is becoming critical. The ability to sense and respond to ‘breaking’ market opportunities requires a de-layering of the established innovation process. Lean management principles, alongside agile and adaptive techniques are all becoming part of the organization need to redesign the innovation process.

The ability to learn a common language of innovation, to work on collaborative projects that build new value. to speed up, scale and scope opportunities differently, requires new skills and competencies.

We can do these things but will we even try?

The very nature of modular construction is changing and becoming deeply disruptive to the inner workings of the more traditional modular industry and it will require platforms and ecosystems on part of future management that will allow for this internal change to form into new states of collaborative organizational design.

The old linear way of conducting business of each to their own is being shredded.

The future form is based on value creation networks. The thinking of “just me” needs to become “the power of us”.

This was made very clear at this year’s MHBA and BSC Annual Meetings which saw large attendance by their members. We want to move forward together but we aren’t sure where forward will take us.  

We will need to re-equip ourselves to move ideas into market in different ways, those ideas to be of lasting value, with the need to understand and build on complexity but then break this down in their design, for the parts to give the value each participant wants, from extracting their value from this platform and within an ecosystem.

Combining existing building methods, opening direct lines of collaboration and being transparent will be needed to combat these new well funded hi tech “modular” housing enterprises.

Monday, November 13, 2017

The Pitfalls of Hiring Uninsured Subcontractors

Every new home builder, both site and offsite, finds themselves in need of a subcontractor, especially in today’s labor shortage market, and many of them can spell trouble for your business.

Uninsured subcontractors are often just a necessary evil in some types of construction jobs.  But if you are the contractor who is hiring extra help, and this help is uninsured, you should know what you need to do on the front end to be sure that this cheap labor option doesn’t turn out to be the most expensive help you’ve ever hired.  Understanding exactly how uninsured subs will affect your general liability insurance policy and your workers compensation insurance policy is key to reducing your risks and your costs.

There are really three ways that the subcontractors that you hire that have no insurance policies in force can hurt you.  The first is the classification audit trap.  The second is the insurance coverage punch, and the third is the out of control large loss problem.  Let’s take a closer look at them one at a time.

First up is the classification audit trap.  Two of the main insurance policies for contractors are the general liability policy and the workers compensation policy.

In many states the general liability policy and the work comp policy both compute the premium due by using payroll as the rating basis.  If you hire a subcontractor to work for you, you can provide a certificate of insurance for that subcontractor and anything that you have paid that subcontractor will not be charged against you as payroll at the end of your policy term when the policy is audited by the insurance company.  

Likewise, if you can’t provide a certificate of insurance for that sub, then you are going to have to add the entire job cost paid out to that sub as payroll.  You can protect yourself against this going in by withholding an amount for insurance from the payment you make to the sub.  But, beware, the general liability policy and the workers compensation policy both have different rates for different kinds of work.

If you are a builder and you hire a roofing contractor to work for you to do roofing work, you won’t be protected from the audit trap by using the rate shown on your policy.  That’s because the rate for the roofer is much higher than that for a carpenter.  If you are unsure of what to withhold, either demand that your sub get insurance, or call your agent to find out what the correct amount per $100 of payroll should be withheld.  As you can see, this is a tricky business and if you don’t pay attention to the details and do your homework, you will get burned and will be overpaying for your general liability and workers compensation policies.

Next up, let’s take a look at the insurance coverage punch. Hiring an uninsured subcontractor is a big no no from your insurance company underwriter’s viewpoint.  

This is because the underwriter immediately assumes that you don’t have the same control over a subcontractor that you do over your own employees.  This means that losses are more likely from an uninsured subcontractor.  The underwriter will view your uninsured subs a big liabilities that make you a less attractive risk to the insurance company.  This means that when your audit comes in with uninsured subs listed, the underwriter will be less generous with discounts and you may actually see your rates go up for all of your insurance policies from you commercial auto to your general liability to your workers compensation policy.  Once again the real message to you is that you should not hire uninsured subs.

Last of all, you have the out of control large loss problem.  While you might want to argue against it, statistically is it true that you have less control over your subcontractors.  And that not only means that they are more likely to cause losses on your policies, it also means that they are more likely to generate losses which are not covered by your policy.  Does your policy have an exclusion for the type of work they are doing?  Will the losses they cause exceed your coverage limit?  The answer to both of these questions could well be yes.  

Ask yourself why your uninsured subs don’t have insurance protection.  Is it because they are deemed uninsurable by underwriters?  If so, why are you letting them have a free ride on your policy at the risk of damaging your ability to purchase insurance in the future?

The truth is that hiring an uninsured contractor to work on your projects is risky and in some cases just plain costly.  If you can avoid this type of practice you will be better off from an insurance standpoint every time.  

Friday, November 10, 2017

Champion Home Builders Adding to workforce to Meet Soaring Demand

Champion Home Builders in Benton, Kentucky is looking to add 50 employees to its staff.

General Manager Tom Stoneburner said the need is brought about by a dramatic improvement in the demand for mobile homes, as well as a recent contract with FEMA to build homes for hurricane victims in the southern United States. He said the FEMA contract is for 120 units to be built in the Benton plant, but stressed the jobs were permanent positions and the need for an increased workforce would be in place long after the FEMA homes are complete.

“We already have all the homes sold that we can manufacture through the end of March 2018.” said Stoneburner. “We are ready to ramp up production to meet the growing demand.” He said the Benton plant produces about 1,300 mobile homes each year.

Stoneburner said the company is looking for framers, carpenters, plumbers, electricians, laborers and unskilled workers. He said the positions are full time and include a full range of benefits. Salary is based on experience and skills.

Champion Home Builders began production in Benton in July 2016. Stoneburner said the company’s goal when they opened was to eventually employ 175 people in full-time production.He said they currently have 120 people on staff and the need for 50 additional will bring them close to what they had projected.

Thursday, November 9, 2017

Will Automation Change East Coast Modular Construction? Let’s Hope Not!

As you’ve noticed over the past year, many of the articles on this blog have been about robotics, automated assembly lines, CNC routers and BIM in the modular housing industry.

3 parts of the country are embracing these new technologies while the two biggest markets for modular home construction have been reluctant. The question is “Why Not?”

To fully understand the answer you have to take a closer look at where the three areas that are ramping up the new technologies are located.

The first and most obvious is the high tech area of the country from California through Oregon and into Washington. It should also include the Vancouver, BC area of Canada.

This is where Google, Microsoft, Amazon and other major high tech companies were born. It is the mecca for people wanting to reinvent and/or blow up old ways of doing just about everything. They have embraced the latest technologies including creating modular factories where raw product goes in one door of a factory, is run through a factory where automated wall, flooring and roof sections are produced and then either assembled by people into volumetric boxes or stacked on trailers ready to be transported to the job site. And let’s not forget Blu Homes that builds folding homes that are shipped on flatbed trailers.

The high tech minions of the area of the Pacific West Coast are working day and night to create housing that can be affordable, energy efficient and scalable as well as cookie cutter by design so they can be pushed out of the factory quicker and cheaper, if term “cheap” can actually be used in the Northwest.

This area is also the place where Architects have all read the writing on the wall about modular and prefab becoming the best way ever to build not only homes but apartment buildings, dormitories, ADUs and affordable housing. Like moths to a flame.

The other two areas that are attracted to the latest technology are the Southwest and the Southeast. Both areas have a huge HUD manufactured housing industry and only building a limited number of standard homes is an ideal place to set up some automated assembly machines, CNC routers and BIM. This will probably become a hotbed for technology but not nearly as much as the West Coast.

There are custom modular home factories in both of these regions but their numbers pale in comparison to HUD manufactured housing in these two regions.

The first region that will probably embrace the latest and greatest technologies but a much slower rate is the Midwest. Yes, some factories are trying to embrace it but business is good in the Midwest and factories, both HUD and modular are seeing sales rising close to what they were prior to 2008.

A Typical Midwest Modular Home

A typical Midwest manufactured HUD home

Unfortunately, the housing recession years were hard on them and investing in new high tech machines and procedures will have to wait just a little longer.

That brings us to the East Coast comprising the Mid Atlantic and New England regions. This is where modular housing has its roots and the last place where technology will find an inroad. Yes, some modular home factories are producing hotels, apartment buildings and dorms but they fit quite comfortably into what the factories have done for decades.

But the real reason automation and high tech will take a long time to infiltrate the East’s modular home factory establishment is simple….Customization.

The last 20 years in the East has seen modular home builders showing their customers the factory plan books only to have the customer return with their own plans usually drawn on paper or done on a easy to use CAD program they got for free online.

If someone were to actually walk into a builder’s office and order a plan from the factory plan book the builder would probably look like a deer caught in headlights as nobody has ever done that to them before.

How do factories that are highly automated build that as a finished 6 sided volumetric module and would they if they could?

The East Coast is where custom modular housing lives. No, it’s not a just a rectangle box or two which seems to be the norm for most of the country but homes sometimes being built from 4, 6 and sometimes as many as 12-14 modules, unique roof lines, bumpouts and each distinctly different.

So, when the media praises modular and prefab as the wave of the future for affordable cookie cutter housing, I guess someone from outside the East Coast will have to lead that charge as most of the factories in the East are busy, and getting busier, building custom homes.

Wednesday, November 8, 2017

Sweden Could be a Disruptor in World Modular Housing

Volvo, IKEA, Lego and Swedish fish are world leaders in trucking, furniture, toys and the candy devoured by school bands on bus trips everywhere.

What is missing from the list is one of the fastest growing segment of their industrial might...modular housing. One of the biggest modular/prefab home companies is Lindb├Ącks who is opening their newest 450,000 sq ft modular factory in December 2017 making it the largest in Europe.

Tuesday, November 7, 2017

November Begins with Lots of Job Openings

It's interesting that November, the beginning of the slow period for the modular construction is seeing so many job openings. Just another sign that modular and prefab is growing rapidly in the US.

CLICK HERE to see the current job listings

Monday, November 6, 2017

Champion Will Restart All American Homes

Champion Modular, Inc. is pleased to announce that — as part of its 2016 acquisition of multiple manufacturing plants and renowned modular home brands — it is revitalizing and re-launching All American Homes®. This series of more than 25 ranch, bonus-ranch, cape and two-story modular homes features high-end craftsmanship at affordable prices.

Modcoach hasn't learned if both All American will reopen but at least one will be.

The Brooklyn from All American Modular Homes

The All American Homes’ legacy began in the 1970s and, after changes in ownership and a brief hiatus, officially debuts January 17 – 19, 2018, at the Louisville Manufactured Housing Show in Louisville, Kentucky. It is during this industry-exclusive show that Champion Modular will unveil the first home in the lineup: The Brooklyn, a three-bedroom, two-bath ranch model, showcasing the latest in design, styling and smart-home technology.

“Just as with Champion’s other brands, we know the pillars that will make All American Homes a success are its innovation, premium craftsmanship and commitment to integrity,” said Mark Yost, president of Champion Home Builders. “This new line is a continuation of an undeniably rich heritage, but it is also so much more than that. It is a reflection of this brand’s evolution — an evolution that mirrors the tastes of its customers and fits their diverse wants, needs and lifestyles.”

It was with these customers in mind that Champion endeavored to bring All American Homes back to the market. This began with gaining insight into their valuable perspectives on what made the brand so iconic in the past, in order to make it successful today.