Sunday, July 25, 2010

FACTORY AND BUILDER - ALLIES OR ADVERSARIES

There has always been a love-hate relationship between factories and builders. It wasn't as noticeable when the houses were literally jumping off the shelves in the late 90's and early 2000's but since 2007, the chasm between them has widened.

Factories first started noticing that requests for drawings and quotes began to slow down in 2007 but there didn't seem to be a big concern as there were still a lot of houses to build. But as the year continued to see a slowdown, the factories began pushing their sales reps to get more builders on board and work harder with the existing ones.

Some factories began blaming the builder for the slowdown, not realizing that every builder was quickly depleting their pipeline of prospects and finishing the homes they had ordered. They were beginning to be bombarded by every factory sales rep known to man and getting offers of deep discounts if they switched factories.

Builders who were used to just sucking it up when it came to shortages and wrong items began to realize that their profits were getting pinched and started to complain more and more to the factory. The factories who had not experienced such nitpicking before began setting new guidelines and actually enforcing them. Builders began to look for every little defect or missing part just so they could remain profitable.

Then a funny thing happened on the way to the recession, factories started closing their doors or scaling back territories in order to stay in business. Many were sold including Fleetwood and others locked their doors. Builders began realizing that they were in the driver's seat and started demanding concessions like never before. In the good times, factories gave away trips and prizes to builders and offered trade shows and educational classes but those too began to disappear.

Factories and builders used to have great relationships and some still do but it's very rare. Now builders will jump ship or take on several factories because the modular companies have started becoming a commodity rather than a branded product. Because of that builders are now looking for the best price and not the best product.

If you are builder today, does it really matter that there might be a difference in quality between two factories? Not really...just give me a deep discount.

Nothing will change until a factory starts branding their homes and market (not selling direct) them directly to the public. Builders are not good at marketing and will flock to any factory that promotes itself and generates leads. That's when adversaries will become allies again.

4 comments:

Anonymous said...

wow so true but upon deaf ears
I would take a better product and buy my own trip

Anonymous said...

I agree with you. Factories just don't want to work with the small builder anymore. All they want are the big projects like townhouses.
When the economy turns around, they will once again want my business.

Harris Woodward, CGP said...

I must say - Haven Homes as eked out a pretty solid niche in the luxury homes market. Their builders get plenty of value add, and Haven will be the first to admit that they do NOT give away price!

Anonymous said...

Too many factories have gotten "big time itis" and forgot their roots. However, with the market so depressed many will be forced to return to those roots of serving the small builder or close their doors.