Monday, January 17, 2011

NEW "AFFORDABLE" DIRECTION FOR HAVEN HOMES - update

Occasionally I sit back, grab a diet Coke, turn on the radio and ponder what will it take for the housing industry and especially the modular housing industry to rebound.  I'm sure those same thoughts are bouncing around many modular home factory boardrooms.  But I doubt that any of them would come up with this scenario.

Haven Homes, a modular home manufacturer known for their upscale, high end, architecturally designed homes has two factories in central PA turning out homes for the East Coast and New England markets and the last I heard, these were underutilized.  Their corporate offices and design center is located near Baltimore, MD in the heart of the most populated narrow corridor in the US from Boston to Washington, DC and includes New York City, Philadelphia and Baltimore, MD.  Their homes have won so many awards for their design and elegance that it's getting hard to keep track.

Now I have to ask this question?  What the hell was their board thinking when they took over the closed Penn Lyon plant in Selinsgrove, PA and are trying to open it before this spring?  We are in the middle of a housing recession where retail home builders and especially retail modular home builders are dropping by the wayside and the ones that are still in business are barely breathing.  I guess the argument could be made that having that plant ready for when things turn around is a smart move but that didn't work out for the "old" Excel Homes management when they quickly leased additional plants in Maine and New York and just as quickly closed them because they couldn't generate any sales for them.

But in an unusual and mystifying twist to this Haven Homes decision is the new direction they want to take concerning this new factory.  They are going to build homes for the "affordable" market! 


Let's look at this for a minute and see if we were on their board if we would have come to the conclusion that the time is right for this left turn.

  • The country is in the middle of the worst recession in decades.
  • Many Modular and manufactured home factories are filing bankruptcy or simply closing their doors.
  • The retail builder base has shrunk to less than half of what it was just 4 years ago.
  • A new factory start-up will cost hundreds of thousands of dollars before any return can be seen.
  • Without an "affordable" builder base (zero, nada, none) it will take at least a year to bring one on-line and that will only happen with deep discounts and prices lower than anyone else.
  • The factory will need affordable housing plans and the current design staff and the Architects that offer their designs to Haven are not used to thinking smaller and more economical.
  • New sales reps will have to hired and a "kick-ass" marketing program will need to be implemented --- quickly!
  • And on and on and on!


If Haven Homes is going into affordable housing, look for the other factories to call all their builders and tell them if they go with Haven Homes, forget coming back when they decide that affordable is out and high end homes are once again where their action is.

I really do hope that this move is profitable for them because our industry needs success stories.  If they succeed in bringing their type of affordable housing to market and win a good market share, then maybe you don't want my opinion at your next board meeting.  If they aren't successful, then maybe I should have been there with my list of reality points.

CLICK HERE to read the Haven Homes press release put out today

8 comments:

Insider said...

On the surface it doesn't seem to make sense but there was a lot of thought went into this decision. It was planned about the same time that Penn Lyon announced they were closing their doors.
As for building affordable houses, that is a wide open market. Look for that plant to also start producing some large commercial projects including dorms and apartment buildings.
As you said Coach, time will tell but for now, everything is on schedule.

Anonymous said...

yea, right

Anonymous said...

The move makes perfect sense. They bought the plant for pennies on a dollar. There is one plant building modular units and the other plant building the roof boxes only. They would be better off with one more efficient plant. Are they going to tell there employees that they are moving to a new plant?

They are then going to push some of the Maryland jobs back to the plant level where they belong.

There pricing is coming in line with the rest of the industry and they will sell more homes. They still have great designs and marketing. I wish I could say that about all the plants.

Anonymous said...

First, Haven used to be considered the leader in the modular industry for overall quality and design...the leadership of Chuck Ballard and Charlie Mogish created a viable company that survived past many an economic crisis, and were innovation and design pioneers as far as taking the industry out of the box...literally! While AutoCAD and natural evolution has generated more industry parity and more companies building good products, it was the last changing of the leadership guard with Wind River as new owners that changed the face of the old Haven to the new.

Under J. Smalley's leadership, or lack thereof, the company went "big time" in their own mind to "change the world" of modular and left the fundamentals of the two Chucks in the dust. They moved corporate offices off site to Baltimore (management couldn’t stand the "po-dunk area of Beech Creek vs. the "big city" environment of the Baltimore-Washington corridor) and began to dump 90% of its PA staff over the next 3 years, many who had been part of the successful “kingdom” builders since its inception in 1970. (Unlike the majority of the industry, Haven had an extremely low turnover in the plant and office...about 1/5th of industry average!) This included the "brilliant" idea of moving all engineering staff to Baltimore from the plants...basically, getting rid of the existing engineering staff in the back hills of central PA, then bringing on their own folks from the city, whom had little or no experience in the industry.

Then, they decided that architects and big time one-of-a-kind projects were the only market for the new Haven and abandoned an enviable builder base, some of whom had been Haven partners for more than 30 years. In a down market, this company turned its back on its bread and butter builder base and the organization’s “people resources” for “PR glory”…while I always support the idea of looking to new markets, this is yet another example of a group of non-industry experienced folks who refused to utilize or listen to the good folks in their organizations who could assist them in their success.

Part of the past Haven success did include houses that were built for nearly all markets…the move into custom during the late 70’s prior to AutoCAD, was done out of response to the builder demanding more in the Northeast and the industry vision of the “two Charlies.” While maybe not the marketing “experts” that Wind River are, they built great houses with a good reputation for many years in many up and down markets.

To say Haven is looking to get into a market they haven’t been into before is not necessarily true…it’s just one that Wind River was not seeing with its nose in the air initially and while I believe they will continue to serve the higher end custom market well, they have a good chance to get back into the other markets with the new leadership but after burning the bridges with their builder network it will be a long uphill struggle in this market...

Anonymous said...

There is nothing left of the old Haven priciples that is worth while. So they can tout the name but what is there to back it up.The mind set out of Baltimore will still guide the company.

Anonymous said...

I have to laugh at the people commenting on this. These comments are exactly what have doomed this industry for years. Most everyone wishes the demise of the other factories instead of welcoming a strong company into the mix. If we as professionals in this industry focused more on obtaining a large overall market share we would be so "scared" of a new player in our sandbox. I personally wish Haven the best and would love to see them succeed once again. I believe they will only help solidify the middle market of modular housing with the quality work they do. For those of us who know folks over there we see that Mr. Langley is putting together a strong team which started last September. As his peer I can tell you that everyone I have ever interviewed that worked for him had always had a lot of respect for the man. Change is coming, instead of complaining you should be preparing for the future.

Anonymous said...

The sad part about all this is the old management of haven screwed up big time.they sold false promises to everyone, employees to investors and had parachuted out and took care of themselves.
All the best to the new team but the promises they are making are a very long shot in this market. The old management might have screwed up but the market did not help either. Haven currently cant keep their plants open with full production so they are going to open a new plant and the volume is going to come from?

I wish them all the best but this is not Excel in the boom of the real estate market. Management can sell investors the ocean but sooner or later the truth is going to come out and bite them the same way it did to the old management.

Anonymous said...

The new management is no different than the last except that they care less about the employees. Laying off men who have 25 30 years of experience and then telling them they can come back at starting wages, all the while dangling their insurance benifits in front of them as a tool to cut costs. These people do not know the industry or how to even build the large upscale houses that haven used to produce. Take a look at how some of ed langleys previous ventures are doing now. I say without the ballard family being involved they will never be the same company they used to be.

Sincerely,
An X-employee of a once fine company