Tuesday, March 29, 2011

MODULAR HOME FACTORIES -- HEAL THYSELF

After reading the results to the survey sent to modular home builders and the comments left by other folk, there seems to be a consistent theme;  poor service after the sale but that is not the only thing wrong with the modular housing industry today but it is one thing that most builders can agree on.  Here; in no particular order; are some of the things that need fixed by the modular home industry.

Poor Image.  Modular housing has evolved steadily over the past 40 years to where a factory can build just about anything a site builder can.  The quality of the materials used in modular housing and the construction techniques are second to none.  But for most people, modular homes and double wides mean the same thing.  The modular industry has many organizations, lots of meetings, numerous conventions and political PACS and it still can't distinguish itself from either the manufactured home builders or the site builders.  Finding a way to let prospective new home buyers know that modular is the way to build will never get off the ground if we, as an industry, don't find a way to get that message out there.

Reluctant Management.  I talk with modular factory owners, managers and sales reps every week and the one recurring thing I hear is a reluctance to take a new look at what they are doing at the factory level.  Owners are telling me that there is no money to invest in new equipment or design.  Managers say that the owners are becoming more intolerant of slow sales numbers and are grasping at straws to help keep the factory open.  Sales reps continually have their noses pressed to the window looking for an opportunity at another factory that will respect them and work with them.  When their backs are against the wall and the banks are looking for their monthly loan payments and the employees want their paychecks; it's easy to understand why factory owners are reluctant to try new things.

No Business Plan.  I would love to be at every meeting where the owners and management decides to revisit their short and long term business plans.  I don't think I would have to visit more than 3 a year to visit all the ones with a real business plan. 


I'm excluding the big guys like Champion, Commodore, Cavco, HIG and some of the others.  They have committees that review their plans on a regular basis.  I'm talking about the single factory owner.  Most have a business plan that hasn't been reviewed since the recession started and their business went to hell.  Factory owners have to sit down with their managers and outside consultants and start planning on their business strategy for the next decade.  Most factory's goals are simple.  Keep the doors open.  But there is so much more to it than that. 

No Marketing Plan.  Linked with the business plan is the marketing plan.  It's sort of like the chicken or the egg scenario, which comes first?  Once a real and thought out business plan is derived, it's time to get the marketing strategy in place to deliver those results.  Too often, the marketing plan is left up to the Sales Manager, who has little or no knowledge of just what goes into it.  They come with some grandiose plan that makes everyone on the board of directors smile, (because none of them knows how to write one either).  Here is the one thing that outside consultants can help with.  It's hard to find a single tree in a forest if all you see are trees that look alike.  A marketing plan is a must in today's economy.

Poor Service.  The one area that kept coming up when I wrote the article about the survey was the service department.  I've talked with many factories about their service departments and have even talked with a lot of service managers over the years.  It's not that the service department is run by under-performing dolts.  No, it's just the opposite.   The people that run them are some of the best at squeezing blood from turnips.  Owners look at the service departments as a necessary evil and either give them a very small allowance per home or simply a flat amount of money to make repairs.  This is one area that desperately needs attention.  Neither the builder nor the new home owner is happy with this department.

There are more areas that need addressed for success.  The modular housing industry is not alone in the above needed fixes; there are a lot of other industries as well. 


Now that spring is here and the production lines are starting to fill up again, it would be the perfect time to start planning for some of the above items.  Nobody wants to try to fix things when everything looks bleak but give us a couple of good months and we are anxious to plan doing all the right things.

5 comments:

Anonymous said...

Coach, you got this right. Most factory owners are part of the good old boy network that meet every few months and award each other with some plaque. I'll bet the guys from HIG aren't going to become members. They are on a buying mission and it won't take long for them to start to take over the modular home business in the US.
Then we will begin to see some real inroads into the traditional housing markets. These guys are all MBAs and smart.

Anonymous said...

HIG may have all the MBAs and more money than most, but as long as they retain the people they inherit and if they continue to hire retreads from the talent pool that has left or been let go by other factories, the status quo won't change much. A large corporation's culture is no good if the middle management still lives in HUD world. I'm not sold on the HIGs of the world's success in our industry yet. If they succeed, more power to them and it will probably come at the expense of the mom and pop modular builder and some smaller vendors.

Bill Murray said...

The title of your recent post is dead on the mark. We as manufacturers must "heal" ourselves, it must come from within. It has been and remains a very fragmented, ego-centric, conglomeration of owners, general managers and decision makers. We can sink and/or struggle independently or succeed through initiatives promulgated through a unified voice and effort. Anonymous refers to the good old boy network that meets every few months etc. I understand his tounge in cheek sarcasm, but herein lies the problem in my opinion....manufacturers do NOT meet at all, let alone once a month! It is a real morass for sure, but without a voice, a single unified effort on the part of the industry to educate, police, lobby and be proactive we will not be able to heal ourselves. Organizations like the MBSA (there are only two that solely represent the modular residential industry)must be a viable instrument in facilitating not only a recovery but very possibly in preventing our demise. I certainly am not privy to the intent of owners like HIG, but it surely would be in their best interests to become active in the MBSA. We can all lament the cash crisis (dues are minimal considering what's at risk here)or the fact that we don't have time. The alternatives are frightening! We all have dogs in this fight. Join the fight, help row the boat, not just sit back and take the ride. The MBSA can be the catalyst but they need the support and involvement of those that stand to gain the most---manufacturers.

Anonymous said...

Anonymous 12:15 talks about a good old boy network. As an insider I know for a fact that all the awards and accolades end up in the same couple of guys hands every time there is a convention. What is it going to take to make the modular home industry wake up and start getting different people involved.
Maybe those HIG people will actually start taking an active interest in the modular factories they own. They own 3 already. Excel, ModUKraf and All American. Those are some of the big guns.

Anonymous said...

Do not underestimate HIG.

Does anyone really care about all the plant healing themselves?

Everyone should stick with whomever they think is a winner.

Recessions weed out the weak. Builders and factories.