Wednesday, June 1, 2011

ATLANTIC CITY CASINOS AND MODULAR HOME INDUSTRY ON PARALLEL COURSE

Atlantic City, NJ was riding the crest of the wave in 2007 with record revenue and profits from the city’s gambling casinos.  Then the unthinkable happened.  Little by little the adjoining states of PA, DE and NY began keeping that revenue closer to home as they opened competing casinos.


Modular Housing was riding the crest of the wave in 2007 with record sales and profits from buyers getting easy to obtain mortgages.  Then the unthinkable happened.  Little by little the homes that were once sold to just about anyone that could sign the mortgage loans began to be repossessed through foreclosure.


Atlantic City’s casino owners thought the gravy train would last forever and didn’t have any contingency plans ready for what was about to happen.  Owners couldn’t agree to even meet about the problem let alone address how to begin bringing people back to their businesses.  Sales kept slipping and what was once a great place to gamble became a destination for “boat people”, those groups brought in by bus for free just to fill the casinos.

Modular Home factory owners thought the gravy train would last forever and didn’t have any contingency plans ready for what was about to happen.  Owners couldn’t agree to even meet about the problem let alone address how to begin bringing builders and their buyers back to new modular homes.  Sales kept slipping and in an industry started on single family homes, the owners moved their sales toward low profit commercial and multi-family construction.

Atlantic City is at its lowest point in revenue and profits since they opened.  They are about to become the #3 gambling destination in America behind Las Vegas and the state of PA.  The owners are finally starting to talk with each other about their future and are preparing what they hope will be effective marketing plans.  Observers think that it might be too late for that as people are not gambling like they used to and if they do, they don’t want 4 hour bus rides when they can simply drive 20 minutes to a local casino.

Modular Housing is at its lowest point in revenue and profits in decades. They are stuck in 3rd place behind site built and manufactured housing.  The owners are finally starting to talk with each other about their future and are preparing what they hope will be effective marketing plans.  Observers think that it might be too late for that as people are looking at the best time in decades to buy a used home.  With the prices of used homes on the market marked down way below what a new modular home would cost, first time home buyers are starting to run to these bargains.  Banks are finally realizing that they have to dump these low price, high maintenance homes quickly and they have enough homes in reserve to sell for the next 2 years.

What happens to the modular housing industry over the next decade will be decided this year.  Many factories are starting to work in earnest with their builders for the first time to help them get more sales.  Marketing has to improve not only for each factory but for the entire modular home industry as a whole.  Sales reps will be given the tools needed to help not only their builders but prospective home buyers. 

Is it too late to turn around the modular housing industry?  No!   

Will the turnaround happen this year?  No!   

Will factory owners, management and builders begin to plan for the future of our industry this year? YES!

1 comment:

Heywood said...

Great analogy!!
There is still value to Atlantic City that the PA casinos can't compete with, such as the beach and the boardwalk. Our industry needs to find the value of modular housing and not fear comparison from site builders!