Tuesday, July 5, 2011

5 REASONS MODULAR HOUSING HAS NOT SUCCEEDED - - - YET

Maybe this housing crisis is a good thing for the modular home building industry.  Maybe we will start to think of the reasons our industry is such a very, very small part of the total new home market.

With modular homes accounting for only 3% of the total new homes built in a year, our clout in the industry is miniscule and without teeth. 

What are the reasons we can't seem to get new home buyers to look at us and what do you think we can do to correct it?

Here are just 5 reasons that modular housing can't seem to break out of its small niche market and become more of a voice in total new home sales.

1. YUCK! They're built in a factory!
For decades this has been one of the biggest selling features of modular home factories.  "It never rains on the assembly line" is one of the factories and retail builders best lines.  But do new home buyers really want their home built on an assembly line, trucked hundreds of miles to their building site and lifted into the air on cables before being placed on the foundation, that may or may not fit?  Has anyone really asked the home buyer if they are comfortable with this scenario? 

There is something to be said for a new home buyer to drive up to their land and see actual people working on their house in the hot sun.  It doesn't really matter to them that a lot of these workers are illegals or that they have no carpentry experience.  They only see people sweating and building THEIR house.

One of the best reasons to build a modular home could also be a detriment to closing the sale.

2. Sales Reps get very little training.
This is a real pet peeve with builders.  Most sales reps just jump from factory to factory trying to stay one step ahead of a bad sales year blaming their current factory for low sales numbers.  What do you think would happen if a factory would hire qualified sales reps, either from within the factory or outside, train them properly in what the factory builds and teaches them how to work with builders to become partners in their mutual success?

I'll tell you what would happen.  You would have a successful company and a successful builder.  All to often, the sales rep is simply an order taker even in today's tough market.  Path of least resistance.  I know one sales rep in VA that does work intensely with his builders and even though it's a tough year, he is doing OK and so are his builders.  He works each and every house from design to quote to sale, making sure that he looks at it like his builder would.  Is it more work?  Sure.  But he's still in this business after 25 years.

3. Management doesn't feel the pain.
Over the years I've worked with modular factories that had owners that built their factories and business from scratch, putting all their sweat and tears into it, only to see members of their management ignore the builder and sit back and enjoy the management crown given them. 

There have been MBA's brought in to factories to "make it happen" who have absolutely no knowledge of our industry or the history of it.  They start making the same mistakes that their predecessors did and lose all respect from their underlings.

A lot of factory management people have never seen a real job site and talked with a builder while the box is swinging in the air waiting to be set.  That's because the job site is 200 miles from the factory which means that they would have to stay overnight and be in the hot sun while the house is being set.  Yeah, like that would ever happen.  But just think, they might actually learn how their product is assembled in the field and talk with a builder that is pissed off because the factory forgot to send the roof shingles in the house.

4. Factories are afraid to be held accountable.
This is a big one with builders.  Just about every week I get an email from a builder or a new home owner asking me for help with a problem caused by the factory.  Most are minor at the time but become major obstacles as time goes by and nobody from the factory solves it.

Most things are minor like missing faucets or cuts in the vinyl flooring.  You would think that a factory would want to take care of these right away but with service departments being cut back, they are dragging their feet hoping that the builder will just "buck up and fix it themselves." 

Most factories give the service department a percentage of the sales price of the home for repairs but with the slow pace of housing they are not getting enough to even pay for a service tech to be on the road let alone the budget cuts that have been imposed on them. 

What would your reaction be if you bought a new $30,000 car and the transmission slipped after one month and the factory or the dealer kept stalling in repairing it?

5. No unified voice.
We have all these wonderful associations but the story of how much better modular construction is over site built is still ignored.  When was the last time you saw an ad on TV for a modular home?  Or heard an ad on the radio at drive time?  Or read a newspaper article that featured the good stuff about modular homes?

Have you seen an Extreme Makeover Home Edition program that featured a modular home?  Yes, there have been some built by Excel and Nationwide but after watching the shows, who could tell as ABC TV didn't say much about it.  Blue Ridge Log Cabins is the next modular company in the "Extreme" lineup.  Let's hope they get some exposure.

There are many more reasons that modular housing is an "also ran" in new home sales and most of them are self inflicted.

4 comments:

Heywood said...

great article...how about adding one more? name recognition?
What product does a consumer buy, of notable value where the purchaser doesn't know the manufacturers name?
I would like to see the industry take a survey of the home buying public and ask just one question; Name one modular home manufacturer.
I would guess most would be unable to name a single one.

William said...

Coach your item on management -- take a look at Champion and the outside Ex. Management they have brought in WITHOUT one hour of modular experience. Look at how great that has worked for them --- NOT!!!!!
I also am in a waiting pattern on how well the investment banking companies will do who have put new management in place that has ZERO modular experience. The ONLY way that is going to work is if they acknowledge their inexperience and let the managers that are in place have a direct say in operations.
Looking at one particular manager put in place by investment banker - he has been named by this same investment firm to head up other operations. How well did that go for him. One of their "boys" and they have to find a place for him after they purchased his company.

Anonymous said...

I work for one of the biggest modular companies in the East. We have been guilty of a lot of the reasons you mention but since we got new upper management, we have slowly been correcting a lot of the mistakes made by the previous owners.
I can't wait to see what happens in our company when housing turns around.
Even though I work in the office, I am noticing some good things happening.

Anonymous said...

William. You are so right about management with zero experience running modular factories. There is a long and hard learning curve to housing and just because someone has an MBA and worked in a dissimilar industry doesn't mean a hill of beans when it comes to modular.