Tuesday, February 21, 2012

NEW REALITIES HAVE CHILLING EFFECT ON MODULAR HOME INDUSTRY


Just in case you haven’t noticed, the modular home industry is about to be assaulted again with rising fuel, labor and raw material costs. 

Diesel fuel, the life blood of the trucks that haul our homes from the factory to building site, is predicted to climb to almost $6.00 a gallon by summer.  Older diesel trucks that haul modular home sections only get between 6 and 8 miles per gallon.  Add in all the other costs per mile that these trucks incur like driver pay, insurance, profit, taxes, maintenance, etc and things just begin to spiral out of control.  This could limit the distance a factory can effectively deliver a home from the factory.  100 miles may become the breakeven point for the builder.


Petroleum prices, wages, health insurance, new building codes and regulations along with increasing costs of facility maintenance and the myriad of other costs are already starting to eat into what little profit most modular home factories earn. 

There are several things that a modular factory owner and its management can do now to start making things a little easier to survive the next year or so until everything shakes out and this election year is over.

Here are just some of them:

  1. Spend only on needs, not wants.
  2. Stockpile essential building supplies - this is the single best thing you can do to prepare for tough times.
  3. Track your money - make sure you know what you're spending money on.
  4. Redo your budget to stop money leaks.
  5. Pay off debt. Make a plan today to do it.
  6. Cut down on travel expenses for sales reps.
  7. Ask the builders for their input.
  8. Watch the amount of factory waste.
  9. Recycle as much as possible.
  10. Make people accountable for their actions.
  11. Explore different markets like commercial and multi-family housing.
  12. Increase quality assurance in the factory as it will mean less service in the field.
  13. Look for new, more economical building supplies.
  14. Reuse leftover materials from one module to the others.
  15. Review your quoting and estimating costs and make sure you are not losing money on options.
  16. Take a hard look at your delivery area and track the demographics to decide if it pays you to sell within that area. (this is a tough one to admit if your sales area sucks)
  17. Send roses to your sweetheart.  Make sure you keep your builders happy.
  18. Learn how to market on FaceBook, Twitter and Linkedin.  In fact, learn what marketing is.
  19. Start a blog within your website to keep people coming back until they are ready to make a decision.
  20. Explain to your employees about the current tough times and what impact it is having on our industry and with the factory itself.

1 comment:

Anonymous said...

Coach, have you lost your mind. The good old boys of the modular home factories would never do what you suggest. It would take too much thought and follow through and we all know that will never happen.
Most of the problems are amplified by rising fuel costs not as result of it.