Monday, February 18, 2013

Where Have All the Builders Gone?

I've been talking to several senior managers at large modular home factories about their builder base and their insight into a growing problem makes me wonder if we are prepared for the future.

First, let's go back about 5 years and look at the builder base at these factories. Some of these managers had as many a 60 builders located in several states surrounding of their factory. Most of them were building homes at a nice steady pace averaging about 5 homes per builder per year. In 2008, the bottom fell out of housing and a vast majority of the builders that had been buying homes either got out of the business or went into remodeling.

Today, the builders that had left the modular business are trying to make a comeback into home building but have discovered that their old factory has closed, been sold or the management and sales staff they knew from before has changed. Only about a third of those old builders stayed in home building during the slump and stayed loyal to one factory.

So where are the new builders going to come from to fill the ranks of the ones that left the business entirely?  Men and women just aren't entering the building trades as General Contractors like they did in years past. Most of the builders that are looking at modular production today are urban builders who have watched the pool of skilled trades dry up and leave their area. Turning to modular construction is one of the best ways to compete with the larger site builders that are gobbling up the trades.

Here is the question I have to ask. If a site builder looks to a modular home factory to begin buying homes, does the factory have sales reps trained to help the builder make the conversion? 

If you think that a site builder can just switch to modular overnight, you are naive. It takes a site builder several mod houses under their belt before they figure out the system. Here is where you see a lot of mod factories sign up a builder, sell them one or two houses, and never hear from them again. The builder probably lost money on their first couple of mod homes and decided it wasn't worth the effort. If nobody from the factory was there to help them understand the transition from site to modular building, what did you think would happen?

Where do we look for new modular home builders?
Today, the smaller number of builders that each factory has is probably in the 30-40 range and each of them averages 2.7 homes a year. Do the numbers! Unless factory management, especially the sales manager, implements a training program for their sales reps to find, recruit and help builders successfully make the conversion, the modular home industry will continue to flounder around looking for that "one big project" that will carry them through the rest of the year or will have to be content to work with a dwindling builder base. For many east coast mod factories, that one big thing was Hurricane Sandy.

I've checked everywhere for a program that addresses this situation that is unique to the residential modular housing industry and haven't found one yet. If anyone knows of a training program for sales reps that helps find, recruit and get site builders converted to mod builders easily and profitably, please let me know. Modcoach

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