Saturday, June 1, 2013

Another Blu Homes Video that Just Doesn't Make any Sense

*********UPDATE - Monday 6/3/13*********
According to an interview with Bill Haney, co-founder of Blu Homes, on the Root Cause website dated 5/30/13, Blu Homes "is the leading provider of beautiful and green precision-built homes in North America."
He also says that "Blu Homes’ bookings grew 300% year-over-year, reaching $40 million in 2012."
CLICK HERE to read the article.

Does anyone else think this sounds fishy?

*****************************************************************
I know I talk a lot about Blu Homes, most of it with pure amazement at just how much BS one factory can produce about itself. It seems that every time someone farts on the factory floor, a video is produced and a wine and cheese party is held.

In this latest one, Blu Homes has produced a professional quality video with Bill Haney, co-founder of Blu Homes, where he is sprinkling happy dust on every person in his company but the thing that stopped me dead in my tracks is his statement that there are 250 people working for them.

250 Employees!

He never actually says the word "employee" but he says that there are that many people that work on every Blu Home house. Unless they work for free, they are employees or subcontractors that need to be paid.


Assuming that each "employee" averages $40,000 a year and that includes the owners, their yearly total payroll is $10,000,000 plus taxes and benefits!

That means that Blu Homes, a factory that has said that it can take up to 60 days to produce a home and from what I've seen it has less than 10 workstations, must have the biggest payroll per house in the entire prefab and modular housing industry.

I worked for a factory about 15 years ago that produced between 15 and 20 homes a week with less than 100 employees. Even if you added in the transport people, set crews, the builder and his crew, the local inspectors and even the banker that stood on the curb with a check in her hand waiting for the modular to arrive, I think you would be hard pressed to get much over 200.

No wonder they are still looking for more investment money after already receiving $70M. 

17 comments:

Anonymous said...

BS is right. You hit it out of the park again.

Anonymous said...

I'm starting to smell something too

Anonymous said...

They pay above market rates and look at the website, all those VP's, thats over $200K with benefits etc. Mid level people are leaving fast and they are rumored to be out of cash by Sept or Oct unless that married couple running the place con some new investors

Anonymous said...

Coach, did I read that correctly, $40 million in sales in 2012? If that is right, that makes them the biggest modular home factory in North America.
Who are they trying to bullshit?
If they are just soliciting money to feed their egos and go out of business as Anonymous suggests will happen this year, it will give prefab housing another bad rap.

Maura McCarthy said...

Folks - this is Maura McCarthy with Blu homes~ I am one of the co founders. I would be glad to provide detailed answers to the questions that many of you have brought up, but let me start with a few items and hopefully these are helpful! And, while we are always open to constructive feedback I would like to clarify a few misunderstandings. We do have ~250 employees but only some of these are in operations. Many of these are in sales, marketing, design (this is the front end including what is traditionally done as 'architect' work in traditional modular construction -- these folsk for us are talented young designers mostly based in Ann Arbor, Michigan), finance, technology/R&D, delivery and site teams. We pay normal market rates for our employees, everyone has stock options including all factory employees, and we seek to be very fair minded with all our staff. We sell direct to consumer and not through dealer networks, so we interact with our customers from start to finish including running most of the site work (we started offering that service last year, called BluServ Plus, as most of our customers were asking for it). We did do ~$40M in sales bookings last year, and we expect to do a lot more this year. We are excited at the opportunity to learn from anyone who has good insights, while we also are focused on a well developed and differentiated IP portfolio (our 3-D online configurator, our steel & folding, etc.) that is very different from anything I have historically seen in modular/prefab. We are well capitalized and financially very stable, and it is also true that we are raising more equity as we would like to grow our model homes footprint and make it easier for our customers to come see our homes. We have sold in 18 states and we are hoping to help the prefab industry grow to be a bigger percentage of the whole market in North America. For those of you that are posting as Anonymous, I ask you please to feel free to reach out to me at maura@bluhomes.com if you have any questions. For those that are speculating or creating rumors, I ask you to please contact me or the company if you have questions - you will find us to be very open book! And for those of you that are interested in seeing what a Blu home looks like, I would be glad to show you a home - I think you'll find it to be a beautiful thing (of course I'm biased :) Thank you for your time and I hope this is helpful. Warm regards - Maura

Coach said...

Maura,
thank you for your comments. I welcome any information you wish to share with my readers about Blu Homes.

Without input from people directly affiliated with Blu Homes, the readers are left to speculate about the videos and articles from other sources that sometimes makes one go "huh?"

Jerry Robinson said...

Hey Coach,
I just ran some numbers based on what Maura said and yes, Blu Homes can be doing $40M a year.
Assuming that they do everything for the buyer except purchase the lot and according to the pricing on their website, they are selling homes for $400 a square foot because they do everything from start to finish.
Using that $400 as a base square foot price, they only have to build between 2 and 2.5 modules a week.
Any factory could achieve those numbers if they overpriced their homes and finished them for the end customer.

Anonymous said...

Maura McCarthy seems mad that anyone with industry experience (unlike her) questions the business model.

IF, they "booked" $40M in 2012, how many of the booked sales actually become houses, you'll probably find 25%+ of canceled orders due to zoning restrictions or inability to finance the land or home. Happens all the time in traditioinal new construction so it would, presumably, happen more in more speculative prefab. How much money does the homeowner have to put down when they sign a purchase agreement? I bet $0...

Even if they do 2.5 modules a week, which they can't do, that would only be about $30M in revenues, less the $10M in salaries (pretty accurate assumption) doesn't leave much at all, they would be losing big bucks. Who has invested in this besides the Disney guy? does anyone know?

Tim Watson said...

Maura,

Well said. I wish your team all the best. You, I am sure, have found a lot of "This is how we do it, because this is how it's always been done!" attitudes on this site and elsewhere in the industry. Modular folks are quick to anonymously jump on anyone who dares to be different. If you're not from PA then you're not worth a dime. I tried to introduce architecture to modular and was stopped by the economy in 2008. Then again by management that would only give us enough rope to hang ourselves. Self performing by the factory is certainly one way to skin that cat. Good luck to you and the Blu Homes team and don't let the Caoch treat you like he did Michelle Kaufman.

Anonymous said...

Tim Watson, what do mean by "well said", just like every other blu PR piece, she said nothing.

Coach objectively pointed out MKDesigns business weaknesses and is objectively doing the same with Blu

Unless they get more dumb misinformed $$ they will go in the same direction.

Whats the issue with Anonymous, don't want the wrath of the Blu couple...

Dan Hobbs said...

I must weigh in on the side of Tim Watson and Maura McCarthy. Why? First, it is easy to anonymously post comments laden with speculation and sourness. It seems to be a product of our culture and we should all be wary of falling into the trap. Secondly, I must applaud Maura for stepping into the lions’ den and posting among a group that is baring its fangs. Bottom line – if one rereads the posts simply for tone/attitude and eliminates consideration of content, which is more convincing?

Coach said...

To all my readers:
Maura and I have been emailing and I learned that she is on top of her game. She told me that she is working to improve every step of the Blu Home process from conception to move in.

I offered and she accepted my invitation to contribute articles about some of the changes she has made in that process with you. I welcome her contributions to Modular Home Builder.

As for the "Anonymous" comments...think about it.

Everyone knows everyone in this business and commenting anonymously is a great way to express your opinion without being on the receiving end.

I review every comment before it is published as some people's remarks are so vulgar it even makes me blush. Those I immediately delete.

Anonymous said...

Good luck Coach, you don't want to fall for the Blu PR machine. Smart that you welcome articles but please keep up the objectivity.

Keeps in line with the impression she gives that "she" is making changes, not the other 250 employees, especially given her vast work experience and industry experience in homebuilding and her relationship to the other founder.

Hasn't she held most other titles at the company until they eventually brought in real operators? Just looking at old press and former website versions.

Builder Bob said...

Coach drank the Blu Koolade. Next thing you know he will be interviewing Maura McCarthy at one of her Wine and Cheese parties and meeting Tim Disney to get his opinion on why she is so great.

Anonymous said...

I've checked out their website and I just don't get how a 25x18 shed with a patio door is going to sell for $95K. (When an Amish company can provide it installed for $20k)

Anonymous said...

I love the look of these homes but they are just too expensive. The starting prices are ridiculous! I also checked out reviews and found on site with nothing but current and former employees complaining about how management is awful and how everyone is treated poorly.

Jack Kahler said...

Speaking as a prospective customer, this comment chain really differentiates Blu Homes from the common perception of modular homes. Many people, like my wife and me who aren't in the building industry, generally consider modular as an inferior substitute to stick-built homes. However, we think of Blu Homes as aesthetically equivalent to high end stick-built, and possibly superior in terms of energy efficiency.

The vitriolic Anonymous poster who wonders why I would pay $95k for a Blu Homes module vs. $20k for an Amish shed totally misses the point: I am buying more than a shed just like a Mercedes customer is buying more than a ride to work. To avoid becoming a commodity, Hyundai imitates Benz and grows their customer base. The high end drives the low end, not the other way around.

Think before you hate on Blu Homes. I wouldn't be on this web site if they hadn't changed my opinion of modular products.