Monday, June 27, 2016

Modular Housing Industry in 2021

Every person that ever started a business has asked themselves what it will look like in 5 years. Everyone wants it to thrive and provide a good living for their families. Nobody starts a business and plans for failure.

Sometimes failure is running on the next track just waiting for you to jump over and stumble. Even though that is always a possibility, that is not the future of the modular housing industry.

How can one ever know what our industry will be in 2021? Well, no one can really know that but here are some predictions based on what has happened recently.

2015 began just like every other year since 2008. Some factories went out of business, new factories opened, consolidations. regulations became more restrictive, shipping costs got higher, fewer builders wanting to get into our industry, lack of industry leadership and declining modular home sales in most of the country.

Then something happened to the industry in 2015 that has never happened before. We decided to take a united stand and changes started to happen. Not all of the changes were good but change it did.

I started seeing the changes during the Builder Breakfasts held in Lewisburg, PA. Discontent, concern and in some instances...anger.

So with the help of the MHBA’s Executive Director, Tom Hardiman, he and I held a Modular Factory Roundtable at the end of 2015 and for the first time ever, almost every factory on the East Coast came together, sat down, had breakfast together and discussed what was happening to our industry. Presidents, Owners, GMs and Investors that competed with each other for years but may have never met before were all in the same room talking about the future. No builders were allowed to attend.

Then it was the builders turn a couple of weeks later. Tom and I saw something at the Builder Roundtable that in retrospect was the beginning of what the future will be. The most surprising thing at this meeting was how passionate the builders were about promoting the industry and wanting to drag it kicking and screaming into the spotlight. That passion is what will continue to drive modular housing’s growth.

Now enter 2016. Problems were on the horizon in the form of IBS. What was once thought by many to be the future of modular housing became one of the biggest failures we have ever seen. Through a series of acquisitions, IBS grew from just a couple of factories to a national powerhouse under seven brand names. Then in early 2016, they filed bankruptcy and builders and their customers were left with deposits paid and no houses to build.

However, that is what sparked the need to make modular housing what it is in 2021.

Leadership: In 2021, the Modular Home Builders Association (MHBA) is now the most powerful voice for not only modular housing but all prefab housing in the United States. The NAHB’s Building System Council is now a distant memory.

The Board of Directors of the MHBA continue to promote modular as the best way to build new housing and it is catching on with new home buyers. They have also begun a program to encourage new builders to join the modular movement by offering training in the many facets of our industry.

Builders: After the IBS bankruptcy builders realized that they needed to know more about the factories they were buying from and a more open dialogue began between them. Transparency and trust began to grow and if a factory didn’t want to join this movement, builders moved on to another factory. Finally, the builders were gaining control of the industry.

Some builders began joining forces with their factories and are now part of the manufacturing process.

Factories: By 2021 they found that building the best quality home was more important than selling mediocre product at bargain basement prices. Builders expected more and the factories stepped up to the plate. East Coast factories especially saw their business increase in both sales and profits. Expansion happened and new plants are now up and running.

Commercial Modular: After 2008, many factories turned to custom commercial modular to keep their lines filled. Lowball prices attracted developers to buy modular for the first time. By 2015 commercial modular built by residential modular factories was becoming the norm. Wood framing would be allowed to go higher than 3 stories and more commercial projects came on line.

2021 sees some of the more successful residential factories opening new commercial plants and not only going after housing projects but also fast food, strip centers, custom lodges and schools. Even their residential home builders are joining with the commercial side of the factory to sell more multi-story housing.

Social Media: In 2021 both the factory and the builder have such a presence on social media that it is hard to open any form of it and not see something about modular construction. Builders are putting up videos of not only houses being set but of finished homes. Factories have blogs running in high gear promoting their builders and all the custom stuff they can do.

And finally, 2021 will be the year that our industry looks back to 2016 and says “that was the start of everything!”

There is no crystal ball setting on my desk. There is no fortune teller or mystic telling me this. The reason I see this as the future is the people and what they are doing this year. Working together, overcoming a major problem and stepping up and sharing their love of modular home construction.

Hope I’m around to be part of it.


Builder Bob said...

Coach, you are too modest. Your breakfasts, yur roundtables and your boot camps are what has brought this industry together. The MHBA owes you a big thanks for breathing life back innto it. Your blog is the first thing I read in the morning. Without you we would not know what is going on. i also hope you are still around for 2021 and many more years agfter that.

Tom Hardiman said...

Interesting article Gary. The one area that we have influence over in this article is leadership. I can tell you this is what we are working on NOW, not five years from now. We've grown MHBA from 2 dues paying members to 70 in three years. We've opened the doors to more builder support and influence.

If the industry does not rally and join forces, we are going to continue to see what we have seen in Cape Coral, Florida and O'Fallon Illinois - city leaders with little understanding of our industry banning modular homes in their jurisdictions.

Builder Bob, it's time to put up! Join MHBA and help make us stronger rather than your semi-anonymous critiques you've made over the last year. If you are in the modular home industry, you have a choice: be a part of the solution to grow market share or sit around a reminisce about the glory days.

Coach said...

Tom, I think 5 years from now all the current efforts being put into the MHBA will make it the leader in all prefab housing, not just modular. I agree with you that it is already a good association but I think it will be a great association by 2021.

Five years will fly by so fast.