Simplex Open House

Sunday, August 21, 2016

IBS Bankruptcy Aftermath - Rumors and Speculations

The May 11th announcement by the IBS Corporation that they were filing bankruptcy actually took no one by surprise. What did take a lot of their builders and employees by surprise was the company’s insistence that things were going to be OK, just wait until next Monday and production will begin again followed by no production and yet another promise of production beginning the following week.


Now the rumors are flying that on September 9th at least a couple of the closed IBS factories will be officially owned by Champion Home Builders, one of the largest HUD and modular home companies in the US. The most important of all the closed IBS plants is the Liverpool, PA factory that at the time of bankruptcy was supporting a lot of big modular home builders throughout the Eastern US.

No official word from the Bankruptcy Court yet but maybe this time the rumors have some truth to them.

This news has brought with it a lot of speculation about just what Champion brings to the table. Let’s take a look at some of the scenarios that could present itself.


  1. Champion could reopen the former Excel factory and begin producing the same products that Excel provided its builder base. If that were to happen, it would mean a cultural shift within Champion from a cookie cutter type modular home builder with limited options to a wide open “anything goes” custom modular factory. Smart money wouldn’t bet on that.
  2. Does Champion want all the IBS factories including Keiser Homes in Maine which was a rental? Champion has a strong presence in the MidWest and while reopening the two All American plants may sound like a good idea, it may be too late as all their former builders have joined with other good regional factories that produce everything the All American plants did. Smart money might bet on the Iowa plant but maybe not so much on Champion reopening the Indiana factory.
  3. Mod-U-Kraf. This is a great facility and it needs to be reopened as a ‘State of the Art’ factory. However does Champion really want or need this factory. New modular factories have opened in the South and they are quickly proving themselves up to the task of building good custom modular homes. Champion is well served with HUD in this market and if they reopen MUK, their best source of modular business will be their established street dealer network who may be unwilling to spend the time required selling customizable modular over selling from a plan book like their HUD line. Smart money says this will become a Hudular plant if it is acquired by Champion.
  4. Keiser Homes. This factory was a rental for IBS and after the bankruptcy court brings down the gavel, Champion may have to bid against other modular factories to get this plant as it is unclear whether the Court can force a landlord to continue a lease with another tenant. Smart money says this is a no bet situation.
  5. Eastern modular home builders. Some of the former IBS management and engineers were hired by New Era, a Champion modular home company in NW PA with the sole intention of moving them back to the Liverpool plant when Champion acquires it on September 9th. Production at competing modular factories spiked during the second quarter as the Excel builders scrambled to find factories to build their houses. Curiously though, some of these builders are anxiously awaiting the reopening of the Liverpool plant thinking it will be like the good old days.
  6. An interesting thing is currently happening in the East. New housing starts are up a little but after talking to several factories and vendors it appears that the building bubble caused by the IBS bankruptcy has run its course and for a lot of factories things are settling back down to OK levels again. Former Excel builders have become accustomed to their new factories and in many cases the builders have been pleasantly surprised by what these new factories can do for them.
  7. Builders leaving modular construction. One thing that has surprised everyone are the number of small modular home builders that have either switched back to site building or have gone out of business because of deposits paid to an IBS factory and now their customers are suing them for that money. With no plan by any factory to actively recruit ‘new to modular’ builders and these small builders jumping ship, the modular industry may be in good shape for a while but the long term market for modular construction may shift from single family residential to commercial.


And finally, if the Liverpool plant reopens and produces homes exactly like Excel did, with full customization and the discounts enjoyed by the former builders, won’t the result be the same as Excel’s? Low prices, heavy discounts and the ‘build anything for anybody’ mentality are not in the Champion playbook. Will Champion try it for a year or two and then make a decision? Probably. But you have to ask yourself if Champion, one of the huge players in the HUD and Hudular market, who doesn’t sell like this anywhere else in the US will bend the rules for this one factory? Smart money says to wait two years and see what happens.

September 9th, the date rumored to be when the bankruptcy court bangs down the gavel, should be interesting.

29 comments:

Anonymous said...

Coach, this seems to be your month for rumors. I can't agree with a couple of your speculations but most of it is dead on.

I'm one of those builders that hopes Excel reopens even though I have begun buying from another local factory. Time will tell.

Anonymous said...

I was lucky that I didn't have any houses on order when they went bankrupt but I did like working with the people at Mod U Kraf. If they reopen the factory I will be going back to them again. Good people.

Anonymous said...

Coach, what do you have against Champion? Since this began you seemed to be anti-Champion...

Coach said...

I have nothing against Champion. They have proven themselves to be a good manufactured housing company and will put many good practices into the IBS plants if they get them. My problem is with builders that expect they will be just like Excel, Mod U Kraf and All American.

They will assimilate these factories into the Champion culture which is not custom single family housing. Maybe the IBS plants and builders will show Champion that custom can be done but I seriously doubt it.

I wish both Champion and the builders only the best.

William aka "Little Bill" said...

Wow Coach. Give Champion and the old IBS factories a chance. Maybe Champion realizes that there is a need and a market for custom modular homes and want to get their feet into this pool. I hope this is the way they go and succeed.

Anonymous said...

Coach, I think your comments about Champion are correct. There is a big gap between custom modular and HUD. You can't just throw a switch and expect it to work

builder Bob said...

Coach, if I remember correctly, you used to work for Champion giving you an insight that most of us do not have. I like your wait and see about what they will build at the Excel plant.

So far I haven't read anything negative about Champion. You have told everyone to be cautious and don't expect the old Excel to come back. That is not negative.

Todd Kesseler said...

Why don't builders require a performance bond from Manufactures to protect their interest?

Anonymous said...

Champion does have experience with custom modular. Their New Era factory is a pure custom modular facility. Maybe buying these IBS plants gives them a network in their New Era line???

Anonymous said...

New Era bu8ilds a nice home. They just don't compare to what Excel used to build. I've bought homes from both.

Anonymous said...

I think that the point of Coach's comment is that these builders are looking for Champion to do exactly what Excel/IBS did, which was run the company into the ground with heavy discounts and extreme custom design. By now it should be obvious to everyone that when the bones of these plants are scraped clean whoever owns them probably won't do that - especially an MH company like Champion!

Anonymous said...

You can't compare New Era to what Excel and many other factories were/are building. It is just an unfair assessment. Many of us have seen and or heard about New Era trying to take on Excels old orders. Most of the complex houses were shown the door and told not here, which is fine. I think that is what sparked Champion's interest in Excel. You would think if they are spending good money on them the theory would be they want to get into the full blown custom market. If they didn't I would assume the would allocate their funds to all of the factories they own. The modular market is 3% of construction so it is not like we have this giant boom where they need more facilities to keep up with production. Just my own opinion.

Stephen said...

Coach, looks like another topic / discussion for your Boot Camp on September 14th. The timing could not have been better for you and your event.

Steven Snyder said...

My understanding is that the sale of assets and real estate are scheduled for September 14. Champion is currently the stalking horse bidder (the initial bidder on a bankrupt company's assets from an interested buyer chosen by the bankrupt company. From a pool of bidders, the bankrupt company chooses the stalking horse to make the first bid.) I am not aware of other companies that are intending to bid on the assets of the company. The real estate is owned by a separate company.

Steven R. Snyder
Attorney at Law
(717) 975-7799
stevenrsnyderesq@gmail.com

Anonymous said...

I would presume that private equity (HIG or related company) owns the real estate, as security for the debt and the only assets that had real value. If I recall correctly, the IBS press release claimed that the landlord had filed a Notice of Lease Termination.

Anonymous said...

Can't wait for the press release on September 15th. I'm not betting on "smart money" winning this one. Is this the National Inquirer?

Sheldon said...

Coach,
Where do you get your information? Is this stuff that you dream up at night? Have you reached out to Champion to see if they will tell you of their plans for the five IBS factories instead of you speculating on different scenerios?
With out hard core facts I have to agree with Anonymous from 8-25 who referred to this blog as the National Inquirer.

Builder Bob said...

Sheldon,
Have you ever thought where you would learn what is happening in the modular busines if it were not for Coach. I read his blog every morning. He deserves our thanks for all the things he does.

I've gone to sevrral of his breakfasts and a couple of his other events because nobody else has anything that compares.

Thank you Coach and keep yp the good work.

Kenneth Hartman said...

Anyone that thinks the Liverpool plant will ever produce the complexity of product they have in the past, as efficienly as they did, is kidding themselves. The heart and soul of the compNy, their experienced workforce, for the most part, has been forced tk move on due to the way the closure was handled. Champion may have kept, what they believe to be key players, but that means nothing if you no longer have a work force the has a clue how to build the more complex buildings.

I have worked at several modular companies over the years. The one very important thing that Excel did that many other companies don't, in my opinion and experience, was treat their talented work force with respect and pay accordingly. A lot of the times, the factory workers are treated as second class employees. Different pay scales, parking, benefit packages, vacations, personal days....

If we take away anything from Excels closure, let it be that; the factory employees have the ability to make or tarnish a companies name regardless of managements input, and management has ability to bankrupt a company regrarmless of the product their employees can produce.

Anonymous said...

You are correct Ken. The employees made it possible for Excel to build the highly complex product. That is all gone at this point. Although for the industry to continue to be viable it needs competition. I also think it will be a up hill battle to attract employees and builders to this start up operation. The capital investment will be huge. The buildings need repair and the equipment was ran down due to monies going elsewhere instead of reinvesting in the company.

Anonymous said...

Gary,
Is it true that Excel went out of business because they could no longer sustain all of the adds that they had on your site? That's what I have been hearing in certain "circles".

Coach said...

To Anonymous 1:51 PM

Yes, that is why a $50M company closed their doors because they couldn't afford all the ads on my blog.

Sorry about that......LOL

Anonymous said...

Uncanny insight from an old post in 2010 about questioning Shenkman's ability to run a company...here is another example of him running a $100M company into the ground...how's he doing at A.M. Castle? Pretty much the same. Amazing attempt to be the CEO of IBS and President of A.M. Castle at the same time.

Anonymous said...

Apparently there is some merit to the"rumors". Champion had already contacted some former employees.

Anonymous said...

The Company was going bad multiple times. This last time was the nail in the coffin. We were building houses incomplete for months and months. This has happened several times. We kept getting orders and were completing houses the day they were leaving because of shortages. From my standpoint, the employees weren't treated the greatest but they did have leniency. Pay scales were all over. They had employees coming in making more than the employees that were there for years. It caused a lot of hidden stress from the employees that was not known from management. No raises for anyone unless promoted. They did special in complex houses and were decent at it but keeping experienced employees was a huge issue they were battling for years. That being said, it comes down to Management and I believe that was the downfall.

Anonymous said...

Did the bankruptcy hearing actually happen last Friday?

Anonymous said...

Champion was the stalking horse bidder and no one else showed up...anyone see the lawsuits filed against the directors?

Anonymous said...

What lawsuits against the directors?

Anonymous said...

The Liverpoole facility is up and running under Champion and is building the same high quality custom homes Excel did.... Reopening of Maine facility is in the future.... Once re-established, the brand will be unbeatable in the Northeast !!! Look out coach.... The modular industry is about to be shaken up !!!