Wednesday, November 16, 2016

The Cost of Doing Business as a Site Builder

This is a must watch story from ABC News about the shoddy workmanship of some of the largest tract home builders in the US


4 comments:

Carl Robinson said...

Why isn't a single one of these big builders using modular? I'll tell you why. Because you wouldn't know how to handle the amount of homes from even one of these huge developers. If they gave you a 400 lot tract that needed completed in one year, it would probably put you out of business. 1,600 modules is 32 a week. Training the tract builders subs to use modular would take at least the first 5 houses and they want 8 a week delivered. Maybe its best you stick to the small builder.

Alex Berlin said...

Hi Carl,

I am not sure you understand Gary's, or most of the leaders of our industry, point here. We are not necessarily saying that one of our existing companies can, or is willing in my case, to become a subcontractor for one of the big boys. We believe that modular is a better construction method for 80% of the homes that are built in the United States today. We believe that the big production builders could help themselves by finding a way, whether utilizing existing factories or building new ones, to speed up their production, increase their quality control, and overall produce a better home.

If you're argument here is that we cannot handle speed of production better with modular construction than with site built construction, I would invite you to my factory to see that even a small business using modular construction can build faster, and at the same or better quality, than a similar sized site builder with a similar business model. This will only become more apparent to you as this country continues to see a decline in construction labor.

The issue with modular market share is not based on the inability of the modular method to keep up Carl, it is based on the fact that very few or no current modular factory owners use the same business model that most of the current tract builders do, specifically with respect to buying land and developing high numbers of homes before selling them.

Again, I welcome you to come learn more about modular construction at any time. We use a system for quality control and efficiency that simply cannot be matched in the field. Stay dry out there Carl.

Respectfully,

Alex Berlin
Rochester Homes, Inc.

Carl Robinson said...

Alex, you are 100% correct in your reply to my comment. The point I was trying to make is that no modular factory including the Clayton or Champion brands have what it takes to get this business and probably never will.

And if we did, our service and repair record would probably not be that much better than the tract home people. You need to read Gary's article about the problems concerning service and repair in our industry.

Harris Woodward said...

Viewed from the big picture, the developers want what we have, but we cannot deliver. They call, get no where, and go back to sticks. No wonder we're at less than 3%. But that's not our fault. For now.

In order for massive modular home production to happen we have to stop thinking in terms of one-stop shopping. This is not retail - this is scale and understanding. No factory is going to "build it and they will come" (scale up a huge factory for "potential" business), and no site building developer is going to build their own factory for one large tract AND attempt to figure it all out without help.

This is why folks like Chris Rimes are being successful as consultants to the commercial mod industry. He recognizes this void that must be filled, by educating the large developer, building a team, locating a factory that can produce, and stitching together the architects, engineers, GC and contract negotiation to make it happen. If he gets all these right, the only thing he need worry about is a factory being able to meet production!

The large developers have deep pockets. They need to either open their own factories or partner with existing ones. It takes money to make money. Scale is everything.

Ultimately, without construction labor - in the field or punching a factory time clock - we are doomed. This new administration better get its damned act together and recognize that not all Americans are designed to go to college and sit in a cubicle. Vocational and worker education is how we built this Nation. We have a generation that is ready to roll up their sleeves and sweat out an honest living.

They just don't know it yet! [note to self: have riley and logan read this] :-)