Simplex Open House

Tuesday, December 13, 2016

Rebooting the Modular Home Industry

Here are the ugly truths for modular housing. There is a shortage of skilled labor, a shortage of new builders wanting to enter modular home building, a lack of professional salespeople entering the business, a rapidly aging builder base and a disconnect with marketing to Millennials.

Each of these concerns impacts what our industry will become over the next 10 years. Much has been written about it, not only on this blog but by every construction magazine, industry expert and consultant for the housing industry.

The modular housing industry is actually in a better position to be everything all of the pundits have been saying about modular for years. As an industry we have to become proactive in addressing our future needs. For entrepreneurs that actually want to get into marketing, selling and building new homes there is no easier path to success than modular housing.

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Shhh! It’s a Secret

Back in the day, if you wanted to be a new home builder, all you had to do was pay a fee to get a license (maybe pass a test), drive to your local lumber yard, establish credit, put a sign on your truck and take out a Yellow Page ad. I can still picture young men walking into one of my lumber yards with nothing more than a hammer, a level and a best bud to help him wanting to be a builder.

Of course those days are gone forever. Lowe’s is not your friendly neighborhood lumber yard of yesterday. It takes more than just signing your name to get a license and without professional knowledge of the building industry, you are doomed to failure and leaving a trail of angry customers suing you.

There is a little secret that the modular housing industry has kept to itself for years that desperately needs to see the light of day soon or it may be too late. That secret is that a new builder is not alone in his/her journey to become a success. There is an entire team of people just waiting to be asked for their help in the journey.

This team can be found in just about every modular home factory in the United States.

However there is another small secret that modular has been hiding that should also see the light of day quickly. That secret...the team has no idea what to do to help the ‘new to modular’ builder succeed.

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Waiting with Noses Pressed Against the Window

“Oh Boy! We just got a call from someone that wants to buy our modular homes” said every Sales Manager.

Typically the Sales Manager will decide which of the sales reps to assign to this person. Should it be based on which territory, who is the best at giving factory tours or maybe, if all else fails, the Sales Manager will give the tour personally.

The choice boils down to how experienced the builder is. New to building? You will probably get the territory sales rep. Site builder looking to make a change, probably the experienced sales rep and if it is a modular home builder that is looking to make a change, the Sales Manager is the most likely one to show them the factory.

In fact, the order should actually be reversed. The Sales Manager should personally take an interest in every new inquiry, personally invite to the factory tour and personally lead the tour. The experienced sales rep should continue to be assigned to the site builder looking at modular and the Territory rep should talk with the modular builder looking to make a switch.

I remember many years ago being invited by a site builder to join him on a factory tour to a PA factory. At the time neither of us had much experience with modular housing. I was the GM of a lumber yard and the builder was one of my customers.

We walked into the factory’s office where a small sign welcomed the builder by name. Nice. We arrived on time but were made to wait almost 10 minutes before a sales rep showed up to take us directly into the factory. It became obvious to both of us that this person had never built much as he could not answer even the most basic questions.

Then it was time to visit the offices. We were allowed to look at people drawing houses but not allowed to talk to them. As we passed one office after another, we were told who worked in each but never introduced. The next to final stop was the office of the CFO where the builder was told all the things he couldn’t do and given financial forms to complete and send back.

The final stop was at the Sales Manager’s office where we were told that he was too busy to talk to us at the moment. There was absolutely no follow up by anyone from the factory.

The builder went back home, continued site building and within a couple years was building 10 homes a year and buying all his material from my lumber yard.

Fast forward to 2015. I joined several modular builders during their first encounter with a factory after deciding to make a switch. Both times Management lead the tour. Both times the builder was underwhelmed. At the factory offices of both, we were shuffled through them just like I was 20 years earlier. Neither builder made a change and both decided their present factory was OK for now.

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Perception vs Reality

Remember the old joke…”I’m from the government and I’m here to help you.”

Now replace government with factory in the above. It’s not that the factory does not want to help new builders succeed, most just don’t have any programs in place to help them succeed. These programs take time, talent and money; three things that are in short supply by most factories today.

Gone are training departments, recruitment efforts and continuing education in new products, procedures and production. In its place is an attitude of “It’s somebody else’s job.” Word! There is no ‘somebody else’.

Builders come to modular to ease the pain of site building thinking that we have all the answers. Publications far and wide have been touting modular’s benefits but when boots hit the ground, there is very little meat on the bones. Builders find themselves learning on the job, making mistakes that should have been pointed out to them by someone at the factory. Losing a couple thousand dollars on the first one or two homes might not seem like much to the sales rep or the Sales Manager but it could mean the difference between eating, paying a mortgage and having their truck repossessed by the builder.

Hope

Over the past few years there has been an awakening of sorts. The Modular Home Builders Association and the NAHB’s Building System Council have begun to stretch their wings and rise from the ashes of what was once a powerful industry.

They bring hope for both factories and builders. The MHBA’s Consumer Awareness Program is helping introduce modular through many social media venues with their “Ready. Set. Built” ads. It seems to be working with several builders telling me they have gotten good leads from it.

The Building System Council is stepping up their involvement in modular by attending more of our industry functions. They are also a much bigger and more vocal part of this year’s International Builders’ Show in Orlando, FL with speakers talking about the benefits of modular.

If you haven’t joined either or both of these associations, take a few minutes, get off your butt and do it now. They are the keys to the future of modular housing and by ignoring their efforts, you may just be left behind wondering where your business has gone.

Wish List

What does the residential side of modular housing need to do to improve our industry?

  • Training programs for sales reps, experienced and new to modular builders
  • More social media interaction
  • Blogging by both the factory and the builder
  • Find ways to attract new builders to modular construction
  • Cutting edge production upgrades
  • More new factories to serve a growing market

The residential modular housing industry can become stronger. It can be a growth machine and it can begin to show those small site builders that modular construction is not only a good option for them but in all reality, their only option.

4 comments:

Anonymous said...

Coach. It sounds like you might be invited to Trump Tower to discuss draining the modular swamp. Good article but I think it is hitting too close to home for some.

Anonymous said...

I think you literally hit the nail square on the head. When the economy was in the tank, theses factories were your best friend and do anything in the world for an order. Now that things are improving and the factories are buzzing, these factory people are no where to be found. Might as well go back to stick building. Takes too long to get a house and no support from modular factories!

Anonymous said...

Why are all your articles so negative... Sounds like the typical media we deal with every day... Look for the good stories, and I don't mean so and so built this and so and so built that.

Builder Bob said...

There's a special place for people that are happy all the time.

Coach, Keep doing what you do best. Informing and giving us the best news about the modular housing industry.