Wednesday, July 25, 2018

Too Many Choices - A Paralyzing Problem for the Modular Home Industry

How can too many choices be bad? When you go shopping for clothes or to a restaurant, especially a Greek restaurant, don’t you love all the choices?

And don’t get me started on paint choices at Home Depot. Watching your spouse pick the perfect color for the bedroom is one of the most agonizing 30 minutes you will ever spend.

Our brains have been trained since childhood that more choices are better. For Boomers like myself, trying to decide what penny candy to buy with our nickel could take 10 minutes.

For those buyers that are fortunate enough to live in a suburban or rural area looking to build a new home the choice of style, floorplan and design can send your brain into a spin that can last years.

There are several ways to get a custom home built. You can hire an Architect to design your home and then find a custom home builder that will erect it stick by stick at your job site or you could go to a modular builder with your plans drawn on paper and have them design and build it.

Maybe a home from one of the big tract builders could work for you. They usually have 6-8 designs with options per community. Simply choose the builder and their community based on one of their plans. They use prefabricated wall, truss and floor sections that can be built to even the most complicated design. But you are limited to living in one of their communities.

The modular housing industry started off building homes that were quite easy to design and manufacture. Ranch and Cape Cod style homes similar to the homes built in Levittown were the rage for modular factories in the beginning.

One small modular factory with only 10 workstations turned out almost 500 ranch homes one year. Other factories in PA were seeing as many as 50 modules a week leaving the production line. Life was great!

But something happened in the late ‘60’s that changed modular home construction, especially on the East Coast, that began making those production numbers harder to achieve.

The modular home industry began accepting custom home designs from their builder’s customers that were outside the factory produced plans showcased in the company’s Floor Plan books.

At first it was just an occasional plan a month from the same builder, then it became a trickle of custom plan orders prompted by builder’s customers and promoted by factory management through their sales reps.

Two companies became known for doing extremely custom modular homes, Penn Lyon Homes and Haven Homes, both located in Central PA and unfortunately no longer in business, hit hard by the housing recession.

Moving forward to today the plan book provided by modular factories, especially on the East Coast of the US, are just suggestions of what you could build if you really wanted to get a home done quickly but that isn’t the case any longer.

Everybody wanting to build a new home wants what they want in it, not what someone tells them they should want. Too many websites like Pinterest and House Plan sites show nothing but custom homes.

When the modular home builder is presented with one of these plans I doubt any of them turn it down at the first meeting. I would bet that what they say is “I’ll send it over to my factory and get you a price.”

I can remember visiting engineering departments in modular factories in the late ‘90’s and seeing 2 people, maybe 3 working on plans. Today entire teams of people work on drawing, quoting and sourcing custom plans.

Backlogs in our industry are nothing new but most of those custom plans require longer lead times, special order trusses, windows, materials, etc and approvals which can add weeks if not months for it to get to the production line where it begins to slow down the line simply because it is a custom home and some of the special production work has never been done before.

I recently talked with a factory owner that said he is done with custom orders and if it isn’t in his plan book or can be easily modified from his existing plans, he isn’t going to build it. BTW, he is out till late February of next year and now has a one man engineering department since making that decision.

I also learned that a couple of factories are no longer doing ceramic tile showers and baths as it takes extra time and slows down their lines. This puts the burden of installing back on the builder where, honestly, it should have been all along.

What will help curb this paralyzing problem for the modular home factory?

We have three choices. A factory can go ‘all-in’ doing custom homes and CHARGE for it; put some of the custom work back onto the builders or curtail the scope of what they are willing to do.

If cutting back is an option for your factory, you may find that automation for both walls and floors could become part of your business as it would be a perfect fit.

The days of building “Everything for Every Builder” has to end or it will begin paralyzing not only your production but your growth and profit.

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