Saturday, February 22, 2020

Where are All the Young New Home Builders?

Sometimes you have to wonder if we will ever see young new home builders entering the business with the numbers to replace the current pool of aging home builders.

Wonder no more! There will never be the number of new home builders we had just 30 years ago.
That’s when I managed two of the biggest lumber yards in central PA. Between the two locations I had 5 outside sales reps, a kitchen rep and 3 inside builder salespeople at the contractor counter. Serving the builders were a fleet of 7 trucks making deliveries at least twice a day to our builder’s job sites. There were always at least 20 people in the “yard” pulling orders for both those deliveries and the builders that stopped in for materials. Each of those outside sales reps had at least 20 builders to call on, sometimes daily. They did takeoffs for their builders, visited every job site and were responsible for collecting past due accounts. At the time there were only a couple modular or panelized home builders in the area and it wasn’t unusual for my store’s builders to have several hundred new homes under construction at any time. Today most of those builders have stopped building new homes. Age and death claiming most of them. That was the Golden Age of New Home Building! Fast forward not only to today but let’s look just 5 years into the future. Very few of those builders had a succession plan because they wanted more for their children than just pounding nails. The children weren’t at the job sites to see what their parent did and were never allowed to catch the “making sawdust” fever. Even today, the few that actually did follow in their parent’s footsteps are not encouraging their children to take over the business. It’s tough and the parents don't want their children, who now get ribbons for placing 8th in an 8 person race, to learn such a tough trade. Better for them to become a lawyer, doctor or even a politician. Little Johnny or Jane might hit their finger with a hammer or cut off the tip of their finger like their “old man” did. There are many reasons for the lack of 25 to 34-year old people entering not only the building business but business in general with the biggest being fear of failure. A recent report stated that almost 50% of that age group are held back by fear of failure while the over 35 age group only has a 33% fear of failure rate. There is a slight glimmer of hope for the 25-34 year old age bracket however. It is becoming the norm for young Americans not seeing the value of a college education. When it comes to small businesses, the majority of owners don’t have a college degree. But that glimmer of hope is reserved mostly for the digital technology and online commerce industries with young people, who have grown up living in those worlds and wanting to join those industries rather pick up a hammer. Financing is one of the most difficult hurdles a young entrepreneur has to overcome. Because they don’t have strong credit history or savings it is that much harder to get approved for financing. Younger new home builders not only need money to start their business, they also must have enough in reserve to live on for at least 6 months until they see any money coming in from their contract(s). At IBS 2020 I saw a ton of young people wandering the aisles of displays and vendors booths, watched them soak up knowledge from all the speakers and observed how excited they were just to be there. But when I talked with them, the majority are working at entry level positions with companies in marketing, media, CRM or Internet based businesses with little desire to actually become any type of builder. So, even if they have a strong desire to start a business, they might have to wait. There are other reasons such as fierce competition among their peers because of low entry barriers; not enough skill sets and lack of experience. To further hinder young people from entering the new home building business is the lack of any formal training in construction, sales, marketing and if they would like to become a modular home builder, there is no training for set and finish of a modular home being given anywhere by anybody. Not from the factory and not from any of the national building associations. The only place I know of currently that is putting together a complete training, marketing and sales educational program is Express Modular Franchising, the new business opportunity from Express Modular, the national modular home builder. Will we ever see the “Golden Days” of small independent new home builders again? Probably not. That ship has sailed. But what we should see is the modular housing industry beginning an education program offering interested young people a pathway to become modular home builders. Again, will we ever see that happening? Probably! It has to happen if the modular home factory wants to continue selling single family homes. I just hope they don’t wait 5 years to get organized to start it.
Gary Fleisher, the Modoach, is a housing veteran, editor/writer of Modular Home Builder blog and industry speaker/consultant. Contact modcoach@gmail.com

1 comment:

MARK WILLE said...

Gary,
Thank you for sharing. I believe in training, education & mentorships. High Schools, Trade Schools, Colleges & Universities. If we focus on the curiculum on procedures of success for the various roles we have a possibility of putting a dent in this.