Tuesday, June 11, 2013

Where are Tomorrow’s New Home Builders?

Yesterday I had lunch with several of the modular housing industry’s most knowledgeable people. No, not Michele Kaufmann.

We discussed a lot of things about the current state of modular housing and what the future might bring and a subject of great importance to these men….older home builders.

Being an older former builder, I ask myself all the time where the new builders are. I’ve looked in newspapers for their ads, on social media sites, press releases about a new builder starting up business but I’m discouraged at what I see. Younger men and women aren’t turning to new home construction as a way of making a living.

With home builders aging, many turn to their sons and daughters to keep the family business alive find they have absolutely no interest in following in “the old man’s footsteps.” And who could blame them. Today a General Contractor has be to versed in not only how to build a new home but also with things like water management and runoff, energy efficiency, hurricane, earthquake and tornado regulations, IRC Codes, new Energy regulations and on and on and on.

If a builder was around prior to 2008 and still around today, they have officially earned the honor of being an “Older Builder” even though they may only be in their mid thirties.  They are survivors that will continue to build nice homes but without new people entering the field, the day of the small single family builder will become the domain of the small groups like the Amish who value handing down their business from generation to generation.

Let’s see what is happening out there in new home construction. We are seeing expansion of the top 200 tract home builders, the ones that move into an area, buy up 40 acres and more, level it, put in the infrastructure and build conservative middle class homes for less than any small stick builder could by using the least expensive materials and bidding out work to the lowest bidder.  They’re in and out, sometimes in less than 2 years and leave behind modern day Levittowns. Sidewalks that nobody uses and playgrounds with plastic slides that kids rarely play on. They don’t let anybody else build in their developments.

That leaves what are called scattered lot builders. These men and women are the bread and butter of the residential modular home factory and this is the group that is not producing new builders. I mentioned to my lunch mates that there are a lot of people franchising these days. For example, a Red Robin franchise cost $1,000,000 to get started and will cost up to $3,000,000 just to open the doors. The franchisor will put in about 100 hours a week and maybe earn $100,000 a year after taxes. That’s a lot of hard work and investment for little return.

For a lot less investment in time and money, people looking for a new career could do a lot worse than becoming a modular home builder. Then I started to ask myself what a person would need to get started in the modular home business and how much could they make a year. Well, it turns out there are college degrees for construction management but I have yet to hear of any degree for modular home building. So let’s change that.

The factory owners across the US could work together to develop regional training seminars and each recruit people as “new to modular” builders.  The factories could charge a fee for the courses that would explain the codes, regulations and the building techniques of modular home construction.  It would be a great way to restock the lake.

Once a ‘factory sponsored’ builder has earned his certificate from this schooling, they become an authorized builder for that factory. They would then be obligated to build a model home, either with or without the factory’s financial assistance and feature the factory’s homes for at least 10 years. The factory would have a continuing education program that helps them with sales and marketing techniques. With full factory support, these builders would be so far ahead of home builders that not only would there be a lot more modular home builders filling the ranks, it would drive site builders to take another look at becoming modular home builders.

But alas, it will probably never happen as the factory owners never seem to be able to sit together and come up with a marketing plan for their industry let alone this kind of program. Too bad though, as it could actually work. Ford, Toyota and the other car companies do it every day.

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