Monday, August 13, 2018

Major Component of Residential Modular Housing Disappearing

Everyone in manufacturing knows that business hasn’t been this good in years, even decades for some. They also know that it is getting harder to find labor for their assembly lines, office staffing and middle management. Good people to fill these positions are disappearing faster than a cold beer on a hot day.

Something that is unique to the residential modular housing industry is also disappearing; “new to modular” home builders. In fact even new site builders are a disappearing entity these days.

A Beracah Modular Home Being Set in Delaware

Is it the cost to enter the business or the skill sets needed? Or is it that not many young people are stepping up to enter the business that for years had been crippled by the 2008 housing recession?

Another big reason for the lack of new builders coming into the modular housing business is the older modular builder has never thought of putting a succession plan in place.

Harris Woodward, Owner of FinishWerks in Savage, MD

Many small modular home builders have their identities wrapped up in their business. That makes sense because building a small business is often the fulfillment of a dream -- a very personal kind of success.

Because a small business owner often built their company from the ground up it can be hard for him or her to discuss succession. In fact, 58% of all small business owners have no succession plan.

Many modular home builders never envision retiring and definitely do not enjoy discussing their own potential demise. Their family members, especially sons and daughters, were not brought up swinging a hammer and really don’t understand what is involved in running a successful modular home building company. Actually the builder wants more for their kids than enduring the ups and downs home construction is known for. They want their little tykes to go to college and “make something of themselves.”

But when the modular home builder is ready to retire, lessen their involvement in their business or God forbid, dies, there is nobody ready to step in and take over. That happens to almost 70% of the modular home builders in this country.

“I'm not planning on dying any time soon” is the mantra of modular home builders.
Everyone dies and many people retire to enjoy the fruits of their labor. Succession is not an easy topic for a variety of reasons. It's hard to confront your own mortality and not fun to tell a family member or trusted employee that they won't be taking the reins as your replacement.

The best way to control what happens to your home building business; in many cases your life's work; is to take the proper steps to execute your plan. Even if what you want may anger your family or employees, it's always better to handle it now when it can be discussed than to leave it for lawyers after you're gone.

There is one other approach to the disappearing modular home builder. Maybe it’s time for both the BSC and the MHBA along with the modular home factories to begin a recruitment program for young people to become modular home builders.
If these associations and their member factories would like to begin working on such a program, I would excited to help promote it and host another Round Table to bring this to the attention of our entire industry. Just ask and I’ll make it happen.


Harris Woodward said...

Gary, I only wish I had that much brown hair as shown in that 2008 photo! But I must agree: succession plans are critical. A possible good first step is Keyman Insurance to protect the builder's loved ones in the horrible event he/she dies.

josh margulies said...

To the money they will come, Gary. And it will happen without any social contrivance. As long as we control the labor market better (immigration was more curse then blessing but as you sew, so shall you reap) and encourage the return of a “trades culture” as well as a culture of rewarding hard work, we will be fine.

That is happening elsewhere in the country today. Stay vigilant and keep voting for it.