BUILDER BLOGS WAY TO SUCCESS

I have been telling all builders that they need to start blogging and a couple of you have begun to do it.  But there are still a lot of builders that need convincing to join what is the least expensive and most effective way to market your business.

Recently one of my readers sent me a blog written by a renovation specialist in California that shows what a couple of hours a month can do for your business.  If I needed restoration services, this is the company I would call first!

Enjoy their Blog:  Good Home Construction

WHEN IS A SETBACK LINE NOT A SET BACK LINE?

Imagine if you can, a family has lived in a house for over a decade and one day disaster strikes!  Their home burns down.  Later they decide to rebuild again using a modular home from a local dealer.

Apparently nobody realized that the old foundation had already been “grandfathered” before new set backs were recently adopted by the local zoning commission but now the people are screwed because they have to build a new foundation 43’ away.  There home has arrived and they continue to be homeless.

Don’t think this could happen to you?  Think again.  Just one more reason to make sure that EVERY last detail is covered when building a home, especially a rebuild on an existing foundation.

Here’s the story: 

By LE ROY STANDISH/The Grand Junction Daily Sentinel

Saturday, July 11, 2009

Tammra Stafford is 50 feet from home.

Fifty feet is how far Mesa County Code Enforcement says Stafford needs to place her new home from the neighbor’s property line.

In January, the modular home that Stafford and her family — husband Martin and four children — lived in for a decade burnt to the ground. On Tuesday, a new modular home was delivered from Gering, Neb., to the Stafford’s 5-acre parcel at 927 20 Road.

But because of setback requirements, the old foundation, which is 7 feet from the neighbor’s fence line, cannot be used for the new structure.

“I did not ask for it. I did not ask for the fire,” Tammra Stafford said.

For the past few months, the family has lived in an apartment while working with Mesa County to get the property ready for their new home. Mesa County Code Enforcement told the Staffords to rid the property of junk and several old cars, which the family has done.

Stafford said that on Monday, her mother went to get the final approval from the county. It was then the family said they learned of the 50-foot setback requirement. But by then their new home was in transit, to be delivered the following day.

“If we didn’t have that fire, my house would still be there,” she said. “We are going to have to move everything ... This is just silly.”

It is not silly; it is the land development code, said Donna Ross, director of county code enforcement.

“They were certainly not told that where they are placing the mobile home is OK,” Ross said.

The original Stafford home was placed on the property in 1991. It was allowed because it was replacing a home that had been grandfathered in under the old codes, Ross said. A decade later, codes were updated.

“There is a provision in the 2001 code that says when a building is replaced they must meet current code standards,” Ross said.

HERE COMES THE I-HOUSE FOLLOWED BY THE E-HOUSE

Just when you thought you knew what Warren Buffet’s manufactured housing companies were up to, along comes another surprise.

But first things first.  Marlette Homes in Hermiston, OR was the first of the Clayton plants to build the I-House.  After being on display at a northwest dealer, the company is looking forward to building 1,000 during the first year. Now that’s all well and good for the northwest but what about the northeastern US?

Well, it seems that Marlette Homes of Lewistown, PA won’t let their sister plant in Oregon steal the entire show.  They are just about ready to ship their  first “E-House”. 

Here are some shots of the northeast’s answer to the I-House.  It features many eco products including bamboo flooring.

Sneak peeks from the factory floor!

 

 

 

 

 

Each e-Home is built containing Energy-Star insulation and thermostats, low-E thermal pane insulated windows, 13 SEER heat pump systems, front and rear storm doors, compact florescent light bulbs and Energy Star appliances by G.E. But materials and equipment are not the only aspects of this innovative home that allow it to be truly energy efficient.

“Everything is new and state-of-the-art,” Hampstead general manager, Gurney Hufham told encore exchange last week. “We are reaching out in design as well as function.”

One of the main goals of the e-Home’s design is to allow for an open feeling, full of natural light and no wasted space. The 9-foot walls, compared to standard 7-foot walls in most modular homes, give the accommodations more dimension, letting in extra sunlight and giving the owners a sense of space to breath. This feeling is only reiterated by an abundance of windows and a full-view glass insulated front door. Porcelain sinks, solid wood cabinets, name-brand flooring and full sheetrock walls, ready for the buyer’s choice of paint or wallpaper, also give the houses a higher quality feel than most typical manufactured homes.

Another exclusive and energy-efficient option for the e-Home is the porch roof, which shades the doorway from the sun and stops excess heat from entering the home at its most vulnerable point.

Clayton Homes began their national campaign to promote the new e-Home two weeks ago. Over 500 people, ranging from managers and sales associates to consumers, have provided input on the homes, and now that all the kinks have been worked through, branches everywhere are eagerly awaiting the arrival of their models. Hufham expects his model to arrive in the next three to four weeks, which will be available for purchase immediately thereafter. Folks who are too eager to wait for the model can visit the e-Home online and begin customizing their new dwelling before contacting a Clayton Homes sales representative (www.claytonehouse.com). As with any major purchase, price is of the utmost importance. Luckily, consumers will be pleased to know that “going green” won’t cost much more than any other manufactured home. The e-Home is only $4,000 or $5,000 more than standard modular homes, and the e-Home easily makes up for the price by providing massive savings in monthly energy bills.

“We are the first in the industry to be environmentally friendly,” Huffman explained. “It is more important now than ever to give people lower costs in home operation.”

Now here’s the best part.  When I started my research for the Clayton E-Home, I found one of their models from 1994 that appears to have carried the same e-home name.  Maybe that’s why they have a jump on the rest of the industry, they’ve been at it longer!

FINE LINE BETWEEN MODULAR AND MANUFACTURED HOMES

The people of Cary, NC are upset and they SHOULD BE!  Faux modular homes are coming to town and they are powerless to stop them!

The distinction between what is modular, stick built and manufactured is getting blurred by factories that are building double wide homes to IRC codes.  They still have a steel frame but everything else is built to code.

The problem arises when factories intentionally go out of their way to blur the lines and houses like this one are set in neighborhoods where mostly custom stick and modular homes have been built. 

You can clearly see the steel frame and single stacked concrete block foundation.  If it looks like a duck, walks like a duck and smells like a duck, it must be an eagle!

I blame WalMart for this!  Consumers today are only looking for the lowest price and Clayton and all the other manufactured housing companies are going to give it to them.  It’s the American Way.  Can you imagine any of these “Faux Modular” homes still being occupied 100 years from now?

ENERGY STAR HOMES PROVE THEY SAVE MONEY

One quarter billion dollars is a lot. An awful lot. Most people will never even come near that amount of money, but that’s what the U.S. Environmental Protection Agency said Americans saved this past year by switching over to energy efficient homes.

In the EPA’s announcement on July 3, it was reported that 17 percent of all single family homes built across the nation in the year 2008 received the EPA’s Energy Star approval rating, which means that a homes are at least 15 percent more energy efficient than homes built to the 2004 International Residential Code (IRC), and include additional energy-saving features that typically make them 20–30 percent more efficient than standard homes. The percentage of Energy Star homes was up from 12 percent in 2007.

The increase in Energy Star rated homes shows that home builders and home buyers are investing in homes that save money and the environment. “Every year more Americans decide to cut their energy bills and help keep the air clean in their communities by buying a new home that has earned EPA’s Energy Star,” said EPA Administrator Lisa P. Jackson.

“Features like properly installed insulation, high-performance windows and high efficiency heating and cooling can reduce home energy needs by 20 to 30 percent, saving American families thousands of dollars on their utility bills,” Jackson continued.  It is savings such as these that have added up to one quarter of a billion dollars being shaved off utility bills.

With more than 940,000 Energy Star approved homes built to date - and more than 100,000 in 2008 alone - the popularity is growing.

“Even in a difficult market, the interest in Energy Star qualified homes keeps rising.  We’re helping builders and home-buyers to protect the environment, safeguard our health, and move the country into a low-carbon energy future,” she said.

That low -carbon future comes from a variety of factors.

The 100,000 Energy Star homes built across the nation is equivalent to eliminating the emissions from 49,000 vehicles, saving 296,400,000 pounds of coal or planting 81,000 acres of trees.

CHAMPION CLOSES ANOTHER FACTORY

The Berthoud facility, a subsidiary of Champion Homes operating under the name Summit Crest Homes, employed as many as 250 in 2007.   Laurie Van Raemdonck, Champion's vice president of investor relations, indicated that about 80 will be affected by the impending closure.   The closure, announced to employees, customers and suppliers last week, will occur once the production on current orders is complete.

"The Berthoud plant was closed due to a lack of orders to sustain the business, generally as a result of weak housing market conditions," Van Raemdonck explained in an e-mail to the Business Report.

For its fiscal first quarter ending April 4, Champion reported a year-over-year sales decline of 64.5 percent and a net loss of $17.6 million.   However, the company began its cost-cutting initiative last year, so despite the lower sales it reduced its losses by almost 14 percent.   So far this year, the company has idled or closed three plants in addition to the one in Berthoud: Topeka, IN.; Bartow, FL.; and Woodland, CA. The company now has 27 plants in North America and the United Kingdom.

I MUST BE GETTING OLD…DAMN!

This week I visited a “Green Expo” and what I discovered aged me quickly.  First thing I noticed was that I was just about the oldest person there and I’m only 60 something.  The next thing I noticed was that these “Green Builders” have their own language.

I was a hippy back in the Sixties and thought I was one of the cool guys in this new green business because I actually went to Woodstock and lost 2 whole days of my life!  But what a surprise when I was offered designer water in a recyclable bottle, a sandwich of organic green stuff and an organic brownie.

They dressed sort of like the people from my hippie days but all their clothes sported expensive labels.  Their long hair was clean and washed and they actually picked up all their trash and separated them into the proper recycle barrels. Oh, how I miss Woodstock!

They spoke of permeable driveways made from recycled tires, trees and moss growing on rooftops and recycled rain water!  I thought builders didn’t want things growing on their homes…my mistake!

The developers were in their 30’s as were the architects and landscape designers.  Sales booths featured solar heating, green this and green that. 

I found myself getting light headed and decided it was time for a beer.

JIM AND JOE’S GREEN CERTIFICATION PROGRAM

Like all reporters, I like to be the first one breaking a news story.  So here goes.

Jim and Joe, two builders that were having a tough time keeping their doors open and staying ahead of the creditors were discussing that they should jump onto the  “Green” building bandwagon and maybe they could get some homes to build.

First they looked on the Internet and googled “building green homes”.  That was an eye opener.  There were over a million hits for that!  Then they thought that maybe they should find out HOW to build a green home from the “Green” gurus.  Turns out there are hundreds of different green associations, councils and organizations.

All of these were different from each other in quite a few ways.  First they looked at LEEDS and said that was too hard.  Then they went to the NAHB site and found that it was easier to understand but still would cost them both in building techniques and certification.  One after another they just couldn’t justify the money needed to be green certified.

They also discovered that nobody was actually regulating what green was.  “That’s when the light bulb went off” said Jim.  “Why don’t we start our own green certification program and charge a small fee for each house a builder completes.”  And that’s what they did.  They started  Jim and Joe’s Green Certified Homes.

First Jim and Joe made a checklist for the builder to complete.  If green meant keeping a low carbon footprint, then what would be an easy way to do that?  They decided that if the products used in a home had a guaranteed life of 30 years or more, that would help keep the planet green.

They came up with 10 questions and if the builder answered “YES” to each one, the builder would get a certificate for the house and a small brass plaque that could be attached to the front door that the homeowner could proudly point out to every visitor.

The questions included:

Do you use 30 year shingles?

Does your siding come with a 30 year warranty?

Did you install at least one fluorescent light bulb? per Obama

There are seven more questions, but you get the drift!  And what are they charging the builder for a certificate pronouncing the builder’s home “GREEN?”  $200!  and worth every penny!

Jim and Joe are pure fiction but this scenario isn’t!  What is it going to take to make a green standard we can all live with?

FOREMOST INDUSTRIES WEATHERS RECESSION STORM

A 45 year old PA company has weathered this recession storm by adapting it’s business plan by marketing itself to experienced builders in a 5 state area.  Located in Greencastle, PA, Foremost Industries has been a “direct to the buyer” modular home company but times “they are a changing”

About 5 years ago, they started moving all their factories to the Greencastle area from locations in several states.  (Just in time for the recession!)  The new production lines are located within almost 10 acres of brand new covered factories.  In addition to modular homes, they also manufacture wall panels, trusses, floor systems, components and custom cabinetry.  They also build modular home shells and modular garages among other things.

FOREMOST TRUCKS, CRANE AND SET CREWS SET NEW HOME

Foremost Industries not only builds modular homes and panelized homes, they also deliver them on their own trucks, set them with their own cranes and does the exterior sets and interior finish.  They can also supply complete HVAC systems and precast concrete foundations.   Completed homes are turned over to the homeowner in 30 days or less!

FOREMOST’S APPALACIAN MILL ALL WOOD CABINETRY

But here is where it gets unique.  This year they introduced a Preferred Builder Program which is giving the experienced “new home builder” another way to grow their business.  Foremost management has divided their marketing area into 22 distinct sales areas in PA, MD, DE, VA and WV and have recruited builders to sell and market ALL their product lines.  There are still areas available for experienced builders in each state according to Jim Rockwell, Production Manager for Foremost.

Not only can these builders sell modular homes, they can also sell modular shells, panelized homes, components and custom cabinetry to the builder’s normal prospect base but also to other builders and remodelers.  One of the new Preferred Builders has even gotten into the church building business using Foremost Industries’ design/build commercial division.

If a 45 year old company can adapt to this changing world, what is holding you back?

FLEETWOOD SELLS ITS MANUFACTURED HOUSING DIVISION

Cavco Industries, Inc. and Fleetwood Enterprises, Inc. announced that that they have signed an indication of interest in which Cavco and an investment partner, Third Avenue Trust Value Fund to purchase Fleetwood's manufactured housing business.

Cavco, headquartered in Phoenix, Ariz., is a leading producer of manufactured housing, park model homes, and vacation cabins in the United States. Third Avenue Management, the investment adviser to Third Avenue Value Fund, is a New York-based company with expertise in value and distressed investing.

Fleetwood is a producer of recreational vehicles and manufactured housing and has been operating under Chapter 11 protection since March 10, 2009.

The Fleetwood assets proposed for purchase include seven manufactured housing plants, one office building, all related equipment, accounts receivable, inventory, certain trademarks and trade names, intellectual property, and specified contracts and leases. The manufactured housing plants are located in Nampa, Ida.; Woodburn, Ore.; Riverside, Calif.; Waco, Tex.; Lafayette, Tenn.; Douglas, Ga.; and Rocky Mount, Va. The proposed purchase does not include the company's operating plants in Alma, Ga., Elizabethtown, Penn. and Garrett, Ind. The facilities included in the proposed purchase currently employ more than 700 people in seven states.

"The Fleetwood brand is one of the strongest in the industry, and we are excited to have this opportunity to integrate Fleetwood's strong family of product offerings with our own growing business," said Joe Stegmayer, Cavco president and chief executive officer. "We look forward to supporting Fleetwood's operating factories and experienced people as they continue to serve their excellent independent retailer network."

MARKETING SUCCESS DURING THE RECESSION

When business was good, you could advertise your business and sales just happened.  It wasn’t important that your ads or marketing campaigns were any good, just that you had one.  But those days are long gone and may never come back.

So what is the new strategy for preparing a marketing program for your business during this recession?  Well, here are some simple steps that may help.

Revisit the Basics of your Business.

Take a good, hard look at what your business looks like to potential buyers.  Look at your logo, your letterhead, your trucks and signage.  Is it what need to attract new prospects?  When was the last time you updated your business card?  Is Energy Star and/or Green Building a major part of you current business?  Does your static marketing reflect that?  If not, there is no better time than right now to focus all your static marketing material to your new image.  A few dollars invested here will pay back many fold.

Know Who your Prospects are.

How can you create a marketing plan and not identify who your potential customers will be.  Have you ever seen the ball jump play pens that McDonald’s has in their Kid’s areas?  If you think of all those different colored balls as prospects, you’ve got a big problem trying to market to each different color.  The blue ones are empty nesters, the red ones might be affordable housing prospects, the green ones are the unqualified prospects that take up a lot of your time.  Now pick out one color and start devising a plan to attract just those.  If you want to build houses for everyone, you are doomed to failure because you can’t be everything to everybody.  Pick a primary group, such as move up families that want to go Green and then prepare your marketing for that group.  Focusing on one group will give you prospects that are tuned into you too.

Stay Focused.

How often do you go for one type of customer and someone from another group buys one of your homes?  It happens a lot more than you think.  Then you start to forget about focusing on the original prospects and start thinking you don’t really need to focus on anyone in particular.  That’s bad news.  What you probably didn’t know is that your latest prospects really thought they were in the group you were targeting even though they weren’t.  How’s that for a kick in the head?  Your prospects will select a builder using the criteria they have established for themselves and then look for a builder that can deliver those things for them.

'This is not the time to cut advertising. It is well documented that brands that increase advertising during a recession, when competitors are cutting back, can improve market share and return on investment at lower cost than during good economic times.'
Harvard Business School

THE SNOWBALL EFFECT

You’re the happiest you’ve been in quite some time.  The customer that wants the 3,000 sq ft custom modular home has gotten his mortgage approval.  The bank  gives you enough to order the house from the factory and you start planning the excavation.

The factory gets your check for $25,000 and decides it needs the cash to help meet payroll.  Besides, there will be more checks coming from other builders next week.

You’ve subcontracted the excavation and have given your poured foundation company $2,000.  Everything is going along just fine.  Happy times! 

The factory doesn’t get any orders the following week and only has a couple of floors on the line.  They need to meet payroll again, so they don’t order your windows and doors and start building your house with the reserve material they have on hand.

The customer calls and says he was just laid off and the bank tells him that he either has to cut back on the mortgage or get dropped all together.  OMG!  What happens now?  First, the customer tells you he can’t afford to build without the mortgage and wants his money back.  You tell him that the factory will not return it and you’ve already given most of his initial deposit to the factory and selected subs.

You have other jobs going and can’t spare any money to help him out of his problem. Even though the factory hasn’t actually started to build his home, they say they have so they don’t have to return the money.

Your excavator just completed his work and wants paid.  You tell him that the customer backed out and he is very understanding.  Yeah, like that would ever happen!  Now you have the excavator, the foundation company and the customer wanting money.  The factory is saying “Too bad” and your spouse isn’t aware of any of this yet.

You can’t stop work on your other jobs because you need the cash flow.  Within days, both the bank and the customer are calling about the money given to the factory….they want it back.  The bank tells you they will pay your excavator but you need to get the deposit back from the foundation company and reimburse them.

Your spouse finds out about the problems and wants to know what is going to happen to the family and their personal house?   OOPS!

The bank and the customer file a lawsuit against both you and your factory.  The foundation company people reluctantly give back your deposit.  The lawsuit hits the newspaper and several people you’ve talked with about building their homes have stopped returning your calls.  Your current customers start calling you everyday. 

And this is just a typical day in the life of a Modular Home Builder.  And stick builders have it worse!

ARE YOU READY FOR AFFORDABLE HOUSING?

At no time in our history have more people been forced to live beyond their means.  Over the past several years, the reality of home ownership has all but disappeared from sight for millions of American families.

The generally accepted definition of affordability is for a household to pay no more than 30 percent of its annual income on housing.

Families who pay more than 30 percent of their income for housing are considered cost burdened and may have difficulty affording necessities such as food, clothing, transportation and medical care. An estimated 12 million renter and homeowner households now pay more then 50 percent of their annual incomes for housing, and a family with one full-time worker earning the minimum wage cannot afford the local fair-market rent for a two-bedroom apartment anywhere in the United States.

So how can you sell houses to people that can’t afford them?  YOU can’t but there are many organizations and federal and local programs that can.  Now your customer has become that most feared entity for all builders, liberals.  I say this with fondest thoughts!!!

There seem to be a lot of these affordable housing projects coming on the market but trying to compete with your own modular factory is becoming harder and harder.  Some of the modular factories even have “Commercial Sales Reps” that will compete with their own builders on these projects.  Guess who wins?  Ahhh, you guessed.

How can you get in on this type of housing?  First, you need to do your research.  The chairpersons or organization committee leaders probably have no idea you even exist.  You have to proactive and start reading the newspapers and going to your housing authorities.  Ask them for help in locating the right people.  What have you got to lose?

Then learn as much as you can about Energy Star and Green Building Systems.  Remember, the Al Gore brigade now runs the clean and green side of government.  If you do not embrace green and energy efficiencies in your homes, you will be left behind. 

You will also have to learn that affordable and cheap are not the same.  Anyone can build cheap! I’ll bet your factory has an aggressive discount program and/or lowered their prices and specifications.  This is not going to get you the affordable housing that is currently being shopped to the builders by the very “Green” affordable housing people. 

The old railroad crossing sign says it best…STOP (doing business as usual), LOOK (at Green and Energy Star homes) and LISTEN (for affordable housing opportunities)

BILLY MAYS DIED ON SUNDAY

I did an article about Billy Mays last year and was sad to learn that he died over the weekend.  Here is the article:  Billy Mays

Television viewers knew him as the OxiClean guy: the bearded, boisterous pitchman on commercials airing hundreds of times a week nationwide. "Hi. Billy Mays here," he would begin, before showing off his latest cleaning product or gadget.

Family, friends and colleagues mourned Mays, 50, who was found unresponsive in his Tampa home Sunday, and awaited an autopsy to determine the cause of his sudden death.

Police said Mays told his wife he didn't feel well when he went to bed Saturday night. Earlier in the day, he said he was hit on the head when his airliner had a rough landing at Tampa Bay's airport.

But the airline said no passengers reported any serious injuries, and Mays himself cheerfully recounted the landing for a local TV station. His wife, Deborah, found him unresponsive Sunday morning.

Tampa police spokeswoman Laura McElroy said linking Mays' death to the landing would "purely be speculation." She said Mays' family members didn't report any health issues with the pitchman, but said he was due to have hip replacement surgery in coming weeks.

EXCEL HOMES INTRODUCES A NEW PROGRAM FOR BUILDERS

With the housing market in the crapper, Excel Homes is pushing forward with additional programs for residential and commercial builders knowing that this recession will be ending soon.  Here is their newest venture:

With Excel’s architectural design team creating so many designs, the company is introducing the Excel Drawing Board, a new blog that will not only showcase these designs and renderings, but ask builders and consumers to provide their feedback. Excel’s architects will consider all the feedback and may make changes based on the suggestions provided. The feedback will also help Excel’s team decide whether or not to finalize the featured design concepts.

Feedback provided on the blog will also help to inform Excel’s design team as they move forward on the needs and aspirations of both builders and consumers.

“As the nation’s top custom modular manufacturer, we thrive on innovation and our unique ability to construct almost any home or commercial space using our precision manufacturing process,” said Steve Scharnhorst, President and CEO of Excel Homes. “It’s really key to our innovation process that we address the needs of our builder partners, and showcase design features that consumers are looking for in their dream homes. The new Excel Drawing Board blog provides a unique, online, interactive space that is open to everyone so we can achieve this goal.”

Included with each prospective design will be an artistic rendering, downloadable PDF, and description highlighting the benefits and features of the concept. Excel’s architects will also provide information on the use of each design, what inspired them and green features.

The first four features will include a Flexi-School, featuring a series of modules connected to form educational structures that can meet any size and needs; Eco-Friendly Classroom designs that provide mentally stimulating environments; the (Un)boxy Short-term Housing Complex solution; and Ready-To-Go Rest Facilities for interstate roadside rest stops that can also be modified for use in other locations such as school athletic fields, amusement parks and golf courses.

The Excel Drawing Board blog went live on June 17, 2009 and will be hosted along with Excel Homes’ other informative blog, Modular Musings, at ExcelHomes.com.

8' x 8' x 20' MODULAR HOMES!

You've seen these new modular homes for years and didn't even suspect they were ready for occupancy!

Shipping containers are the latest darlings of the architectural world. 8'wide x 8' tall x either 20' or 40' long is the size you have to work with. Here are 4 examples of what can be done with a little imagination. Do I like them? Nope!

8 containers and a roof...I might be talked into this one, but they'd have to throw in a pool and a big screen TV.

I could use this one as my workshop! But my wife would probably kick me out and use it for her gardening shed.

Put some axles under it and it will look like a modern single wide trailer.

Only in California! Built around California’s notoriously stringent construction codes, this Redondo Beach container house is sleek and contemporary, barely hinting at the recycled and sustainable nature of the house. The American Institute of Architects gave the home design a 2007 award for innovative design, which incorporates the used shipping containers, which are integrated with traditional home building techniques. And who says Architects don't have a sense of humor!

WHAT ARE YOU GOING TO DO WHEN YOU HEAR YOUR FACTORY MIGHT BE CLOSING?

Here is a situation that nobody wants to be in.

You’ve been with your current factory(s) for a few years, gotten comfortable with their production procedures, options and personnel. 

Then you start to notice reductions in staffing at the factory, the service department wanting you to do more of the repairs and sending them the invoices, a different sales rep calling on you and phone calls going to answering machines more than ever before.  What’s going on?

It’s what happens to companies when the recession hits them!  I find it interesting that almost every factory wants an application completed by the builder before they will sell to them but what about factories giving their current builders a financial report about their business!

I have written over the past year about factories and builders taking deposits and either using the money for other things or simply keeping it and not producing anything and going out of business.

Over the weekend I received several calls about a major PA modular company telling their employees that they will not be called back from layoffs and that the factory may be closing for a few months and maybe forever if sales don’t improve. 

I will report this to you if I can verify the calls.

My advice  for builders is to have a conversation with your factory owners or managers NOW and try to get a sense of their problems and frustrations.  Maybe some changes on your end will help them.  I have seen too many factory owners and builders relying simply on the sales rep to be the source of information between both sides. 

So before you switch factories, make sure you have gotten the REAL story about their financial health and talk to the owners.  Any factory that weathers this storm will be stronger when it turns around and who do you think the factory owners will want to work with then…the ones that jumped ship or the ones that stayed loyal and helped the factory through this crisis?

OMG …. It’s OMD!

If there was any doubt that people will buy anything, I’ve just discovered the P T Barnum of the modular industry. 

Jennifer Siegal, a California Architect, owns a company called OMD, Office of Modular Design, which produces “green” homes with a Modernist flair.  Her Venice, CA company even sells T-Shirts!

And here is her inspiration!

Guess which home cost $200 a square foot?

SINGLE FAMILY HOME STARTS UP SLIGHTLY

Single family home starts were up in May, ending the month up 7.5% to a seasonally adjusted annual rate of 401,000. That was still 41% below the May 2008 rate of 601,000, and overall starts remained 45.2% below the May 2008's 971,000.

Permits, a longer-term indicator, also rose, but not by nearly as much. Permits for all housing types were up 4% to an annual rate of 518,000, 47% below a year ago. However, single family permits were up 7.9% from April to a rate of 408,000. That was down 35.1% from May last year.

Although this may seem like a good thing, the numbers are still only about half what they were last year at this time and as we all know...last year sucked too!

SIGNATURE HOMES WORKING ON MAJOR PROJECT

Justin DePhillips from Signature Homes just wrote and told me about a project they are completing in Scranton, PA. Signature Homes is attuned to building townhouses and commercial buildings in the Northeastern US and this project is just a sample of what they can do.

Signature Homes is unique in the industry because they "proof" all their homes before they leave the factory floor. I have seen them "Proof" homes by erecting them and making sure everything fits properly...gable ends, hip roofs, bumpouts, etc. This extra step sets them apart from other manufacturers. Vic DePhillips, the company's President, is a stickler for making sure things go smoothly at the job site.

Here is a picture from their Scranton, PA jobsite.

i-house FEATURED AT DEALERSHIP

Clayton homes has started to place the i-house on dealer lots including Heritage Home Center in Everett, Washington.  This could be the end of the small boutique builders cropping up on the West Coast!

The Clayton i-house II on display at Heritage has two bedrooms, 1,023 square feet and a base price of $93,300. ($91 a sq ft!) The i-house I is 723 square feet, with one bedroom and one bath, and starts out at $74,900.

The 262-square-foot bonus room, and the deck from the main house to the room, add nearly $30,000 to the price, which doesn't include optional extras and delivery.

Clayton is building the homes in four plants, including one in Hermiston, Ore.

Clayton originally envisioned marketing and selling the homes exclusively online, but is now starting to set up models around the country, said John Devoille, a housing consultant at Heritage. "They're realizing now that people want to see the house. They want to touch it. They also need some help in terms of site preparation, permitting, financing. That's where we come in."

EAST COAST “BOUTIQUE” FACTORY LOOKS GOOD

For followers of this blog, you already know the “high” opinion I have of the West Coast Boutique mod builders.  There are a couple of exceptions to this including a new one just getting up and running in California, Eco Offsite.

But I found what I believe can be the formula for the rest of the industry to follow.  I just hope they stay in business long enough to prove me right.

New World Homes in Georgia is building some model homes along the East Coast to showcase their LEED certified homes.  Here is a quote from their press release:

ATLANTA, June 15 /PRNewswire/ -- New World Home has been awarded LEED(R) for Homes Platinum certification by the U.S. Green Building Council (USGBC) for outstanding achievement in green homebuilding, representing the first factory-built home in the state of Georgia to earn this designation. In addition, the New World Home project is the first home of any type in Georgia to earn the prestigious Platinum rating without the need for any costly renewable energy sources, such as solar panels, wind turbines or geothermal systems.

The New World Home project, located in East Cobb County, also earned EarthCraft Gold certification as well as National Green Building Certification Gold, which is administered by the NAHB Research Center.

"This home brings green living to its highest level," says Mark Jupiter, co-founder and President of the Product Division for New World Home. "It also reflects our mission to provide traditional-style houses that incorporate a 'whole systems' design approach that results in a minimum 50 percent energy savings annually, reduces water consumption by thousands of gallons a year, provides a non-toxic indoor environment for the occupants and will save homeowners thousands of dollars a year in maintenance costs starting from day one."

Their homes have the look of traditional homes rather than the homes that look like containers from a ship as found on the West Coast.  Take a look and see if you agree.

I also hope that the cost of building this home is less than the $250 – 300 a sq ft the containers in California are fetching.  Good luck New World Homes!

CAVALIER HOMES TO BE ACQUIRED BY CLAYTON HOMES

Get out of the way or get run over by the 500 pound gorilla!  Berkshire-Hathaway is at it again.  This time it’s Cavalier Homes, incorporated in 1984, as a Delaware corporation with its executive offices located in Addison, Alabama.  Purchase price is reported to be $48.4 million.

They had 51 dealers at the end of the year with 5 manufacturing facilities (one is mothballed).

If Warren Buffet keeps investing in the manufactured side of our industry, will he soon be looking at Champion Homes?  Champion would appear to be a good fit for him.  Their stock is in the tank and they have manufacturing plants throughout the US, Canada and England. 

If anyone can make double-wides look good, it’s Warren Buffet!  No wonder he’s one of the richest people on the planet.  What I wouldn’t give to be a fly on the wall at one of his “strategy meetings.”

MODULAR HOME FACTORIES STRUGGLE TO STAY OPEN

It doesn’t take a genius to see that all phases of the construction business are in trouble.  Everybody from the multi-state tract builder to the lawn care professional is feeling the pinch.

So how are the modular home factories making out in this turmoil?

Not very well.  A quick look around the country sees the top 100 “stick builders” filing for bankruptcy, mothballing entire states or simply closing their doors.  Small “1-10 a year” home builders are laying off their workers and doing remodeling either alone or with one other person.  The recession has already claimed these companies and is eager to devour more.

Before the recession, modular housing accounted for about 6% of the total new houses built.  The last estimate I recall is that there are about 200 modular home factories in the US. 

Quick math test:  Pre-recession.  1,000,000 times 6% is 60,000 homes.  Mid-recession. 400,000 times 6% is 24,000 homes, a difference of 36,000 homes!

Now for some more math.  60,000 homes divided by 200 factories is 300 homes each.  A very respectable total.  Now take the 24,000 homes currently being built and the total per factory drops to 120 homes a year.  Now this is terrible.

So what can the factories that are still open do to combat this situation?  Right now they are cutting costs and offering lower prices to any builder that stills has a pulse.  I’ve heard from several sources over the past few months that many factory owners are operating on a break-even basis, just hoping to keep the lights on until the recession goes away.

While they may have little or no choice but to do this, the real problem will occur when the recession is over. These low-balling factories are going to find that the builders they have kept during the recession will not tolerate any price increases after it’s over.  The builder’s thinking is that they stuck with the factory when times were lean and now they don’t want any price increases until they get their business back to pre-recession times.

So what are the consequences?  I believe some of the current factories will be caught in a “Catch 22” of having increased costs and not being able to pass them on to their builders. 

So if you are buying from a factory that has been selling you homes at unbelievably low prices, you may find yourself without a factory when the recession ends, either from them going out of business or your choosing to go with another factory that seems to have better pricing.

With millions of foreclosed homes on the market at ever decreasing prices, buyers are finding the best bargains in existing homes while you and your factory are struggling to lure them with lower and lower prices.

The spiral will not end when the recession is over.  It will stay at the bottom for a couple of years until the economy catches up. 

What can builders do right now? Keep yourself motivated and keep moving forward, one foxhole at a time.  If you need to buy the lowest priced home from factories that are just hanging on by their fingertips, then go for it!  Damn the specifications and factory service, “FULL STEAM AHEAD".”

But just remember that they may not be there when the light shines on our industry again.