Two terms come to mind when talking about the modular
housing industry….Mature and Sunset.
A mature industry is defined as a declining sector of an
economy or one growing slower than the overall economy. It’s opposite of a
growth industry.
As I look around at the modular housing industry this term
seems to hit us right between the eyes. There are houses in my town that were
standing 50 years before the Civil War battle on my streets. They are still
functional and surprisingly they look very similar to homes that have been
built recently. A bit smaller than the new ones but they have bedrooms, a
living room and dining room. They didn’t have kitchens or bathrooms but they
were added later. Your family could move into one of these 200 year old homes
and live comfortably.
Innovation is not something that comes to mind when talking about housing. Even the modern prefab has it’s roots in homes that were produced over 50 years ago. Blu Homes with their patented folding house didn’t invent anything that was being produced by other factories decades ago.
The housing industry has been a mature industry for
centuries and the modular housing sector, even though a relative newcomer and
represents only about 3% of all home starts, is a maturing senior citizen too.
Factories have been building modules, putting them on carriers, setting them on
foundations for over 50 years and aside from improvements in construction
techniques and product selection; they are built the same way they always have
been.
We, as an industry, have forgotten that in order to become
more than just an asterisk or footnote to the annual housing report we must
begin to find a way to promote ourselves. There is no modular industry
marketing plan, no real organized effort to bring all the factories together to
bring our homes to the attention of the home buying public and definitely no
organization that has been able to congeal us into a force to be reckoned with.
We have the talent to do the job. We have the passion to see
it through but we don’t seem to have a plan to do it. The modular home
factories are beginning to use social media to promote themselves by putting
pictures of homes being set, stories of awards won and letting everyone know
about their open house tours. This is not what the prospective new home buyer
wants to read. They want pictures of completed homes, stories about how new
home owners love their modular homes and articles about green building and the energy
savings that modular home are known for.
I rarely see pictures of manufactured (HUD) homes on the
assembly line or pictures of house sets on their websites. I do see lots of
interior shots of completed kitchens and baths which is what homebuyers want to
see. Tract builders almost never have photos of their subcontractors putting on
shingles or wiring panel boxes.
We can be a mature industry but it doesn’t mean that we have
to sit back and eat oatmeal for breakfast and watch the large site builders
turn their back on us. We can run faster than those huge Pulte Homes,
and other tract developers. We can turn quicker than them. We can innovate
quicker. So what is stopping us? Too much oatmeal I suspect.
The second term I used is Sunset Industry and is defined as
an older industry that continues to be important to an economy but is losing
favor with investors due to its steadily falling employment generation,
capacity and profits and comparatively higher environmental costs.
Residential housing certainly fits into this category. The
big tract builders aside, which control the vast majority of housing today,
small builders are in their sunset years. Finding it harder and more expensive
to build homes, small residential builders are losing their way. Most of them
are close to retirement. Yes, there are young builders showing up and doing
great things. Unfortunately there are not enough new builders entering the
market as there are builders retiring. And unless they build in disaster areas
like the Midwest with its’ major floods and tornados or in the East with the
rebuilding of New Jersey or Long Island, NY, these new builders are finding it
hard to find buyers.
Many of them have turned to the modular factories for help.
What they find in many instances are management staffs and sales reps ill
equipped to help them make their business grow and prosper. Factories
themselves are in their “sunset years.” Some are selling to larger factories
with the result being downsizing and lose of identity. Others have closed their
doors, either voluntarily or through bankruptcy. Others have become content to become
pure custom builders that encourage sales directly through the factories’ own
sales department.
A 3% share of anything is not healthy unless it’s the top
3%. That’s definitely not where modular housing is. It has been stuck in the
bottom 3% for as long as anyone can remember. Can you even imagine how many new
factories would have to be built, employees hired and builders fighting to join
our ranks if we could just take the number to 6% of total home starts?
Imagine for moment that you are a new site builder and decide
to give modular housing a try. After meeting with the factory rep and touring
the production line, what do factories offer this “new to modular” builder? The
answer varies from factory to factory but overall, it’s not much. No marketing
plans or business plans are developed, no formal education about pricing or
modular construction methods are given by the factories. One of the reasons for
this is that a factory doesn’t want to invest a lot of time and money into training
a builder only to find that they jumped ship and went to another factory or
worse, went back to site building. Another reason given by many factory owners
is that they don’t want to held responsible for something the builder does in
the field and that is why they only want to supply the assembled materials and
not have any connection to helping the builder if a lawsuit arises. This is
lame. If a homebuilder, either modular or site built, decides to sue their
builder, their lawyer will try to sue everyone involved including the Job
Johnny people if they think there’s money to be made in doing it.
The final term that the modular housing side of our industry might want to begin
preparing for after “Maturity” and “Sunset” is “Death.”
If we don’t begin to market our industry to the home buying
public and home builders, the only customers the factories will have are the
commercial developers where every penny is scrutinized and profits are measured
with teaspoons. It’s not too late to begin to turn our industry into the 6% solution.
All it takes is a couple of people to stand up and say “follow us.”
