Last November I began hearing from modular home builders all over the East Coast that something was wrong at most, if not all, of the IBS factories. Shortages of interior trim, windows, siding, cabinets and other things. The builders were concerned but they merrily kept on buying new homes from IBS.
Then service and reimbursement for repairs started to fall further and further behind and still many modular builders kept buying new homes from IBS.
There are several reasons why builders kept going back to their IBS factory to purchase homes.
Sales reps: Most builders have tremendous loyalty to their reps. It took a long time to develop such a relationship and leaving their rep would almost feel like a death in the family.
Factory people: Second to the sales reps, builders came to know the key people at the factory including the folks in engineering that finally understood exactly what the builder wanted in their homes.
Good quality: The IBS brands have always been known for quality construction and their willingness to do just about anything the builder threw at them. Not every factory would or even could do some of the special requests from the builders.
The three things are why builders stayed loyal to one factory in particular. Loyalty, dedication and quality. Three outstanding items every builder looks for.
Today, almost a month after the IBS bankruptcy notification, all their former builders have moved on to other factories. They have taken it on the chin and like the great builders they are, they are slowly and methodically working to build the homes caught in this mess. That is the biggest strength of the modular home builders. Hard work and honestly with overwhelming loyalty to their customers.
But there was a little shock when these builders went shopping for a new modular factory to replace their IBS factory.
Little or no discounts: IBS and the companies that owned the factories before IBS bought them offered huge discounts to builders. And good basic pricing. What was not to like about that. However, knowing the margins most factories make on their product, these discounts cut deeply into the factories’ bottom lines. After discounting, most IBS factories were really only lowball specialists. Today those huge discounts are gone, replaced with either a good price or a volume discount from the factory for loyal builders. What a rude awakening when the IBS builders began shopping their homes.
Factories running near capacity: When IBS modular home builders from Iowa to Maine to North Carolina began looking for new factories to supply them with modules, two factors reared their ugly heads. First it was Spring and the other factories were being hit with Winter and Spring new home orders from their current builders. No special treatment for the IBS builders in most cases. Your homes had to be redrawn by the new factory and put onto the production lines behind the factory’s regular builders. Bummer.
Rain, rain and more rain: What can only be called a perfect storm occurred when most of the biggest modular home markets were inundated with rain. Carriers began backing up at the factories, foundation couldn’t go in and many builders hid all sharp objects.
But in spite of all this, the modular home industry is surviving quite well. Orders for new homes are being placed, commercial projects are running ahead of schedule and becoming even more popular with developers. Many of the IBS factory and sales personnel were absorbed by the other factories.
The IBS bankruptcy was a major bump in the road that will not go away for years but it will have little long term effect on our industry.
The people we need to keep in mind in all of this are the employees that worked on the production lines, engineering, shipping and even middle management that will now have to look for work in other industries because the remaining factories just couldn’t absorb almost 1,000 people.
Bottom Line: We are a strong industry with a new association, the MHBA, a new marketing campaign being developed and the best new home builders in the US.
We are “Modular Strong”
