Thursday, October 30, 2014

Is Being a Site Builder a Better Choice?

The modular home factories are seeing more and more of their builders going back to site building and with good cause. What once was a promising way to build a home, modular construction has now become very complicated, regulated, costly and time intensive.

Here are some of the reasons that builders may be looking at site building as a better way to build:

1. Modular home builders are tired of fees being added to the pricing such as carrier maintenance fee, fuel surcharge, material surcharge, etc. If these fees are going to be charged then just put them into the price of the house so that they know the real price up front. Few, if any, of these charges are added to the site builder.

2. Site builders do not have to worry about crane placement and if they are doing infill lots in the city, they do not have to worry about getting street closures, police escorts, etc, all of which cost a lot of money that most of the time the modular builder just has to eat.

3. Modular builders are tired of the crane companies adding prices to the actual crane cost. For example, $250.00 and hour commencing from the time they leave the yard to when they return. This is fine with the builder but now the crane companies are beginning to add up to $1000.00 for the crane to be set up at the site and another $1000.00 for the crane to be buttoned up and returned to the yard. No crane if you site build.

4. Modular builders are tired of being remodelers. Many times, items are not completed in the factory and sent to the modular builder with a "get it out of the line and delivered and let the builder take care of these unfinished items on site" attitude.  This simply goes against why the builder would buy a modular to begin with.

If it is not complete before leaving the plant, then shame on the factory for letting it go. Modular builders are told that the modules have many inspections before it leaves the factory gates. If that is true, why are so many items incomplete or missing when the house gets to the builder? The modular builder then becomes a remodeler and they are tired of it because once they submit the bills for those repairs and completions, the factory wants to negotiate with them on the costs. Site builders don’t have to repair other people’s problems very often. If they make a mistake, they fix it.

5. The advantages of "time " in modular construction is lost when the builder submits an order and finds that his home will not hit the line until some 90 days later because the factory is running through some multi family projects which evidently takes priority. The factory needs to leave some slots available for the individual builder so that his unit can be completed in a reasonable time. Site builders, that in that same 90 day period can get their house framed, the utilities installed and most of the interior work performed so that the time advantage in modular is really no longer apparent to the modular builder.

Add in the extra scrutiny of state and local codes and regulations that tend to slow down getting floor plans 'stamped' so that they can be sent into the local planning office to get approved and you could add another 30-60 days to a modular home.

6. The modular builder’s factory rep no longer goes to the set because many of the companies, in trying to save money, have cut the expense account of their reps meaning that they will not be reimbursed for their gas and vehicle use. The factories that still encourage their rep go to sets want them to be there when the builder notes a problem and call the plant to report and perhaps solve the problem on the phone AT THE SET.

They save a penny on the expense account but lose a modular builder because of customer service. Speaking of customer service, modular builders tell me they used to be able to call the rep or customer service to report a problem. In this money saving phase at the plant, the rep is able to take the call and then submit the required paperwork but the customer service at the plant is now an "800" voice mail. Many of the calls are not returned and the builder simply gets fed up with the whole situation and quits using modular.

Simply switching factories in order to find a better one, the modular builder usually finds the same thing again.

I know I have put a lot of this on the factory side and everyone knows there are two sides to every story. Modular builders are not faultless in their relationship failures with their factories. But I will save that for another time.


Anonymous said...

Coach, I confused. Are you trying to expose the problems in order to begin fixing them or are you saying that building on site is becoming the better way for modular builders to build homes?
I am a modular home builder that has seen these problems first hand and I wake up every day asking myself why I am continuing to build modular homes.

Anonymous said...

Coach, I'm confused. I agree with what you say about the problems of modular housing but are you now saying that maybe we should give site building a shot?

Tom Hardiman said...

I am confused too! I thought this site was here to advocate FOR modular construction! Its tough enough overcoming the public's negative perceptions and misconceptions about modular.Too many negative articles coach!

Coach said...

Sorry about the confusion and my intention is not to drive builders away from modular construction. It is important however that before any real improvement can happen in our industry that we acknowledge the problems that are keeping modular homes from gaining market share. That is the real message of this article.
Saying that I am too critical of our industry is about the only way I can get industry people to see the need for real change.
As for overcoming the negative perceptions and misconceptions, showing only pix of great looking homes is not enough.
I love modular homes and can't wait until the day our market share recovers.
The comments made in the article are observations compiled from emails and calls from builders about the internal problems they are facing.

George R. said...

No confusion here Coach. I completely agree with you about the need for improvement. How can things get better if the facts never see the light of day and are not being discussed? In your interview with Anthony Zarrilli, he even mentions the need for a united front on codes, training and other issues. This will never happen until the factories and the builders begin working toward a better future for modular home construction. Don't let anyone tell you to stop being so critical of us. If you don't do it, nobody will.

Anonymous said...

There is a lot more problem's if you are a stick builder. By the way, are we home builders or are we called retailer's if you stay in the retailer's bubble you will always have problems