Thursday, March 19, 2020

COVID-19 Prompts Upper Management Planning

The 2008 housing crisis which caught most modular home factories and builders without much time to react was a “one-off” event. The fact that it impacted an entire industry for many years was primarily caused by deregulation in the financial industry.

Businesses commonly prepare organizations for a one-off event, but many won’t prepare for a threat like COVID-19 that could potentially play out over months or years.

The modular factory owners and senior management need to prepare and decide on plans to protect business continuity as well as crisis management and pandemic response plans.

According to financial planning experts, two or three senior members (two preferably) should be tasked with the work of creating and monitoring this pandemic crisis plan. It should have several layers of response with each being implemented as the COVID-19 crisis changes.

Once appropriate plans are in place, this senior management group is advised to resist the inclination to request ever increasing levels of information from management. Create the plan, monitor the situation and adjust the basic plan as situations change.
Upper and Middle management will be under significant pressure and Senior management must demonstrate empathy and manage themselves to ensure that, in their quest to provide support, they are not making the situation more difficult by getting in the way of the everyday routine of the factory’s business.

The duration and extent of the impact of COVID-19 is unknown but it will have major modular housing industry implications.

This Senior management team should be reviewing long-term impacts and the changing nature of the threat, anticipating and going over the different scenarios that could hit the modular housing industry. Everything from production line staffing, rationing of building materials, transportation restrictions and availability of set crews once business begins to return to normal.

One aspect of the COVID-19 many factories aren’t planning for are problems their builders face if they go too long without cash flow. Many of today’s builders may not be able to work through a prolonged dry spell. What happens to their customers if the builder goes out of business and the home is still setting in the factory’s yard, completed and ready for shipping to the customer.

How a modular home factory handles the COVID-19 crisis will determine how they are judged and the confidence of builders. If Senior management gets this right, it presents a unique opportunity to establish and build trust.

If you are asked to be part of this Senior management team at your factory, here are some questions you need to be discussing right now:
  • Do we have a crisis plan?
  • Does it address employee wellbeing, supply chain disruption, short- and long-term financial impact?
  • Do you have the reporting system you need, not only within the factory but also systems to monitor the builders, suppliers, mortgages, transportation and set crews?
  • Have you a designated team to gather this information?
  • Will you routinely revisit and readjust the company’s priorities as the crisis evolves?
  • What are the plans for adjusting expenses if revenue projections aren’t met?
  • Do you have a “Worse Case Scenario” plan ready?
  • Who communicates with the builders about changes in production, transportation? This should be one person designated to get the same message out to everyone. Allowing anyone to spread the word usually results in only bad news being delivered.

Gary Fleisher is a housing veteran, editor/writer of Modular Home Builder blog and industry speaker/consultant.

Contact for help in setting up your crisis management team and planning


Anonymous said...

Coach, you assume modular factories even care about their builders and their reputation. It would be great if they did follow your advice but I think we have a better chance of seeing flying monkeys than we do seeing a senior management team planning for the COVID-19 crisis.

Anonymous said...

From someone who has been in senior factory management, they were more likely to be discussing who was buying lunch than business continuity plans. I can absolutely assure they weren't discussing problems facing builders.

Anonymous said...

Wow, so cynical. If everyone feels this way, no wonder we struggle getting builders to join us.

Coach said...

These are not the responses I expected but my policy of allowing "anonymous" comments is a double edged sword. Few in our industry would comment if I forced everyone to use their name and at the same time I get comments that may never see the light of day otherwise.

I don't review comments before they are published but I remove the slanderous ones and spam as soon as I see them.

Anonymous said...

Wow, some of these posters on here worked/ have worked for some horrible operations apparently. This is a very fluid human situation. I find it hard to believe that a manufacturing plant (that should know how much money it costs to replace a builder) would not be sensitive to how supply interruptions may/will effect their livelihood.