Wednesday, March 11, 2020

Vertical Integration a Proven Success at Huntington Homes

This is a response to my to article on factory vertical integration from Jason Webster, Huntington Homes in Vermont:

You’ve heard me say for years that the way forward for our industry is to stop acting as Manufacturers and start acting as Building Companies. And that the client is the client, not the builder. . . . . . Vertical Integration is the way forward.

Today about 25% of our business is full general contract projects. And that package is already almost entirely booked for 2020.

See here for a full general contract home we just finished.

The exterior isn’t for everyone. But the interior photos almost broke Instagram.

The other 75% is direct to client module sales. Most of which include crane and a factory set crew (air tight, structurally secured, finished roof).

Disadvantages. You’re correct, we have a smaller geographic reach. BUT, over time we’ve become the dominant builder in our territory. And “sales” have become organic. Prospect clients talk with Past clients at ballgames, neighborhood parties, etc and sell for us. We spend almost zero time convincing people we are a better building option. . . . . they already know it.

You also mention a disadvantage or conflict of running a finish company and running a manufacturing company. I disagree. Both shop crews and onsite crews have the same goal. The best product. . . . . In our company the Onsite Crew and Shop Crew communicate constantly. And we’re constantly adjusting our shop process and handoff points to make our product easier to assemble. The onsite crews (and shop crews) also feedback to our sales and engineering staff on what design conditions to avoid. Working Together the product is always improving. . . . . . . Not having this feedback or integration is lunacy to me.

Advantage. You mention lower prices to a client as a possible advantage. The other side of this is more opportunity to make money for the Building Company. . . . . . By expanding our General Contracting package we’ve been able to increase annual sales by 10% - 20% per year and NOT take on any more clients. We’re just eating more of a client’s existing pie.

Another major advantage of being a full building company is that we have complete control over what we build and who we build for. We don’t allow builders to pull us into something we shouldn’t be a part of. We know what works. We know where we make money. We speak frankly with clients to get them on the right track quickly (alignment of budget and product). We cut bait quickly with long shot clients. We cut bait quickly with undesirable clients. We’re able to stay focused on what we build best. And in the end this gives us the happiest clients.

I welcome more factories doing the same. We all perfect our product in our respective geographic territories. Each of us has our own flavor and personality. Each of us making our own clients happy. Each of us raises the bar and perception of offsite, factory built homes.



Anonymous said...

If more factories would set and finish their homes there would be a lot more people wanting to become modular builders (dealers) and happier customers. It would also allow more customization and set us apart from the CrossMod. Isn't that where we should be? Better product, full vertical integration and building homes the manufactured homes people can't.

Stop fighting them on their own turf and up our game to the point where they can't compete and then take on the real enenmy, the custom home builder where we can win more battles and at the same time make more profit.

Nobody will do it but it is a nice thought.

Anonymous said...

Anonymous 7:45am. To Be Clear. We Sell, Manufacture, Set, and Finish our own homes. We do not sell through Dealers / Modular Builders. We do not give up that critical piece of control.

You can't have full vertical integration AND third parties.

Apple doesn't sell batteries, cameras, cases, boards etc to dealers to have them assemble a phone. Rather they design, produce, and sell the product themselves. Giving them complete control, responsibility, and profit.

I do wish more manufacturers would general contract projects themselves. That'd give fewer people more control over the collective product.

I also wish I had edited my email to Coach to include fewer . . . . .'s.

huntington homes