During their recent investor relations conference call Legacy Housing’s [LEGH] Chairman Curtis “Curt” Hodgson described his firm’s solid position in part by using the phrase that they had “a Warren Buffett type Moat.”
MHProNews and our MHLivingNews sister site have carefully tracked and systematically explained what the Buffett “castle and moat” strategy means. Hodgson is said to be a reader of this publication, which makes his choice of phrasing an interesting one.
In the wake of that investor relations call, multiple sources inside Legacy Housing provided MHProNews with a document issued by their human relations department to numbers of their team members. Though the document has no header, the details of the document made it clear that it was genuine.
Furthermore, a senior level Legacy contact confirmed the document’s authenticity.
The document is digitally ‘signed’ by “Kenny & Curt” – Kenny Shipley and Curt Hodgson. It lays out Legacy’s plan for controlling costs, cutting staff, boosting sales, protecting remaining jobs, and cutting the pay of numbers of team members.
Legacy’s corporate attorney and a co-founder were contacted for comments. Part of the off-the-record response was to thank this publication for giving them a chance to reply formally, saying we had always been fair to their firm in our coverage.
That noted, Hodgson reportedly declined the opportunity of making a formal public response.
However, a senior Legacy source expressed their hope that MHProNews would note certain facts in our coverage of the leaked information by noting that much of what was in the document issued by Legacy’s HR department was covered in broad terms in their investor relations call.
Further, among the other points they hoped would be noted is that Hodgson and Shipley were going to personally share in the pain of the measures being taken to secure their ability to weather the economic storm of what they could expect from the coronavirus pandemic.
Corporate leaders additionally wanted to stress that they were boosting options for communities, and taking other measures that a management-level contact used as an example, to buy manufactured housing products under favorable terms. All of those steps were designed, that source said, to protect the maximum number of jobs and to position their firm in the best possible place on the far side of the partial economic shutdown that was occurring in much of the United States and in other nations too.
That backdrop helps set the context from the corporate perspective.
The views on the employee side stand in contrast to some of the corporate positions. They ground that in examples from the leaked Legacy Housing document itself.
Quotes from Leaked Legacy Housing Document
What will immediately follow are pull quotes from top corporate management “Kenny and Curt” to their team. That will set the texture of employee concerns and more.
The Legacy letter begins as follows.
As we write this, our government(s) may be putting us on a lock down. If that should occur, this plan may change. Please regularly monitor your email for the latest Company announcements
concerning the crisis.
What a difference a few weeks can make! Four weeks ago, we were preparing for the biggest mobile home show in the country and looking forward to showing off our new products. Then SLAM-BAM, the whole country started shutting down, school by school, church by church, city by city. And then, after we had already taken our new homes to the show, they cancelled it too.
During this turmoil, Kenny and I have not slept hardly at all. Our concern is for our families, our own health, your health, and for the health of our company. We have always been world class “shuckers-and-jivers,” and we intend to shuck and jive right through this unprecedented crisis.
Considering the recent economic turmoil, we have already initiated the following sales and austerity moves.
- Production in Fort Worth has been reduced approximately 15%.
- Production in Commerce has been reduced approximately 25%.
- We laid off approximately 52 production workers.
- All overtime has been suspended.
- We implemented company-wide restrictions to mitigate the risk of COVID-19 exposure amongst our workforce, which has increased absences.
- Wages for new hires have been reduced at all levels by $1 per hour.
- Deals are being offered to our retailers for ordering new stock units. We are financing our dealers’ freight for the first time in our company’s history.
- We are accepting “short pays” of between $1400 and $5100 per home on over half of our display inventory.
- We are financing units for mobile home parks without requiring a down payment, which increases our risk.
- All 13 of our retail stores have been authorized to heavily discount their inventory.”
End of extended quote from the source shown.
There is more from this leaked document, which will be covered in part two – a follow up to this report.
Legacy Employee Concerns
A fair characterization of the mood of the sources who leaked the document to MHProNews was strong disappointment to anger with elements of Legacy’s plan.
For example, one said that the company was all about the “almighty dollar.” That’s a statement likely to resonate with some there, who say that it’s part of a broader pattern of how the firm operated pre-COVID19. Other employee complaints were expressed – see part two upcoming of this developing report.
Ironically, the squeeze on labor, wages and other costs might make certain kinds of investors sit up and take careful note.
Looking Ahead to Legacy Leak, Part II
For the most thorough possible review of the tipsters concerns and the company’s reasoning, a second part of this report is planned. That second article will cover several items from the investor relations call and juxtapose it with more items from the leaked document itself.
That part two of the Legacy Leak report may include a comment shared via email from an executive level member of a rival company to Legacy. That competitor’s statement was made on-the-record and is obliquely tied in as much as it relates to the pressing issue of reactions from within manufactured housing to the COVID19 outbreak.
Legacy is one of several firms tracked by MHProNews in our business-nightly stock and investor market report. The Friday report is linked here as the most recent example.
Another firm – Marcus & Millichap, tracked by MHProNews in our evening market report did a detailed presentation on their research outlook and analysis of the coronavirus pandemic. That is linked below.
The information above helps frame the context for this analysis and commentary.
MHProNews Analysis
It is axiomatic that stating the obvious can bring clarity to a subject.
What some are calling the “Wuhan Virus,” “CCP Virus” or “China Virus” has forced the attention of business and association leaders of all sizes to respond to the extensive and controversial partial economic shutdown that the White House, federal, several state and local officials have enacted to “flatten the curve” of the hospitalization, medical resources, illness contraction and death rate.
While MMI’s widely attended public presentation was meant to shed light for investors to navigate what lies ahead, the Legacy revelations are arguably a different take on the same broad issue. It is a window into a specific and financially solid firm’s maneuvers during this still unfolding pandemic.
The leaked Legacy document reveals both company planning and a significant level of employee push-back. That tension is itself newsworthy.
In contrast to say Clayton Homes, which declined comments to MHProNews on the CC Virus related issues, Legacy saw the wisdom of engagement. Indeed, they said they appreciated the opportunity to respond.
Perhaps one of the more important takeaways from the Clayton Homes, Legacy Housing, and Manufactured Housing Institute (MHI) related whistleblower stories is that employees and sources inside those organizations have a measure of recourse by leaking documents, and providing insider insights to MHProNews.
While manufactured housing in its heyday once had numerous publications of various quality and value, today there are a relatively small number of bloggers and digital publishers that each routinely reflect the Omaha-Knoxville-Arlington axis and their allies ‘party line.’ A periodic exception to that is Kurt Kelley led MHReview (MHReview), but Kelley himself has said that he leaves hard news to our trade media.
It has become de rigueur for state associations to merely parrot or pass along without comments whatever MHI has said. Given over a decade of demonstrably failed efforts to obtain key parts of the manufactured housing industry’s obvious needs in placement and for more financing opportunities, MHI has earned some dark satirical nicknames. The report below explores some of rationale for one of those monikers, which gives fodder for prudential discernment.
But that pattern of purported failure by MHI and related their lack of accountability has sparked their own whistleblower responses.
Examples of that are linked above and below.
That failure to advance, for example, the full and proper implementation of the Duty to Serve manufactured housing lending has created opportunities for Legacy Housing and larger MHI member firms to broaden their respective “moat” – arguably at the expense of other firms. Many of those other smaller, competing firms are ironically MHI members. Those smaller MHI members are metaphorically feeding the organization that is purportedly undermining the industry’s growth potential.
Put differently, there is evidence of a growing tension inside the manufactured housing industry. Those pressures appear to be fueling a resistance from within organizations of consolidators and/or of self-described or de facto moat builders.
Seemingly increasing levels of pushback from within via comments and leaks to MHProNews may be influencing the engagement on the broken terrain. It certainly sheds light on why this publication and our sister site are so widely read by company leaders, management and staff of operations of all sizes.
The apparently failed public pushback of Tim Williams or others to debunk the reports and analysis – and to debate those topics publicly have served to strengthen the reputation of MHProNews as the go-to resource for what’s behind the curtain of over 15 years of manufactured housing industry underperformance. Several firms have arguably violated the mantra espoused by the late Howard Walker
Stay tuned for part two of our upcoming report on the Legacy Leak.
Public Notice: for those whistleblowers with their own insider tips and comments, see the below.
As a closing note, Stephen Moore, a White House economic advisor and periodic surrogate for the Trump Administration has said that the nation is facing a potential “Great Depression” era economic fallout to the CCP Virus pandemic.
The great irony of those involved in MHI who are arguably more focused on consolidation than on industry growth is that they are choking off their own investors’ opportunities.
When the economy gets tough, the potential for growth should grow. That’s the prudential wisdom behind the long-term strategy of the more modest sized Manufactured Housing Association for Regulatory Reform (MHARR) plans to push for full and proper implementation of existing laws.
Hodgson himself has said that there is a place to put problem. The obvious solution to that is to fully and consistently implement “enhanced preemption.”
Enhanced preemption is part of the laws MHARR promotes full implementation for, which would include the Manufactured Housing Improvement Act (MHIA) of 2000, where the federal preemption clause is found. The Duty to Serve (DTS) manufactured housing mandated by the Housing and Economic Recovery Act (HERA) of 2008 or other laws such financing laws as FHA Title I or Title II lending.
Notice 2: MHProNews has been contacted by a source that has for years been engaged in financing. In the foreseeable future, we expect new insights and revelations on that front, which arguably shed light on the charge of corrupt practices by certain federal and industry personalities.
The tragedy for true believers in the potential for manufactured housing to serve millions of more Americans is that the industry has been undermined from within. While Kevin Clayton or other key MHI players posture one thing, their own words and behaviors reveal that they are arguably manipulating the HUD Code in Machiavellian ways. Thus, the value of reading that related report.
The March 2020 numbers will likely reflect some decline, per sources. How some in the industry behaved pre-COVID19 is going to impact who survives until the post-pandemic rebound that is expected.
The manufactured home industry has been underperforming for years. Why would it be so unless the powers that be wanted it that way, so they could consolidate more of the industry at a discounted valuation? The years of frustrating MHI results – are they accidental or intentional? Is it just a coindience that the industry is being consolidated by a relatively small group of MHI insider firms?
That’s a wrap on this Monday, Monday installment of manufactured home “Industry News Tips and Views Pros Can Use” © where “We Provide, You Decide.” © (Affordable housing, manufactured homes, reports, fact-checks, analysis, and commentary. Third-party images or content are provided under fair use guidelines for media.) (See Related Reports, further below. Text/image boxes often are hot-linked to other reports that can be access by clicking on them.)
By L.A. “Tony” Kovach – for MHLivingNews.com.
Tony earned a journalism scholarship and earned numerous awards in history and in manufactured housing. For example, he earned the prestigious Lottinville Award in history from the University of Oklahoma, where he studied history and business management. He’s a managing member and co-founder of LifeStyle Factory Homes, LLC, the parent company to MHProNews, and MHLivingNews.com. This article reflects the LLC’s and/or the writer’s position, and may or may not reflect the views of sponsors or supporters.
Connect on LinkedIn: http://www.linkedin.com/in/latonykovach
Related References:
The text/image boxes below are linked to other reports, which can be accessed by clicking on them.
February 2020, Latest National Manufactured Housing Production Data, MHI and MHARR Comparisons
