1) Who, What and Where: (Your name and your formal title at Cavco).

Joe Stegmayer, Chairman, Cavco Industries, Inc..

2) Background: (Educational/Professional snapshot before entering the factory-built housing arena. Specifically mention your prior work experience to Cavco).

I graduated from the University of Louisville, national basketball champions; it was a great educational experience. My career began as a marketing assistant for a small steel company which meant that I just did whatever several bosses assigned me. The business grew rapidly and became a multi-billion dollar Fortune 500 company. My mentor was the founder and CEO. He was a great teacher, and while demanding, was fair, forgiving of honest mistakes, and would recognize and reward good performance. The company’s management style was featured in several best-selling books and in various magazines.

I then moved to Clayton Homes where again I was fortunate to meet and work with so many good, capable people. As an integrated company within MH, Clayton enabled me to learn about the manufacturing, retail, finance, and community segments of the industry. The people running each of these lines of business were all top notch in their fields and good coaches from whom one could really learn.

3) When and How: (When and how you began with Cavco, which could include a recap of the years since Cavco began.)

I first became involved with Cavco in 2000 when it was owned by Centex Homes, a large, on site home builder that was diversified into a number of building related businesses. I worked at their Dallas headquarters looking for acquisitions and working with Cavco management until Centex decided to spin-off Cavco to its shareholders. In 2003, Cavco became an independent, publicly owned company traded on the NASDAQ stock exchange.

My wife and I moved our family to Phoenix and have been here since. Cavco began in 1965 and operated five plants when I joined the team. The company had a great name for quality and design in the southwest but its facilities in Texas and New Mexico were opened shortly before the industry downturn. We made the decision to close them and began to re-build our small company during difficult years for the industry.

4) What are your personal interests or hobbies? How do you like to spend non-work time?

Time away from work is spent with my wife and two children.

We enjoy traveling, scuba diving, skiing and community involvement.

5) You’ve been busy in your executive leadership activities with the Manufactured Housing Institute. Please give our readers a snapshot of what that looks like and over what time line.

It has been rewarding to be on the executive committee of MHI’s board for a number of years and it was an honor to be chairman these past two years.

Initially I was concerned about taking time away from our company so before accepting I asked past Chairman Gary McDaniel who was encouraging and a number of other MHI members also offered their support and assistance. Also our management team supported our additional commitment to MHI and provided time for me to become more involved.

Ken Cashin, who preceded me had done a great job of steering the organization as had Don Glisson Jr. and Kevin Clayton in their officer roles, so things were in good shape considering the tough times for the industry.

The job gave me the opportunity for working with many of the very capable state association executives and their members. I am thankful for each division: communities, finance, supplier, retail and manufacturing for the work they contributed to make MHI stronger and increasingly more effective. I am confident that our new chairman, Nathan Smith, will build on the progress we have made.

6) As you know, Cavco is one of the factory-built housing industry stocks we track in our Daily Business News stock market report. Can you give us a snapshot of Cavco’s growth and acquisitions in recent years? (Palm Harbor, Fleetwood, etc.)

Cavco has grown its business organically through our facilities in Arizona and the plant we re-opened in Texas. In addition we were very excited to add Fleetwood Homes nearly four years ago. Fleetwood’s solid reputation for quality and customer service is reflected in their strong retail distribution network and so this was a great fit for us. The addition of Fleetwood’s seven factories gave us a much broader geographic footprint.

When we were able to acquire Palm Harbor Homes two years ago, we expanded the range of products and designs we offer to homebuyers, plus we added great distribution and financial services to our company.

7) Problem solving and team building are two of the keys that CEOs and C-Suite level leaders deal with routinely. What sort of process do you use in your leadership role and why?

I’m not sure that I can make my answer complicated enough for you. We have good people, with years of experience in this industry. We had a strong core group at the original Cavco and have added many capable, hardworking people with the acquisitions of Fleetwood and Palm Harbor. We give people room to get their job done. We communicate a lot.

Sure we have rules that we have to follow as a federally regulated manufacturer and especially as a publicly owned company; but our people know the guidelines and don’t take inappropriate shortcuts. We are here to take care of our customers’ needs, if we do that everything else will fall in line.

8) While some still see doom and gloom, Cavco has worked hard to grow, even during the downturn. Cavco’s award winning homes are widely respected for the quality and service your firm provides. Please tell our readers what compels your firm’s confidence and efforts in factory built housing in the U.S.?

Thank you, we have a great team of designers with professional credentials and years of experience with factory construction.

In common with probably most people in this industry, we believe that factory built housing is a very good answer to the need for affordable housing in this country. We have never subscribed to what some have projected through the years about taking a huge share of the market for single family homes away from on-site builders. We don’t believe that is realistic and we don’t think it is necessary for our industry to grow.

For many years prior to the past eight, this industry averaged more than 20% of all new single family home sales. If we approach those levels again as overall home sales increase, the impact of our business would be significant. I think we all know the reasons factory built makes sense: control of quality, reduced raw material waste, energy efficiency, rising labor costs, the lack of available labor in some areas, inefficiency of on-site construction for modestly priced homes built individually or even in small developments. The list goes on. MH cannot be all things to all people, but included among the many markets we serve are the two largest and fastest growing demographics, the baby boomers and the millennials. There is opportunity for everyone to work with these promising markets.

9) Virtually no manufactured housing (MH) pros like Dodd-Frank (DF) in its current form. Congressman Walter Jones (NC3-R) told MHProNews that it was never Congress’ intent to muzzle the speech of MH sales people. As you know, common hits on DF include, but are not limited to, harm done to current manufactured home owners and concerns that failure to modify DF could cut personal property lending by roughly 33% +/-. MHI, MHARR and state/manufactured home communities are working to pass a legislative fix. Based on your experience in working with legislators, what would you say to business owners, rank and file, executives or managers about the need for a DF fix and how best to engage their Congressional rep and Senators?

Our take is that communication with elected leaders is critical and can be effective to get the responses and action we need. It can be frustrating at times to write letters that go unanswered or to make visits to Washington.

For example, recently a couple of us called on a freshman senator from a state with a sizable MH presence. When he came into the meeting room where we had waited for him, he stood in the doorway and told us that we had 90 seconds to make our case. We came away thinking what arrogance and such a demonstrated indifference to his constituents!

On the other hand many will listen and some will act, so it seems to me that it is a numbers game. We have to contact every elected official who has a reason to be interested in the plight of people who want and need affordable homes.

Some may represent districts or states that need the jobs we create. Others realize that this country tried putting people in homes that they could not pay for and the consequences included a dramatic economic meltdown. We need to convince elected representatives that it’s time to get back to helping people attain home ownership that they can afford. Our industry produces and sells homes that fit today’s needs and we do so without government subsidies. All we ask is for the government not to pass laws or create regulations that tie our hands or unnecessarily add costs that reduce the value of factory built homes to the consumer.

I think most people do not like to do this “lobbying” work, myself included. Jason on the MHI staff does a great job of setting the stage with congressional staff and on follow up as a registered lobbyist. But he needs the help of people in our industry who live or work in the congressperson’s district and therefore have a better chance of being heard.

10) What do you think sets Cavco apart from others in the industry who are building HUD Code manufactured or modular homes? What makes Cavco a dependable partner/supplier for retailers, communities and developers?

There are many good companies in the industry. We are strong financially and are here to stay; our shareholders want to be in this business.

We have a broad line of homes in all price points, floor plans and designs; we have inventory lending, consumer lending and insurance products.

Certainly we believe that people are our most important asset. We are fortunate to have people who are very knowledgeable and anxious to help our customers. Included among our team are professional engineers, exterior and interior designers, experienced builders, marketing and product experts, the list goes on. We have a culture that really places the customer first among our priorities.

11) Your industry colleague, Sam Landy, said in an interview with MHProNews that given the large and growing need for affordable housing in the U.S., he sees how manufactured housing could return to new home shipping totals of 300,000 to 400,000. Others inside our industry think we ought to be happy to return to shipments in the 60,000 to 70,000 annual shipment levels. What say you? Why?

There is no reason to dispute Mr. Landy’s prognostication. A growing population, rising costs to build and maintain a home and other factors discussed previously could make it happen. While that level of shipments is attainable, the good news is that we don’t have to reach 300,000 plus to be a very successful industry.

Consider that for the thirty-seven year period since the HUD code was adopted MH shipments have averaged 215,000 annually. Yes that average number includes the unrealistic years ’95-99 but it also includes four years of 50,000 shipment levels and the past ten year average of 91,000 per annum. Our time will come and it will be sooner if this industry can obtain justifiable help from our leaders in government.

12) Industry veteran and Green Courte Partners Chairman, Randy Rowe, called for a 5 point plan for industry recovery. It included the following: A) Better Warranties and Customer Service, B) Dealing effectively with Chattel Financing Issues, C) Economic Security for Our Customers, D) A Multiple Listing Service(s) (remarketing system for individuals, lenders) and E) A National Marketing (Image) Effort. What would you say about these bullet points? Do you think that other possible ideas, like more “best practices” and professional sales training, are also needed? What say you on the keys for moving ahead?

Mr. Rowe’s five points are not disputable in our view; working on each one would no doubt improve our industry. I think his points address the use of best practices and are fundamental to our success.

Sales training? Sure it helps and it is always a good thing to do. But can we reasonably expect it to happen universally? It is expensive for an employer and the reality is that commission sales has high turnover in almost every industry, vehicle sales, residential and commercial real estate and insurance, to name a few.

We have all had consumer experience with good and poor performing people. I would suggest that it did not stop us from buying in most cases, although we may have gone to another person or store to make the purchase. So sales and other training can clearly differentiate companies but such efforts do not impact overall demand to as great an extent as do Mr. Rowe’s five points.

13) What do you consider the largest challenges facing the industry in general today?

1. Unemployment and under employment.

2. Consumer confidence.

3. Lack of financing for consumers with somewhat challenged credit, because of a health care dispute or other special situation, but a demonstrated history of paying their primary obligations such as rent, car payments etc.

14) MHI has had significant staff changes in the last 15 months or so, including the additions of Richard “Dick” Jennison, Jenny Hodge and Gay Westbrook. Please share with our readers an insight into the search and selection process that resulted in these fine new staff members and what you think this means on a practical level for our industry.

First we are pleased with the quality of people MHI has attracted and brought aboard. Our new hires joined a small but very capable staff already in place who worked diligently and loyally through the search process and through tough economic times.

Second I would again thank Howard Walker for taking on the task of chairing the search committee for MHI’s president. Howard’s group did a great job interviewing candidates by phone and subsequently in person.

In addition John McLaren offered the help of his company’s highly experienced HR vice president who tediously reviewed hundreds of resumes with me and expertly categorized them. She and I phone interviewed many to further define the list of the most appropriate candidates for the committee to pursue.

We were fortunate to find Dick Jennison, a seasoned executive with CEO experience in a building products trade group. Subsequently other of our members were helpful to Dick in bringing Jenny and Gay to MHI.

The members who volunteered their time for this work saved MHI the considerable expense of hiring consultants and perhaps more important created a more robust hiring process which delivered excellent results.

MHI is now getting more quality and quantity of work done with a lean profile and on a balanced budget. And that represents significant improvement that should engender the confidence of all MHI members in their trade association.

15. Closing thoughts or comments, sir?

We are optimistic about the future for the systems built housing industry, a term that applies to manufactured and modular homes. This optimism is not based on a wish or hopes; rather it is based on the many advantages our industry has over other methods of providing places for people of various social and economic backgrounds to live.##