The Robeson County website says that “Business Matters on The Main Street of The East Coast.” It notes that “The State of North Carolina maintains a searchable database of available buildings and sites.” Beyond the deal that is attracting manufactured housing industry professional’s attention is one that says will bring 150 new jobs to manufacture ammunition. “David Hargitt, the CEO of Cape Fear Arsenal Inc” says the county “to create 150 good-paying jobs and invest more than $15.2 million locally during over the next three years says Robeson County beat out eight other counties in two states to get his business.” “Robeson County’s dynamic economy is home to a diverse and growing array of businesses,” because of the “the variety of business incentives available to a number of companies in Robeson County.” Tax dollars or tax incentives are used to lure businesses which in turn promise to create jobs. How does that relate to the manufactured housing deal by Skyline Champion? “Champion Home Builders, Inc. plans to invest $13.2 million which will create 385 new jobs in Robeson County, according to executive director of Robeson County’s Office of Economic Development Channing Jones.”
According to WPDE, “Jones said the manufactured housing production facility will renovate and locate in the old Fleetwood Building. He added the annual pay averages around $42,922.” Jones said that “The amount of pay. That they’re currently projecting around $43,000 is around 18% to 19% higher than our average wage here in the county, and so, it makes a big difference.”
WPDE cited the firm’s news release which said that Skyline Champion is the “largest independent, publicly traded, factory-built housing company in North America, employing around 8,100 people. The company represents 70 years of homebuilding experience and 40 manufacturing facilities throughout the United States and western Canada.” While that may be technically true, it bears mention to outsiders looking in that Skyline Champion is a distant second to Berkshire Hathaway (BRK) owned Clayton Homes. This report, analysis, and commentary will reveal official and mainstream media statements but will also connect the dots that others have failed to do.
To the point cited earlier about taxpayer subsidized incentives, “The news release said Champion will receive $1 million in CDBG Building Reuse funds to renovate the property to their needs, as well as $519,000 in training dollars through the NC Community College System’s Customized Training Program, and $300,000 in Sales Tax Exemption from NC Dept. of Revenue.” Note that other manufactured home producers understandably seek such breaks and incentives too.
The CBS News connected item will be addressed further below. Next up is how Yahoo’s news picked up “The Robesonian” version of the Skyline Champion news.
“The facility is located at 349 E. Railroad St. in Pembroke, at the site once occupied by a Fleetwood Homes manufacturing facility. Champion Homes considered several possible locations for this investment prior to making our choice Robeson County,” said Wade Lyall, executive vice president of Sales and Business Development.”
The SKY corporate info below is not from their latest release.
What neither of the mainstream media reports noted was that the old Fleetwood Enterprises manufactured homes facility was a casualty of the manufactured housing industry’s protracted 21st century downturn. As Reuters reported on March 10, 2009, “Fleetwood files for bankruptcy…”
What Reuters failed to specify is the apparent impact of the Berkshire-brand letter below.
Instead, they wrote: “Fleetwood, which also makes manufactured housing and military barracks, has been hurt by high fuel prices and the housing market decline. It is seeking a buyer for its motor home and manufactured housing units.” The one-time RV and manufactured housing giant had arguably been crippled by failing to successfully address the omnipresent need for capital access.
Retail financing for HUD Code manufactured homes was supposed to be addressed by the Housing and Economic Recovery Act (HERA) of 2008. HERA included the so-called Duty to Serve (DTS) manufactured homes, rural, and underserved markets. That DTS reference is alluded to by Tim Williams in his remarks about getting Congress to act. Williams, then and now, is the president and CEO of Berkshire Hathaway (BRK) owned and Clayton Homes sister-brand 21st Mortgage Corporation. Here is the infamous 21st letter bearing Williams’ endorsement.
These historic connections to the Skyline Champion (SKY) deal for an old Fleetwood plant obviously pop up from time to time, as MHProNews uniquely highlights. After all, Warren Buffett had a point when he said: “In the business world, the rearview mirror is always clearer than the windshield.”
When that 21st/Tim Willams letter was issued, while obviously impactful, it did not create quite the same stir as it did since MHProNews/MHLivingNews began to connect the factual dots that illustrate the possible case for antitrust violations.
When the Realtor.com’s Chief Economist Danielle Hale said that there has been millions of housing units underproduced in recent years, a chunk of that underproduction has to include manufactured homes.
Rephrasing Hale’s point to a manufactured home industry specific takeaway. The skyrocketing conventional housing costs caused by a dearth of supply of all forms of new housing is caused in part due to the collapse of modern manufactured homes during that first decade of the 21st century, and the painfully slow recovery since.
Deals like the one for this old Fleetwood plant might have been unnecessary had that collapse during the post 1998 high decline not occurred. While some manufactured housing pros should shoulder some blame when ‘liar loans’ were being executed in the 1990s, it is apparent that similar and far more costly to the American economy lending occurred in the conventional housing market. Two wrongs don’t make a right, but that is to put the past problems of manufactured housing lending into perspective.
New Production Center Kudos
Let’s note before progressing onto to other related topics that the Skyline Champion deal merits a qualified level of support and encouragement. This is what has been lacking for too long among consolidators. Investment in new production may have a ramp up period, but it is also the only path for significant industry growth. Will the firm revise this stance stated to investors below?
As prior HUD Secretary Ben Carson explained, the demand side of the affordable housing equation is guaranteed. Especially given proper education and promotion, which has been lacking. That’s why MHLivingNews has led the charge for public education and media education.
CBS News reported on 3.10.2022 that – “Monthly rents skyrocket amid record inflation: “It’s impossible to prepare for.” Their report included these sobering pull quotes, which are examples of what is occurring in the rental housing market.
- South Florida resident Jamie Wolf, who is a single mother raising three children, says her landlord is raising their rent by nearly $1,000 per month — a 30% hike.
- “It’s impossible to prepare for,” Wolf told CBS News.
- Apartment sticker shock is happening nationwide, soaring nearly 20% last year across the U.S. In the Miami metro area alone, rent is up by nearly 50%.
- “They’re scared. They have tapped into everything they could tap into,” said Diana Stanley, who helps homeless people and those on the brink of homelessness at The Lord’s Place in West Palm Beach.
It is no secret that only factory home building can possibly close the housing production gap that Hale and others have pointed to recently or in prior years.
Beyond the Skyline Champion old Fleetwood Plant Deal
The FHFA linked listening session statement is approaching its first birthday. But it still provides one of the most succinct and evidence-linked overviews into the troubling comparisons between what conventional housing caused and was allowed to recover from while HUD Code manufactured homes are still de facto being punished for deeds that occurred over two decades ago. To say it is unjust is an understatement.
https://www.fhfa.gov/Media/Documents/Kovach-statement.pdf
Or, you can download that roughly 1300 word document here.
To the point on current housing pressures, as Realtor.com’s Hale data and logic reflect, all housing seekers are being harmed by the lack of robust HUD Code manufactured home sales.
America needs several times the numbers of manufactured homes currently being sold annually. Without millions of new housing units, said Hale and others, the skyward march of housing costs will continue. As a flashback to 2018, MHProNews pointed out that several Silicon Valley connected firms were probing factory-built housing, albeit not manufactured housing specifically. MHProNews gets periodic contacts from firms that want to bring other forms of pre-fab housing to market. Container homes and 3D Printed housing are two examples.
Where was MHI over the years on what they acknowledged several times had to be done? Kevin Clayton said in 2011 that manufactured housing was ready to launch a national campaign.
Really? What happened to that campaign, Kevin?
In fairness, years before that statement was the Roper report, which was supposed to lead to a much-needed campaign. Once more, MHI was long on talk, long on ‘research’ which led to…nada actionable.
Is it any wonder that Marty Lavin mocked MHI’s then nascent CrossModTM plan? Once someone sees the pattern, it begins to be obvious.
Beyond Whining, Doing
The late Zig Ziglar said the first step in problem solving is to identify the causes and then address them.
Certainly, a lack of public understanding has long been an issue. Roper went further in that regard. So, what was necessary is to create a bright line distinction between problematic brands and behaviors and ‘white hat’ brands and authentic and just customer-friendly behavior, before, during and after the sale.
An old Chinese proverb later adopted by the Christophers says it is “Better to light one candle than to curse the darkness.” In that spirit, MHLivingNews was launched years ago. While useful, it became obvious that more was needed. Who said? Ironically, pro-MHI voice Darren Krolewski.
Over a period of years, a series of tips, revelations, documents, research and experiences made clear that many of the issues holding manufactured housing back were internal to the industry. While Krolewski wasn’t the first to make that point, his statements served then and now to illustrate what is keeping manufactured housing to move from snoring toward soaring.
The industry’s bad news is obviously often caused by bad behavior or bad actors within the industry. Last week, MHProNews illustrated how an MHI state affiliate took a public stance against behavior that they claimed was illegal.
Exploring internal industry issues are not to minimize the outside forces that researchers such as Minneapolis Federal Reserve’s James A “Jim” Schmitz Jr. and his colleagues have documented.
Schmitz and company’s contribution to the discussion of manufactured housing industry underperformance was to point to the lessons of “sabotaging monopolies.”
But to Krolewski’s apparent point, there has long been whispered by some MHEC members the need to address ‘bad actors’ inside the industry.
The argument could be made that if manufactured housing professionals involved in MHI and/or their state affiliates stepped up to the plate of addressing the underlying issues, the industry would be building dozens of plants, because there used to be hundreds of production centers prior to the 21st century waylaying of manufactured housing. Since the industry produced hundreds of thousands of homes a year before, it is obvious that it can be done again. Clayton told Congress that 160 plants closed. That should tell the industry that instead of occasionally reporting a new production center, it should be occurring on a routine basis.
The examples above and which follow exemplify what MHI should have done years ago. Perhaps the reason that MHI won’t publicly discuss or debate their performance is precisely because they would be badly embarrased? How can they answer the obvious that this one article has outlined?
- Since before the 2005 Roper Report, MHI has acknowledged the need for an image-education campaign.
- The GoRVing campaign has been so successful that over 20 years into it, the Recreation Vehicle (RV) industry is still promoting that effort. As a result, RVs went from trailing manufactured housing by 3 to 2 in 1998, to outperforming it by roughly 5 to 1 in 2021.
That’s why the educational and op-eds below should have been done by MHI years ago.
But it is MHProNews/MHLivingNews that is making these arguments to the broader public. With a fraction of MHI’s resources, our platforms have for years ‘lit the candle’ rather than just curse the darkness.
In that mix of addressing in a substantive fashion MHI’s ever-more apparent failings is the Manufactured Housing Association for Regulatory Reform (MHARR). MHARR long presented the argument that MHI’s failures to properly promote and address the post-production sectors of the industry. The white paper linked below is as valid now as it was then. Would that such were not so. A good decade before that paper, in the pages of the now defunct Journal, Danny Ghorbani presented that argument that MHI must either do it’s claimed job properly or MHI must be supplanted.
Some years ago, the Arkansas Manufactured Housing Association (AMHA) J.D. Harper was among the voices that proposed a new third national trade group. Harper wasn’t alone. Bob Crawford and industry icon Dick Moore called for such a third trade group that fills the void being they said was being left by MHI too.
When efforts to supplant MHI were undertaken, among those snipers in the background working against a new post-production trade group arguably included one George Allen. That may seem odd on the surface, given that MHI was ripped publicly by the same Allen who per sources reportedly torpedoed and bad-mouthed attempts to boost a new post-production effort. Be it purported smear tactics or other cheap shots, what Allen has ignored is the obvious meaning of his own words.
Ironically, Allen has also applauded our MHProNews/MHLivingNews spotlighting of industry issues of concern.
These are the reasons that those who play footsy with MHI and their dominating brands have failed to do what their outside attorney David Goch claimed they would and did do. Namely, allow for a robust discussion. That statement by Goch was at best naive, at worst arguably a bald-faced lie.
Given multiple opportunities for Goch, other MHI attorneys, MHI staff and corporate leadership to address such concerns, what has MHI consistently done? Duck, dodge, deflect, detract, distract and demean. But aren’t they the ones who accepted members dues under arguably false pretenses?
As antitrust activity continues to rise in the U.S. and abroad, the day of reckoning may be approaching.
Summing Up and Conclusion
It is good to see new HUD Code factories opened, particularly among independents. Cavco and Skyline Champion have, in fairness, done some previously.
But lurking in the background of these issues are probes that may one day erupt on the scene as did the Securities and Exchange Commission (SEC) case against Cavco Industries.
The fact that a state association has publicly called into question the legality of the behavior of an industry member is to be encouraged. By intention or accident, the Texas Manufactured Housing Association (TMHA) VP Rob Ripperda recently stepped on MHI’s talking points.
When candidates and sitting public officials are increasingly calling for robust antitrust action, these are signs that critical mass may finally be approaching.
There is anecdotical evidence that probes and litigation at major brands involved in consolidations are growing.
When the first manufactured housing corporate and association leaders get charged criminally for behavior that has been hiding in plain sight, don’t be surprised if other industry professionals will suddenly shift from questionable consolidation to more production centers, new ground-up or ‘greenfield’ developments, retail centers, etc.
But until that glorious day when accountability begins to reign, MHProNews and/or MHLivingNews will continue to act as a watchdog in fulfillment of that key role that authentic media is supposed to fulfill.
Stay tuned for what’s next. Because the Bunsen burner is just getting fired up.
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By L.A. “Tony” Kovach – for MHProNews.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.
