Modular’s Looming Sales Problem
Date Posted: February 20, 2025
Posted In: Discussion, Offsite Construction,
From Offsite Builder: Residential modular home factories have a looming problem that, if left unaddressed, will lower sales volume and take years to correct. The longer the problem festers, the more expensive it will be to fix. It’s also an insidious problem because it operates in slow motion, and because many factory owners and managers don’t fully understand it. So, what’s the problem? Disappearing sales outlets.
This isn’t something a factory management team notices in a year, or even over several years, but it’s slowly cutting into their sales and building momentum, nevertheless. The situation reminds me of Ernest Hemingway’s 1926 novel The Sun Also Rises, in which character Mike Campbell is asked how he went bankrupt. “Two ways. Gradually, then suddenly,” he replies.
To be clear, I am not saying modular factories are going bankrupt; however, many are at the beginning of a slippery slope of economic decline.
Specifically, there has been a noticeable reduction in the number of single-family modular homebuilders, and those single-family builders are the sales force that a lot of modular factories depend upon. These builders operate the model homes, design centers and sales lots that are the contact point for homebuyers. Without them, factories that build single-family homes lose access to the customers who write the checks that make this whole industry operate.