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Amazon-Berkshire Announcement – Emerging Factory-Building Elephant in the Room?

May 15th, 2019 Comments off

 

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There was no mention this evening of factory-home building when CNBC or some other mainstream business media reported that Berkshire Hathaway has taken a position valued at some $904 million dollars as of the close of the market on 5.15.2019.  But then most others aren’t as keen on factory-built housing, or as in tune with what an announcement like this might suggest for our industry.

 

First, let’s start with some pull quotes from left-of-center CNBC, plus their video.

  • Berkshire’s stake in Amazon was 483,300 shares at the end of the quarter ended March 31, according to a filing at the Securities and Exchange Commission.
  • The value of that stake is $904 million by the closing bell Wednesday.
  • Buffett first disclosed the new investment in Amazon to CNBC on May 2, though the size of the position was not previously reported to the public.

 

 

Buffett told CNBC on May 2, One of the fellows in the office that manage money … bought some Amazon, so it will show up in the 13F.”  Chairman Buffett was likely referring to lieutenants, Todd Combs or Ted Weschler, who each manage portfolios of more than $13 billion in equities for Berkshire.

Yeah, I’ve been a fan, and I’ve been an idiot for not buying” Amazon shares, Buffett said at the time. “But I want you to know it’s no personality changes taking place.”

Berkshire Hathaway’s report revealed an 18% increase in its J.P. Morgan Chase stake to 59.5 million shares, underscoring the Oracle of Omaha’s love of big financial institutions.

If one goes back to the announcement made the morning of President Donald J. Trump’s 2018 State of the Union (SOTU), Buffett, Amazon’s/Washington Post’s Jeff Bezos, and Chase’s Jaime Dimon’s healthcare initiative sent those stocks south.  There was speculation that the timing was in part a move to embarrass POTUS Trump, who had been bragging about the rising stock markets.

Buffett has long been a Trump critic, even before Mr. Trump’s 2015 announcement of what became a successful White House campaign.

Be that as it may, Amazon’s Alexa Fund invested in 2018 in Plant Prefab, a factory housing builder. With Berkshire’s Clayton Homes dominating HUD Code manufactured homes, and announcing even more prefabricated construction plans on their conventional housing side, there are reasons to be watchful how these developments play out over time.

 

Details Emerging on Amazon’s Plans for Plant PreFab Modular Home Investment

 

We’ll track these developments and report as warranted.

 

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That’s this evening’s look at “News through the lens of manufactured homes, and factory built housing,” © where “We Provide, You Decide.” © ## (News, analysis, and commentary.)

 

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Details Emerging on Amazon’s Plans for Plant PreFab Modular Home Investment

November 26th, 2018 Comments off

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It’s a huge business opportunity. With more than 600,000 new homes sold in the U.S. alone last year, there are billions of dollars to be made by anyone who can get a head start in dragging the industry into the tech age — something Amazon has accomplished in multiple businesses,” wrote the LA Times Aurora Percannella for the Herald Courier.

 

The niche that Plant Prefab is custom houses for the urban market. Amazon believes Alexa will be at home there.

 

 

The video interview and tour of the Plant Prefab production center reveals that they currently plan to target custom projects, as opposed to high volume building.

 

Prefab is a form of technology used across the industry to some extent, and it’s increasingly looked at as we face affordability issues and labor shortages,” David Kaiserman, president of Lennar Ventures said.

Kaiserman noted that Lennar already prefabricates roof and wall components in the builders on-site construction.  He also stated that Amazon approached Lennar about creating housing that work with Alexa seamless, without dead spots.

The infrastructure is super-critical,” said Kaiserman, per Percannella, noting that the Lennar unit leader expressed no surprise over Amazon’s investment in Plant Prefab.

Earlier this year, the video page above noted that Amazon announced its first ever foray into the home-building industry with an investment in Plant Prefab.  While that may be true in a strict sense, Amazon has been involved in selling container housing for at least a year, as the Daily Business News on MHProNews noted last year.

Plant Prefab is also targeting the ADU – Accessory Dwelling Unit, back yard housing – market.  ICYMI, see that related report, linked below.

 

YIMBY, Amazon backed Plant Prefab Introducing ADUs, Product Video

 

Those 400 square foot Plant Prefab ADU’s will go for about $160,000, with one bedroom, one bathroom. But the firm says on a larger home that a couple bought, they shaved months of their delivery time line, and saved $80,000 off the cost of conventional on-site building.

Real estate economist Gerd-Ulf Krueger states their business model is likely what attracted Amazon. “It’s a test to see if the model can actually bring down prices in cities with housing shortages,” Krueger said.

MHProNews will continue to monitor operations like Amazon, Katera and others that are expanding their reach in the potentially huge factory-built housing sector. That’s tonight’s “News through the lens of manufactured homes, and factory-built housing,” © where “We Provide, You Decide.” © ## (News, analysis, and commentary.)

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$300 Billion Market, As Predicted, Jeff Bezos’ Amazon Alexa Fund Dives Deeper into PreFab Homes

September 28th, 2018 Comments off

 

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We love working with companies that make a world positive impact on everyday lives, said Andrew Beebe, managing director of Obvious Ventures, as part of a statement to MHProNews. “Plant Prefab is focused on dramatically improving efficiencies and environmental responsibility in the $330 billion market for new homes in the US. With increased costs, labor shortages, reduced affordability, and the enormous impact housing has on carbon emissions, there are few challenges more important than creating more accessible, healthy housing,”

 

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Those are all points that the Daily Business News on MHProNews has raised for investors and industry pros to consider for several years.  We noted that last year, Amazon began marketing for third-parties homes, including container housing that sells for under $40,000 a unit.

Amazon has also been selling via their site pre-cut kit homes, a concept similar to what Sears and Roebuck used to offer a century or more ago.

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Now, through Amazon’s Alexa Fund, they’re taking the next step.

An array of media have given them considerable free ink, virtually all of it positive.

Plant Prefab, a Rialto, Calif., based factory-builder, tells MHProNews that they’ve raised $6.7 million “Plant Prefab’s Series A funding included Obvious Ventures and the Amazon Alexa Fund.”

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The new funding will go toward investments in “new senior hires, building the marketing and sales team, and developing Plant Prefab’s patented Plant Building System,” said Globewire to MHProNews.

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Voice has emerged as a delightful technology in the home, and there are now more than 20,000 Alexa-compatible smart home devices from 3,500 different brands,” said Paul Bernard, director of the Alexa Fund. “Plant Prefab is a leader in home design and an emerging, innovative player in home manufacturing. We’re thrilled to support them as they make sustainable, connected homes more accessible to customers and developers.”

Alexa Fund added as new investor, marking Amazon’s first known direct investment in a home prefabrication/construction company.

In 2016, the Plant Prefab was spun out of LivingHomes, “a design and development company that’s designed and built dozens of award-winning prefabricated homes, including the nation’s first LEED Platinum home.”

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According to a statement by Plant Prefab Founder and CEO Steve Glenn, “In the housing-crunched major cities like Los Angeles, New York and San Francisco, along with areas like Silicon Valley, it takes too much time to build a home from groundbreaking to occupancy, and labor shortages, construction delays and increased construction costs are exacerbating this trend even further — and making homes increasingly less affordable.”

That’s a theme thousands of factory-built housing industry pros know all too well.  Note that Glenn takes direct aim at manufactured housing, mis-characterizing HUD Code homes as “Most existing prefabrication companies in the US focus on standard, low quality, non-sustainable mobile and modular homes — for suburban communities.”

Glenn then juxtaposes what they do with manufactured and modular builders by saying, “Plant Prefab is unique in that we’re focused on custom, high quality, very sustainable homes and we have a special facility and a patented building system optimized for this. We build based on client’s architects or clients can select from a growing number of homes we offer from world-class architects, all of which can be customized for specific lots and client needs. By building in an all-weather facility with lower cost and staff labor, we offer clients a more reliable, time and cost-effective alternative to local, urban general contractors.”

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Rephrased, they sound more like they are targeting more of a U.S. based, Soft Bank backed Katerra, or international player, Revolution Precrafted homes.

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Plant Prefab operates out of a 62,000 square foot facility in Rialto, California.  They point to recent projects they’ve done where they “installed 26 units in California and Utah as well as a multifamily project in Berkeley.”

Keep in mind, that a few million bucks from Bezos could quickly lead to far more from the world’s richest man. Architecture says that the Alexa Fund can provide up “to $100 million in venture capital funding.” But as the world richest man, that too is far from Bezos’ limit.

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Independent and even larger corporate manufactured housing professionals, outside of the Berkshire Hathaway family of brands, arguably have to realize that Amazon, Google, Facebook, and other giants could quickly become a major player in factory built homes, including modular or manufactured homes.

With Buffett, Bezos and JP Morgan-Chase’s Jaime Dimon teaming up to carve out a bite from healthcare, what’s to keep some array of multibillion-dollar conglomerates from crowding out factory-builders through their money and political influence?

Thus MHProNews’ advocacy for antitrust action, and a new post-production association.  That later is similar to a call from the Manufactured Housing Association for Regulatory Reform (MHARR), which has made a similar call.  See the related reports, linked below. “We Provide, You Decide.” © ## (News, analysis, and commentary.)

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SoheylaKovachDailyBusinessNewsMHProNewsMHLivingNewsSubmitted by Soheyla Kovach to the Daily Business News for MHProNews.com. Soheyla is a managing member of LifeStyle Factory Homes, LLC, the parent company to MHProNews, and MHLivingNews.com.

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