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Shocking, True State of the Manufactured Housing Industry, plus Solutions for Profitable, Sustainable Growth – May 2019

May 27th, 2019 Comments off

 

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For busy professionals, holidays often provide a good time to review facts, themes, issues, and trends to gain useful perspectives.

 

Let’s begin this review of the true state of the manufactured housing industry with a litany of facts and their source relative to U.S. housing, affordable housing, and manufactured homes.

 

 

manufacturedhomefiredeaths-2013nfpareport-citation-postedmanufacturedhomelivingnews-janhollingsworth

HUD Code manufactured homes – per the NFPA Fire Analysis and Research Report has such a low fire incidence, that they expressed surprise, as the last sentence above reveals.  But it is their own study.

AreMobileHomeFiresBurningtheIndustrycreditNFPA2-postedtothedailybusinessnewsmhpronewsmhlivingnews

Here is another reason why definitions and proper terminology matters.

 

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Rephrased, manufactured homes are far safer than is generally believed, as safer or perhaps marginally safer then more expensive conventional housing, and are a widely misunderstood solution to the affordable housing crisis.

 

UltimateManufacturedHomeHousingInfographicNotMobileHomeTrailerHouseFactoryBuiltHomeIndustryDailyBusienssNewsMHProNews-600

 

On Manufactured Home Living News (MHLivingNews) we made the point years ago, apparently picked up by some in the mainstream media, that manufactured homes are a solution to the affordable housing crisis that is hiding in plain sight.

 

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Click image above or the link here to see report and related video. 

 

That report linked above featured the following video, which is every bit as relevant today as it was the day it was first published.

 

 

We’ve mentioned before the quote from Terry Decio.  Decio’s comment resonated with thousands of manufactured home industry professionals.

 

TerryDecioSkylineChampionHomesPhotoQuoteImTiredofManufacturedHousingbeingBestKeptSecretReadyHelpHouseAmericaDailyBusinessNewsMHProNews

 

So, all of the above begs the question: why are manufactured homes selling at a lower national annual pace in 2018 – or year to date in 2019 – than the year that Warren Buffett led Berkshire Hathaway entered the industry with its acquisition of Clayton Homes in 2003?

 

SkylineChampionInvestorRelationsProductionGraphicDailyBusinessNewsMHproNews

 

How is that possible?

But the above in a nutshell is the true state of the manufactured housing industry. The facts are what they are, and in some 550 words, the above sums it up.

 

Causes, Opportunities in Disguise, and Solutions?

We’ll take the above subheading in bite size subtopics.

Now what has caused this scenario? Objectively examined, several factors are contributing to this troubling trend.

On Manufactured Home Living News (MHLivingNews) and here on MHProNews, we’ve built step-by-step a case that reveals the following evidence, concerns, trends, and allegations. Let’s note that what follows references sources inside and outside of the manufactured housing industry.

Some of our reporting have been exclusives, publishing documents, quotes, videos, and details found literally nowhere else in manufactured housing today.  The documentation is provided at the report linked below.

 

SmokingGunEvidenceOfAntiTrustMonopolisticCollusionMoatClaytonHomesKevinClayton21stMortgageTimWilliamsWarrenBuffettMHLivingNewsMHProNews

In a series of direct quotes in context, a document from 21st Mortgage signed by Tim Williams, and video recorded comments by Kevin Clayton, these all line up to demonstrate how independent retailers, communities, and producers – among others – where purportedly harmed by action that could be deemed an antitrust violation. Why hasn’t Allen told his readers how that cost them money? https://www.manufacturedhomelivingnews.com/bridging-gap-affordable-housing-solution-yields-higher-pay-more-wealth-but-corrupt-rigged-billionaires-moat-is-barrier/

 

The screen capture below is evidence of that prior claim that others have not yet published the same level of documentation as the report linked above has.

 

21stMortgageCorpLetterTimWilliamsDailyBusienssNewsMHProNews2019-05-26_1620

 

It isn’t that there has never been concerns raised by others, there have.

  • The Manufactured Housing Association for Regulatory Reform (MHARR) has made the ‘post production sector’ – which are often their code-words for the Manufactured Housing Institute (MHI) – a significant issue for no less than a decade, because since we’ve been publishing, they’ve periodically raised that concern. They did so previously in the now defunct Journal of Manufactured Housing.
  • Controversial speaker and writer George F. Allen in his blog, and at other times more privately, has raised this issue of the monopolization and consolidation of manufactured housing, and the purported failures of MHI.
  • Another source raised a similar issue, which has not yet been previously examined here in depth, and we plan to do so in the days ahead.

 

1)    Defenders of Berkshire Hathaway, Clayton, 21st, MHI et al have said words to the effect that MHProNews has MHARR as a sponsor.  That’s true and is out in the open.  There is no hidden agenda. It should be noted that our fact-checks and analysis predates any advertising relationship with MHARR.

2)    Furthermore, that same point could be made that MHI, Clayton, and 21st Mortgage Corporation, which for years were sponsors of MHProNews.  Our fact-checks and related reports that led to our current understanding of the state of the manufactured housing industry began while those organizations were our sponsors. Meaning, we began our fact-checks and analysis that led us to this point while MHI and some Berkshire brands and their allies were among our sponsors.

3)    So, to a fair, informed, and objective-minded reader, it should be clear that MHProNews is not ‘pulling an Allen’ — who purportedly flips and flops according to who he thinks is or may benefit him at that time.  Note too that Allen’s flip-flops should not be construed to diminish the value of some of his prior critiques of MHI, Clayton, and their Berkshire Hathaway related business units in manufactured housing. That falls within the principle of separating the wheat from the chaff with all people and organizations. Nobody is perfect, neither are any organizations or companies. That includes this writer and this publication. But in keeping with Society of Professional Journalism Code of Ethical Conduct standards, we hold the powerful to account, and we have been revealing of prior incomplete understandings that explained more fully why manufactured housing wasn’t progressing as it should.

Doug Ryan with the nonprofit CFED, now known as Prosperity Now, has likewise alleged that Clayton and their related lenders were monopolizing in the industry.

 

DougRyanAmericanBankerManufacturedHousingMonopoly-postedDailyBusinessNewsManufacturedHousingIndustryProNews-575x237

While MHI’s SVP Lesli Gooch has denied the charge, Doug Ryan at CFED, and long time MHI member, George Allen, are among those who’ve raised the issue of monopolistic practices by MHI.

 

Trade and Mainstream Media Summary

So, there are several sources within manufactured housing that have made similar claims and allegations to MHProNews, and MHLivingNews, although they have routinely not provided the level of documents, direct quotes, graphics, and videos that provide evidence that our industry-leading trade publications have.

There are voices across the left-right media divide that have raised the issue of monopolization in general.  An example of that is a New York Times column, linked here.

There are more specific reports about manufactured housing that pointed a finger at Warren Buffett, Berkshire Hathaway, Clayton Homes, and their manufactured housing related lenders of 21st Mortgage and Vanderbilt Mortgage and Finance (VMF). Examples of those are linked below.

 

 

There are numerous others, but that’s sufficient to make the point.

This publication and this writer have reached out numerous times to Clayton, 21st, the Manufactured Housing Institute (MHI), and their attorneys for comments or reactions to the allegations that purportedly demonstrate antitrust violations. They have routinely declined commenting, either in writing, or live at industry events.

 

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But Richard ‘Dick’ Jennison – president and CEO of the Manufactured Housing Institute (MHI) has himself said that the industry could be doing 500,000 new home shipments. Which begs the question, during an affordable housing crisis, after decades of positive, third-party research praising manufactured homes, why isn’t the industry at record highs?

 

MHI CEO Dick Jennison’s Pledge – 500,000 New Manufactured Home Shipments

But what is arguably the definitive report ‘making the case’ for behavior that violates antitrust laws is linked here.  The Arlington, VA based Manufactured Housing Institute (MHI) is arguably not only ‘failing’ to be effective, but is arguably behaving in ways that de facto foster consolidation, which benefits Berkshire Hathaway and other ‘big boy’ companies.

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The Seattle Times, MHProNews, and even Clayton Homes’ local hometown media have each reported that federal investigators are digging into a variety of allegations involving manufactured housing brands connected to Warren Buffett led Berkshire Hathaway.

 

 

 

It should also be noted that each of the most recent MHI Chairman have been involved in some kind of scandalous allegations or legal issues.

 

ManufacturedHousingInstituteLogoMHIBoardOfDirectorsLogoMHIExecutiveCommittee

Joe Stegmayer/Cavco Industries, Nathan Smith/SSK Communities, Clayton Homes, 21st Mortgage Corp — the MHI executive committee reflects that 4 of the 5 named above arguably have ‘black hat’ style scandals associated with themselves and/or their respective firm.

 

A report that covers some of the same issues in more depth is found in the report linked from the text-image box below.

 

 

What thus far has been reported only by MHProNews and our sister site in trade or mainstream media are the dark money connections between Buffett’s donations which flowed to nonprofit groups that in turn often attacked manufactured housing in some form or fashion.

 

Prosperity Now, Nonprofits Sustain John Oliver’s “Mobile Homes” Video in Their Reports

 

Rephrased, Buffett and Berkshire money – directly and/or indirectly – has been on both sides of numerous battles in manufactured housing.  The effect has been to cause a steady stream of consolidations.

 

Rope-a-Dope – Preserving Access to Manufactured Housing Act, Mom, Dad, & You

 

The result has been a severe contraction, outlined by the Atlantic, of the number of manufactured home independent businesses.  While routinely those were ‘small businesses,’ they also included the fall of larger organizations, such as Fleetwood Retail during the timeframe since Buffett entered the industry. A number of independent producers of manufactured homes have been lost during those 15 years.

Summed up, what GuruFocus called the unethical strategic moat, and what the Nation called Warren Buffett’s dirty secret, is arguably part of a larger scheme that has harmed access to affordable housing, by hobbling the manufactured home industry when it was most needed.

 

UnderstandingWarrenBuffettCastleMoatMetaphorsQuotesDailyBusinessNewsMHProNews

Never forget that even during medieval times, castles and their moats were in fact breached.

 

Solutions? Congress, States, Other Investigators

The breadth and number of allegations of wrongdoing, while not proof in an absolute legal sense, are certainly just cause for Congress, state, or other investigators to take up this issue in an investigation.

It would be profitable to the nation at large, and thousands of independent businesses to press for congressional hearings and investigations on this matter.  By laying out in public the kinds of facts that HUD Secretary Carson, or reports like this one, has made about the proven value of manufactured homes, the stranglehold of Berkshire Hathaway could be broken.

Such a Congressional investigation can and should occur as a parallel to investigations by the Federal Trade Commission, the Federal Bureau of Investigation for possible violations of the RICO, the U.S. Postal Service for misuse of the mails, the Department of Justice, HUD, and other federal regulatory bodies.

As 2020 is on candidates’ minds, the issues outlined – largely bipartisan or nonpartisan in nature – could be useful in scoring points with voters. That may be especially true for the roughly 111 million renters – per Apartment List – and the approximately 22 million Americans who live in mobiles built before June 15, 1976 and/or the manufactured homes made since.

But once owners of conventional housing and other businesses understand that the lack of affordable housing costs the nation an estimated $2 trillion dollars in lost gross domestic product (GDP) annually, per third-party research, the support for action to break up the monopolistic behavior of Berkshire Hathaway in manufactured home should grow among those too.

ValuePenguinFearManufacturedHomesSolutionAffordableHousingCrisis

https://www.valuepenguin.com/home-insurance/fear-manufactured-homes-affordable-housing-crisis

See reports on that linked above and below.

 

 

But the bottom line is that acting to stop market manipulation is the right thing to do.  This has purportedly harmed thousands of independent businesses, and millions of our fellow Americans.

That’s the snapshot of the true state of the manufactured home industry, and how federal and other legal action could take positive, economically beneficial steps to investigate, and then appropriately punish such arguably treacherous behavior.

That’s this episode of “News through the lens of manufactured homes, and factory-built housing” © where “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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