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Avoiding the Perception and Reality of Discrimination

August 3rd, 2011 1 comment

In a disappointing scenario being played out in disaster-stricken communities across the nation, Federal Emergency Management Agency (FEMA) policies are resulting in de facto discrimination against HUD Code manufactured housing as both temporary emergency and permanent replacement housing.  At the same time that these policies are unnecessarily complicating badly-needed relief for disaster victims, FEMA, on June 7, 2011, hosted a day-long meeting in Washington, D.C. to explore, discuss and otherwise consider the details of a possible “small footprint” temporary HUD Code emergency home design.  Given these two seemingly opposite directions, a good many HUD Code manufacturers, anxious to meet the current pressing need for post-disaster housing with the most affordable, transportable and rapidly deploy-able homes available, while facing historically low productions levels, are starting to wonder exactly what is going on.

What is “going on,” is that FEMA, facing an immediate need for both short-term emergency relief housing and permanent replacement housing in communities where the existing housing stock and infrastructure has largely been decimated, has, for now, seemingly retreated from the use of new federally-regulated HUD Code housing as a primary source of emergency housing.  Instead, displaced disaster victims have been put-up in rental housing as much as an hour away from their former homes, or in non-HUD Code modular units.  Media reports, for example, indicate that FEMA is currently constructing up to 324 three-bedroom modular homes in Kansas City, Missouri, that will be sited on city-owned land in the north part of town, for some 624 Joplin families and individuals in need of housing.

In part, this appears to be a reflection of specific policy choices by FEMA.  In a May 31, 2011 Associated Press article regarding Joplin, Missouri relief housing, a FEMA spokesperson stated, “despite the distance, putting people in permanent housing is preferable to trailers….”  Another FEMA spokesman commented  that “the agency will consider bringing trailers to Joplin if enough existing housing isn’t available.”  Consequently, FEMA policy seems to be that today’s HUD Code manufactured homes, despite serving as “permanent housing” for millions of Americans and being regulated under federal law as residential dwellings and not “trailers,” are somewhere down its list of options to house disaster victims.

In other places, like Cordova, Alabama, FEMA has failed to overrule — or even object to — local officials who have barred the placement and use of HUD Code manufactured homes as emergency relief housing based on local ordinances, even though such emergency housing is provided with federal tax dollars by a federal government that, under the Manufactured Housing Improvement Act of 2000, is supposed to “facilitate the availability of affordable manufactured homes.”  According to news reports, FEMA’s official comment on this HUD Code  housing ban affecting large numbers of displaced disaster victims, was that “it’s a local issue….”  Whether this is an outgrowth of a “second choice” policy for HUD Code housing or simply unwarranted deference to biased local officials, the result is the same — discrimination against HUD Code manufactured housing that hurts both disaster victims and the industry.

In the meantime, against this backdrop, FEMA, at its June 7, 2011 gathering, devoted an entire business day to a discussion — with industry members — of hypothetical “small footprint” one-bedroom HUD Code units that FEMA might be interested in purchasing under a “possible” future contract.  This, in turn, has led to the creation of  task forces, committees, discussion groups and the like, and meetings of those groups, to explore the particulars of such units, while, at the same time, it was apparent from the various FEMA presentations, that there is considerable confusion and disagreement, within FEMA, regarding the most basic aspects of such a unit, including: its size and configuration; its compliance with federal accessibility criteria; possible mandatory compliance with the International Residential Code; the installation and storage of such units; and the possible use of such “small footprint” homes as permanent housing.  And all this is if FEMA goes forward with such an initiative at all — with FEMA officials cautioning that nothing has yet been decided.

The bottom line for now, is that while there is the appearance of discrimination against new HUD Code manufactured housing in the field for both relief and permanent replacement housing, the industry has been left to chew over the details of a possible new opportunity that may be, could be, or might not ever be.  So, what to do?

Let there be no mistake, the industry can and should continue to work with FEMA.  The HUD Code industry has traditionally taken the lead in providing — on a quick, timely and flexible basis — safe, decent and readily deployable relief and replacement housing for disaster victims.  The industry should continue to pursue this role vigorously with FEMA at the policy level, which is why MHARR participated in the June 7, 2011 FEMA meeting and the Association has already started to follow-up on ways that the HUD Code industry can provide even more assistance to FEMA and other government agencies responsible for post-disaster relief.  The HUD Code industry already has the knowledge, know-how and experience to  provide whatever FEMA and disaster victims need.  But it must also address current FEMA policies.  Very simply, FEMA must be urged to change policies that have resulted, effectively, in discrimination against HUD Code manufactured housing and to re-commit to the use of HUD Code housing — of all types — as an equal participant in its federally-funded programs for both short-term emergency housing and permanent relief housing.

In MHARR’s view, the HUD Code industry has long been at the forefront of helping government provide both temporary relief and permanent replacement housing for victims of natural disasters, and with appropriate policies in dealing with FEMA, there is no reason why it should not continue in — and even expand — that role. # #

Danny D. Ghorbani is President of the Manufactured Housing Association for Regulatory Reform.  MHARR is a Washington, DC-based national trade association representing the views and interests of producers of federally regulated manufactured housing.  Danny can be reached at 202-783-4087.

The IBISWorld Controversy and the Manufactured Housing Industry

April 13th, 2011 3 comments

Exclusive MHMSM.com Industry In Focus Report

The March 2011 IBISWorld report that cited manufactured home dealers as a ‘dying industry’ has made news inside and outside of the manufactured housing industry. MHMSM.com has contacted a variety of Industry leaders and personalities from coast to coast to get their comments. On-the-record comments have included national association leaders, as well as professionals in factory-built housing from the manufacturing, retail, communities and lending sectors.

Messages, comments and calls to MHMSM.com from manufactured home industry professionals dribbled in at first, and then gained in volume as publications such as The Atlantic and Business Insider covered the IBISWorld report. As an example of mainstream media coverage, a TV station in Houston reportedly called a regional firm to interview them about the developing IBISWorld story.

Derek Thompson, associate editor at The Atlantic, penned a commentary that included these words:

“At the center of a perfect storm of boomer burnout, a brutal recession,
and a rapidly changing industry, the mobile home retail market
could be the worst industry in America. Here’s why.”

Photo from The Atlantic
Photo from The Atlantic

“If I asked you to name America’s least fortunate industry, your mind might go to record stores, obliterated by on-demand apps; or photofinishers, left in the cold as digital cameras turn Americans into our own photo editors; or fabric makers, where business is booming … in Shenzhen, China.

“But when it comes to unlucky industries, it’s manufactured home (aka mobile home) retailers who really hit the trifecta. First they missed out on the housing boom. Then they felt the gut-punch of the recession. Now they might yet miss out on the recovery. That makes them America’s fastest dying industry, according to a new report from IBISWorld.”

Paul Bradley with Resident Owned Communities USA (ROC USA) was one of the first in the manufactured housing world’s leadership to publicly respond to this IBISWorld report. Bradley wrote a feature article for MHMSM.com that analyzed the IBISWorld report. Quoting from Bradley’s analysis:

“The (IBISWorld) report states ‘demand is dwindling’ and ‘sales are stagnant because the industry is not innovating, and that sales are likely to continue falling in the coming years.’ They go on to say, ‘Manufacturers have made cosmetics changes to manufactured homes, but they have not been significant enough to alter their life cycle stage.’ The report puts MH retailers in the ‘Industry stagnation’ category of declining industries.

“Are you kidding me? These are ‘deeply researched answers’?

“First, the headline clearly comes from their marketing division as a means of grabbing headlines. The research is not about a dying industry but a declining industry segment – one of two long-standing distribution channels in the business.

“With MH shipments in 2010 at 50,000 or 20 percent of 2000 levels, it’s not news that retailer revenues over that period declined. On that data, I’m surprised establishments are not down more than 56 percent. It suggests that the segment has excess capacity and additional closings are likely.

“Most surprising to me is laying the blame at the feet of manufacturers on the issue of design! From a ground-level market vantage point, that’s misplaced.

“The industry’s great declines came about as a result of, first, an industry-created chattel collapse where the seeds were sown in run-up to the 373,000 shipments in 1998. The collapse, and the repossession overhang which followed, began the decline like a skilled boxer’s well-placed left jab.

“The right overhand came next in the form of aggressive sub-prime and predatory lenders in the site-built market. In that run-up, traditional MH buyers – who were harder to finance for MH as a result of the chattel collapse – were lost to site-built housing in an eerily familiar boom market.

“Dazed by the right hand blow to our collective heads, the left to the body that has people reeling now is the regulatory reaction – the SAFE act, etc. – to the clearly consumer-eating lending practices of the last decade.

“The results of this three punch combination are declines of the magnitude widely reported and felt, and like a good whack, the pain lasts a while.

“Innovation in housing design, however, is not the industry’s chief failing.

“For those of us in the community market segment, in fact, innovation in new homes is a small issue – not a non-issue but a mere shadow of the aforementioned home financing issue. In fact, we are seeing demand for replacement and in-fill homes but only where we are able to arrange decent home financing. People want more efficient homes and the cost savings with new EnergyStar homes can be dramatic based on buyers with whom I’ve spoken.”

(Editor’s Note: The complete analysis by Paul Bradley can be found at this link.)

Other commentary in the form of articles proposed for publication, private and public comments followed. Thayer Long at the Manufactured Housing Institute issued this email as part of his response:

“State Execs & MHI Board:

“A very well articulated response to the IBIS report from last week by Paul Bradley which was just posted on www.MHMSM.com.

“I’d also just add that the sentiment at the Tunica Show, the Louisville Show, and the expected strong turnout at the Congress & Expo and the Tulsa Show and York Show later this month certainly don’t indicate this industry is going anywhere.

“Tony/Paul – I hope you don’t mind me sharing. We’ll see you in Las Vegas. Thanks for your support.

“Thanks-

“Thayer”

MHMSM.com spoke with Danny Ghorbani at the Manufactured Housing Association for Regulatory Reform (MHARR) and to Thayer Long at the Manufactured Housing Institute.

Danny Ghorbani stated in a telephone interview that his comments were not the official position of MHARR, but represented his own views on the IBISWorld report and related.

Ghorbani stressed that the IBISWorld report represented the “failure” of “the post-production sector of the Industry” [meaning, MHI] in “serving that segment of its membership.”

The MHARR official then referenced two previously published documents that do represent MHARR’s official position, which were previously published on MHMSM.com in August and October 2010. These MHARR Viewpoint articles called for ‘the post-production segments’ of the manufactured housing industry to form their own national association; a thinly veiled vote of no-confidence from MHARR towards MHI.

MHMSM.com spoke extensively with Thayer Long at the Manufactured Housing Institute (MHI). The typically soft-spoken Long was quick to respond.

Long was at times tongue-in-cheek, at other points direct in his comments about the IBISWorld report and Ghorbani’s often pointed comments on the matter. It should be stressed that Long’s comments, which follow, should be viewed as his own, and not necessarily reflective of the official view of MHI.

In an exclusive interview with MHMSM.com, Long shared the following thoughts:

Thayer Long:
“If it is a dying industry, then ok, then I guess I quit! And if Danny wants to blame it on us [MHI], okay, what else is new? … I am still struggling to figure out what he (Danny Ghorbani) is doing right now. Name one thing that he has accomplished … in the past three years? What has he accomplished…? I would love for you to think about that and get back to me. What has he accomplished? We [MHI] win and lose some battles. But at least we try. We have accomplished some things. Except, except, except… [MHARR]…nothing….

READ THE FULL INDUSTRY IN FOCUS REPORT