Fleetwood in Expansion Phase
Riverside, CA, September 21--The manufactured housing industry has been in a steep decline for the last four years, and one of the few companies looking at it with a glass half full attitude seems to be Fleetwood Enterprises Inc. Fleetwood has said it will open two factories for manufactured homes this year. About three weeks ago, the company said it was building a new facility in Texas, probably the state that felt most of the pain from the lending crunch that caused the worst industry slump in four decades. Earlier this year, Fleetwood opened a plant in Georgia that was operational in time to produce replacement and temporary housing for victims of Hurricane Charley, spokeswoman Kathy Munson said. The plant, in Alma, is near the Florida state line. Revenue at Fleetwood's manufactured housing division has increased by double digit percentages in the last two quarters, Munson said. "The market is still flat," Munson said by phone. "But we're doing better than the industry, and we're picking up market share." Fleetwood's factory in Waco, Texas, will supply homes for Affordable Residential Communities Inc., a Denver-based developer. Munson said it's a company that recently went public, giving it capital to expand and to renovate existing communities. "We're a national company, and they're a national company," Munson said. The peak year for the manufactured housing industry was 1998, when builders shipped more than 372,000 units to dealers. Less than 131,000 were shipped in 2003, and the industry is behind that pace this year, according to the Arlington, Va.-based Manufactured Housing Institute. The slump was caused by a huge increase in delinquent loans, which forced many lenders out of the market. A flood of repossessed homes, which competed with new models, hurt manufacturers. The financing miseries helped bring on the 2002 bankruptcy of Conseco Inc., which paid $6 billion in 1998 for Green Tree Financial Inc., a specialist in manufactured home lending. There have been signs of improvement in the last 18 months. In April 2003, legendary investor Warren Buffett's Berkshire Hathaway Inc. bought Clayton Homes Inc. Buffett's interest in Clayton, one of the industry's top three companies, was called at least a psychological lift for the industry. However, Munson pointed out that Berkshire Hathaway also controls lenders, meaning its influence can be much more than psychological. In February, the government-chartered mortgage company Fannie Mae said it would back loans to consumers, enabling private lenders to get back into the market. Munson said U.S. Bank is now qualified to lend in 50 states, but the bigger impact may come next year. "We're still treading water. We haven't started sharing in an economic recovery," Jody Anderson, executive director of the Texas Manufactured Housing Association, said by phone. "Some new lenders are expected in 2005, and lenders drive all portions of the housing industry." Bruce Savage, vice president for public relations at the Manufactured Housing Institute, said by phone the only positive signals he's been getting are anecdotal. "We are getting some comments from retailers who talk about the traffic being up," Savage said. Sales for the industry might be tied closer to current and short-term economic trends than they are for traditional homes because of the socioeconomic thinking of the buyers, Savage said. Buyers are not usually swayed by 30-year interest rates. "Our industry is much more impacted by consumer confidence levels," Savage said. "People want to feel that their jobs are safe six months or a year from now, and there's a general feeling the economy is moving again." The market-share leader is Auburn Hills, Mich.-based Champion Enterprises Inc., and Colleen Bauman, Champion's director of investor relations, said repossessed units and other indicators appear to be stabilizing.
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