In 1958 when Marge didn’t get pregnant as hoped, I was drafted into the army, but got two breaks. I was sent to Alaska rather than Korea. That meant Marge could come up and live with me in Fairbanks if we could afford housing. We couldn’t. Apartment rent was so high there were more mobile homes per capita than anywhere.
Mid-February I found an old trailer that had to be moved and bought it for $500. It was a crappy 1950 23-foot travel trailer nailed together having a nodding acquaintance with insulation. We managed getting it to a trailer park having plumbing in heated permafrost tunnels and were miserable until June. After working all summer fixing the old trailer and attaching it to an old “wanigan” to add some space, we spent a cozy second winter (our son was born nine months after Marge’s arrival) and decided there was a bright future for mobile homes. A recently graduated industrial designer, I saw trailers were homely, inefficient things. We both like small town life, so after my discharge we headed for Elkhart, Indiana—home of the industry. A little research had suggested a brand new mobile home sold for approximately the value of its materials. How could that be?
I found a job at Richardson Homes, a leading company having the largest mobile factory known. I’d assured Marge there’d be beautiful mobile home parks inhabited by senior industry executives where we could choose among many options. Not so. The mobile home parks around Elkhart were typical Mom & Pop operations seen across the nation. Just two of Richardson’s 60 office employees lived in mobile homes. How could that be?
We bought a new Richardson for cash, had some of the guys build us an add-on bedroom, installed awning and storage shed and had it set up in Midway Mobile Home Park, between Elkhart and Goshen. With good neighbors, a fenced yard, paved streets, congenial management and decent facilities—$21 a month rent (in today’s dollars, $180!)—life was good! Half the park residents were seniors and half were young families like us, saving to buy a house.
A new truth was emerging. Except in places like Florida and California, where developers created upscale parks, the dreaded trailer stigma was rearing its ugly head. Most parks were aging and unable to accommodate mobile homes growing too big for existing lots. The homes improved and grew every year insuring depreciation. Manufacturers paid scant attention. The market boomed, construction and prices came down while profits increased. How could that be?
The industry was fragmented, and no one was at the helm. Richardson shipped homes from coast to coast, but held only five percent of the mobile home market. Skyline and other big producers eked out as much as 10 percent, but that was enough. The answer to my simplistic Kansas question was easy. Yes, the industry could and did deliver mobile homes everywhere and sold them at about the retail value of their materials. As original equipment manufacturers, they bought most materials directly, delivered in truckloads, paying thirty days same-as-cash. Efficient production processes converted that material to homes so fast that many were shipped to dealers before the materials were paid for. Dealers used “floor plan” finance to pay for homes upon receipt. In theory, mobile homes could be built without the use of cash! In practice, most manufacturers were as efficient as wholesale distributors. Manufacturers and dealers eliminated the middleman and sold homes retail for about the retail value of the material used in construction. The homes Richardson built in 1960 were quite good, with many still in use. By 1970 they were much better and certified by American National Standards Institute (ANSI 119.1) to comply with the performance standards of the National Building Code.
New parks were improving, too. The industry’s association encouraged new park construction and became the nation’s biggest mobile home park developers. But home construction still outgrew park growth as communities no longer wanted either. Yet no alarm bells went off. Manufacturers and dealers shifted focus to private lots, scattering mobile homes willy nilly across the countryside, with too many on trashy lots in pastures and further dinging the young industry’s fading image. Zoning boards said, “Enough! Those shabby trailers won’t spoil our town!” And the populace agreed. NIMBY reigned. Manufacturers increased production. Dealers kept buying. Life was too good to step back and ask what we were doing. Suppliers, manufacturers, banks, dealers, insurers and park operators were all coining money. Companies were going public left and right—darlings of Wall Street. And nobody was calling the shots.
It all came crashing down in the 70’s. Half the industry disappeared. Only the strongest survived, and only because building homes in factories is so doggoned efficient.
One strong survivor was Clayton Homes. Starting as a dealer in the 60’s, Jim Clayton focused on the big picture. He consolidated many components of the industry under one name—his. A herculean task, but the nascent industry was so inefficient he was able to pull it off, succeeding so well he attracted the attention of Warren Buffett. Buffett shared the view that the whole housing industry was built and operated by amateurs. And Berkshire Hathaway invested the bucks to greatly expand Clayton’s vision. Clayton keeps growing as competitors fade away, feeling bereft of their birthright. How can that be?
No magic; no secrets, no cheating needed—just sound management capitalizing on the best housing system the world has yet seen. No one else has matched Clayton/Buffett’s moxie, so they can breeze along with little competition leaving the other half the industry in the dust.
It’s an unfortunate situation for the entire industry. Shed no tears for Clayton or Buffet. America’s largest homebuilder, they’re diversifying into other aspects of housing and need no help. The rest of the industry needs Clayton more than Clayton needs them.
I’m just a lonely aging voice, but I’ll accept my share of the blame for creating this stigmatic mess. It’s way past time roll up our sleeves, work together and find ways to restore the momentum lost 50 years ago. It can be done with or without Clayton, but not without focused leadership and united effort.