News & Notes Archive - February 2008
Fleetwood Enterprises to pay $75,000 fine after federal regulators conclude its Woodland, CA plant was building unsafe, defective homes. Company agrees to re-certify plant, notify customers, and correct defects for homeowners.
In a January 30, 2008 media release, the U. S. Department of Housing and Urban Development (HUD) announced the agency had reached a settlement with Fleetwood Enterprises, Inc. after HUD inspectors found that since 2005 Fleetwood’s factory at Woodland, California (near Sacramento) had been turning out homes with significant durability and safety risks. A total of 77 defects were discovered, including problems with proper ventilation and appliances. In once case, HUD inspectors found the defects were potentially life-threatening.
As part of the settlement, in which Riverside, California-based Fleetwood did not admit any wrongdoing, Fleetwood agreed to pay a $75,000 civil penalty, re-certify the plant, post a $125,000 performance bond as an incentive to improve plant performance, notify consumers of the risks, and remedy the defects for all homeowners.
Significantly , this is the first settlement in the history of HUD’s oversight of the manufactured home industry (which began in 1976) in which HUD has required a manufacturer re-certify its plant and pay additional penalties if it can’t meet performance goals. Until the plant is recertified, HUD will supervise the plant’s quality control. The plant could face a $125,000 fine if, following its recertification, it failed either of two subsequent quarterly inspections.
My comments: Score egg-on-its-face for Fleetwood, especially since it merits only a middling construction rating to start with in The Grissim Ratings Guide to Manufactured Homes. This sprawling national company has 19 plants scattered around the U.S. (two in CA, the other in Riverside), and the settlement begs the question, If the company’s internal quality assurance and supervision permitted shoddy work to slip through in one factory (and for so long), could poor performance be happening in some of its other factories?
As for HUD, I’m impressed that the agency has finally begun to take its enforcement responsibilities seriously, and is going after violators with penalties that have some real bite to them. I know of at least one manufacturer in the southeast that recently closed its doors forever after HUD came after them with a long laundry list of serious defects. This is good federal regulation, as it’s meant to be. Kudos to HUD.
Fleetwood Enterprises, Inc. (which includes its vaunted line of RV products) has been struggling of late as it fights declining RV sales (blame high gas prices), and a continuing anemic industry-wide demand for HUD-code homes.
For its part, the company says it has changed management at the factory and has remedied all real or perceived issues. With new plant management aboard and close HUD supervision, I’m sure they have. I’d be comfortable now recommending the Woodland, CA plant as an exemplary facility in which to have your home built. As I make clear in my two guides, quality can vary considerably from plant to plant, largely because of the quality of the available work force in the region, and the quality of management.
To be fair, one thing I’ve always liked about Fleetwood is, over the years the company has come up with some great home designs and innovative features (its Entertainer series, with home entertainment rooms and wall-mounted TVs, was an instant hit, and much copied). I know of one spec builder in California who placed a two-story Fleetwood home on an in-fill lot in Crockett, and the home is gorgeous. The factory did a great job. If you choose Fleetwood, and add options and upgrades to bring the home you order up to a higher construction rating, and you have a reputable dealer backing you–and these are important ‘ifs’–you’ll do fine.
Why the manufactured home industry is languishing despite a favorable market environment, and why this is a great time to buy a HUD-code home.
Ever since the subprime crash began last summer in the mainstream housing market, some prognosticators in the manufactured housing marketplace predicted many first-time home buyers who have been shut out of the site-built home market because of tougher credit standards would flock to manufactured housing, because these homes are generally well built and certainly more affordable.
Makes sense on paper. With the median price of a doublewide manufactured home at $65,000, and combining that with the cost of land and site improvements, homebuyers should find affordable land-home packages in the $115,000 to $160,000 range. Compare that with the current price of an existing home of $218,000 (down from $222,000 in 2006).
But the up tick in manufactured home sales hasn’t materialized. Why? In an article posted earlier this month on the popular construction industry web site, Reed Construction Data (reedconstructiondata.com), writer Jim Haughey reports that the manufactured home industry has been unable to capture any of these potential buyers, “even though manufacturers have improved their product, and dealers have eliminated the worst of their former [abusive, predatory] business practices.” The reason: “...the lingering bad reputation for quality and ethics earned a decade ago is preventing their expansion in a very favorable market environment.”
Comment: I agree. Hits the nail on the head. And that’s why I believe savvy homebuyers who realize things have vastly improved in the manufactured home marketplace (both in quality and customer service), are in a buyer’s market. If you have good credit, and especially if you don’t have to sell the home you’re living in before you buy your next home (which could take forever), you’re in a great position to take advantage of very low mortgage interest rates and purchase a terrific, new home–aided, need I add, by the essential advice and recommendations of the Grissim Guides (end of commercial).
Weighing in on the challenges facing the modular home manufacturing industry. Grissim offers his views for a magazine article
Note: Although this web site and my two consumer guide books deal exclusively with manufactured homes (a.k.a., mobile homes or HUD–code homes), I was recently invited by an industry magazine to share my views about the future of another type of factory-built housing-modular homes. Because the article may provide helpful insights to homebuyers looking at both manufactured homes and modular homes, I'm making it available here. The piece is quite long (3,700 words), so I've converted it into a pdf format. Just click on the link below to get the article
