News & Notes Archive - May 2009
More HUD-code builders closing their doors as recession takes its toll. Conditions likely to get worse before they get better. More about Fleetwood’s Chapter 11 bankruptcy.
Springtime is usually a busy season for manufactured home builders as warm weather encourages home shoppers to visit sales centers. But with very few exceptions such as Oklahoma and some areas of the Southeast, the recession continues to depress home sales of all kinds, including new manufactured homes. As a result, some of the smaller, less capitalized builders are suspending operations or going belly up. Here’s a brief rundown of this month’s developments:
- Homes of Merit, the Bartow, Florida subsidiary of Champion Enterprises, Inc. is closing. This operation built homes almost exclusively for land-lease communities. A separate Homes of Merit plant in Lake City, FL continues, focused on building family market housing for street retailers in FL, GA and SC.
- Carolina Building Systems, another Champion Enterprises, Inc. subsidiary, has ceased building HUD code homes altogether and will focus on modular production solely. Prior to this, 98% of its output was modular, with only a small number of HUD homes built as a private brand for Jensen Communities, owner of several upscale land-lease communities on the Atlantic seaboard.
- Silver Creek Homes (Henrietta, TX) has shut its doors. For at least one retail sales center, the builder will not be missed: “They were never committed to taking care of their customers.”
- Laurel Creek Homes (Phoenix, AZ) closed May1st, bringing to an end a spirited effort to gain a share of the coveted Southwest market with a combination of park models, HUD homes and commercial modular buildings. My sources report Laurel Creek’s manufacturing license was suspended on March 27th. as a result of its $100K bond cancellation. In addition, the license was due for renewal on March 31st. and was not renewed. Laurel Creek had been working with potential investors and had planned to obtain a new bond and renew its license, but the investors backed out and cash flow roadblocks prevented them from obtaining a new bond.
As for on-the-ropes industry giant Fleetwood Enterprises, Inc., on May 18th. the company asked for court approval to sell most of the RV side of its business to New York Private equity firm American Industrial Partners L.P. for $53 million, subject to higher offers at a bankruptcy auction scheduled for June 18, 2009. As for Fleetwood’s manufactured home division, the company continues to seek a buyer but to date has found no one deemed suitable. For home shoppers would be well advised at this juncture to leave Fleetwood off their list of homes to consider. For details see the beginning of the lead story for my March 2009 News & Notes.