Ometimes a book appears at the right time
written by the right author. DUELING
CURVES, The Battle for Housing is
such a book and Bob Vahsholtz is such an author. Manufactured housing is at a crossroads,
and in this book, Vahsholtz spells out why, and suggests what can be done.
Manufactured housing’s production level
has reached lows last seen around 1950. Industry share of the single family
housing market was a third of the total in 1973, but has since eroded to just
seven percent. In many ways it appears to be an industry on life support.
Nonetheless, conditions point to an industrialized housing renaissance—a dire
need for affordable housing, growing desirability for efficient, sustainable
homes, and a continuing awareness that construction efficiency has been best
achieved in a factory setting.
Through the years there has been no lack
of commentators setting their sights on factory construction as housing’s
ultimate frontier of efficiency, but lacking a clear understanding of how that
potential can be realized. There’s also no shortage of conventional home
builders who incorporate more and more pre-fabricated components, yet fail to
improve housing productivity. Manufactured housing’s advantages have been
clearly demonstrated, but explanations for its recent malaise have been
piecemeal and rare—until now. This book’s central theme is how learning curve
created manufactured housing’s success, and how that process was stymied by
housing’s inherent and compounded volatility.
has been on his own learning curve with manufactured housing since he bought
his first home—a truly mobile, used, 184 sq. ft. California-built unit as an
affordable option for his family during a deployment to Alaska.
Educated as an industrial designer, he saw potential and sought out
manufactured housing as a vocation. After finding a design position with a
leading manufacturer in the industry’s Indiana
home base, he bought a new mobile home right off the production line—just one
other member of the office staff of 62 lived in a mobile home. He went on to head
the largest design staff in the manufactured housing industry. Subsequently Vahsholtz
and an engineer friend formed the industry’s leading design and engineering
consulting firm, specializing in modular systems. The team grew and ultimately
became operational, successfully managing a huge modular manufacturing facility
as a division of Bethlehem Steel.
Vahsholtz’s evolving career coincided
with the glory years of manufactured housing, where from 1960 through 1973 the
industry’s production rate quintupled, selling prices plunged, quality matured
and profits soared. When it all collapsed as a result of American housing’s
inherent volatility, he held a variety of positions including hands-on factory
operations as well as head office responsibility for design, engineering and
manufacturing. That heady rise and catastrophic fall provided author Vahsholtz
a first-hand look at what is possible—and what is not. That education, from the
school of hard knocks and unanticipated consequences, equally informs
Vahsholtz’s analysis of the industry as an alternative interconnected, mutually
dependent housing system. It all adds up to a credible overview, explaining how
the industry got to where it is today, the potential that remains, and a
veteran sage’s context for finding a way forward. DUELING CURVES provides thoughtful answers regarding what went
wrong, and a viable prescription for the future.
A house is a simple thing, but the
housing industry is highly complex and surprisin
gly inefficient. Manufactured
housing is also complex—far more than just factories that build houses. It’s a
web of suppliers, assemblers, retailers, financiers, transport systems,
community developers and set-up teams coordinated by specialized leaders,
managers, designers and engineers. All of these components have come together
to create a housing process far more efficient than the traditional stick
building process. Until recently, none of the industry’s segments played a
dominant role, nor was any company or group in a position to apply strategic
planning to the overall manufactured housing process.
As a consultant and as a corporate
strategic planner, inside and outside the industry, much of Vahsholtz’s career
involved synthesizing pieces of information into coherent business strategy—thinking
critically about the unique challenges and ultimate requirements for sustained
success. With broad exposure to the entire manufactured housing process, he
came to understand the critical role of leadership at both corporate and
industry levels. Too tight a focus on management alone effectively blindsided
otherwise exceptional companies.
CURVES shines light on
an overlooked area of enduring business success—the e
volution of efficacy and innovation
through strategic feedback that leads to continual product improvement
simultaneous with reducing cost—learning curve. Understanding that process and
its potential is critical reading for those in operations, management, and
leadership roles in all branches of industry.
Manufactured housing serves as a useful
context for examining the benefits and challenges of learning curve in
practice. From 13th century homes designed around open hearths to
the failure of Edison’s housing venture, the improbable
success of Sears kit homes, right up to the cutting edge factory-built homes of
Curves provides a critical history of housing. That history is
fascinating, and has broad applications, but does learning curve matter moving
forward? Indeed, will the manufactured housing industry be relevant in the
years that come? Vahsholtz eloquently and systematically builds the case that
the potential is there. A solid foundation has been laid. Ultimately
manufacturing efficiency must surely prevail against long-standing housing
handcraft traditions. Whether success is at hand or awaits future attempts
depends upon the current industry’s ability to seize the opportunities that
The recent financial crisis and ensuing
fall in home prices served to release some pressure on a long-term and frightening
decline of affordable U.S. housing.
Other economic ills such as a shortage of employment opportunities served to
draw attention away from the plight of low income families seeking housing. For
decades, there has been an affordability gap, with the bottom 40 percent of
households increasingly unable to afford U.S.
housing prices. Housing incentive packages were abused, are essentially gone
and housing prices are headed up. New home prices continue their upward spiral
in both price and size. The bottom 40 percent of families, with an upper income
level of $40,000, is increasingly excluded from the housing market. Credit
standards are tight and as existing, distressed for-sale homes are worked
through the system, options for the working poor diminish f
affordability is near an all-time low. Stick builders are not focused on
housing the bottom 40 percent, but manufactured housing has the potential to
satisfy that huge market.
In his research, Vahsholtz found that the
learning curve that is inherent in competitive factory production created
manufactured housing’s edge during a period of strong housing demand. But that
great strength has been eroded by housing’s inherent volatility—those wild
market swings that have always been a major factor in attaining efficient
housing production. Stickbuilders have always faced that kind of volatility and
found ways to cope. Manufacturers are still learning and devising methods of
smoothing the production cycles. Manufactured housing’s cost advantage over
stick builders endures. Despite losing 90 percent of its peak volume
manufacturers emerged with their quality improved and price advantage intact.
Affordability is not the only ace in the
manufacturers’ deck. They provide good jobs for ordinary Americans and build
homes at unmatched efficiency in use of materials. In addition to their price
advantages those homes are green, creating nominal production waste, while
providing efficient and ergonomic living space and optimum energy efficiency.
Such factors appeal to today’s small families, retirees on limited incomes, the
baby boom generation and millennials desiring a transitional, sustainable,
small-is-better housing paradigm.
Vahsholtz began this book with a desire
to demonstrate the power of learning curve but with some pessimism about the
future of the manufactured housing industry. His research, however, affirmed the
industry’s immense potential today, and serves as a call for strategic
thinking, leadership and united action to move forward. Success will not be attained
through a bold breakthrough, but rather the hard work of incremental innovation
and application applied to specific markets and niches that play to
manufactured housings’ strengths. The industry’s consolidation around a small
group of dominant and efficient manufacturers is identified as the prime cause
for optimism. Leadership potential exists in the form of Clayton, Cavco, and
Champion. In ad
dition, smaller companies such as Blu Homes can explore windows
of opportunity for continued development of learning curve and innovation.
Today’s environment of focused manufactured housing competitors holds promise
of evolving strategies to attract new markets, distinguish itself from
stick-built competitors and lead the way toward affordable and attractive housing
Read to understand learning curve, and
for a history of manufactured housing, but be prepared to come away inspired
about the future of factory-built housing and a blueprint for getting there.
Baker Program in Real Estate
hy hasn’t housing made the tremendous advances over the past few decades
that, say, the automotive, aircraft, medical and electronics industries have?
Well, it may be that housing is carrying thousands of years of social, political
and cultural baggage that these other industries need not cope with. Sure,
there have been hundreds of technical advances with what we attach to a house
but not so much in how we create a house.
One sector of the housing industry that did see significant growth, as well
as meaningful technological and process development, was mobile homes in the
1950s and 1960s. Throughout this period our author was intimately involved with
the design development of this product, and with the people and companies that made
it happen. As such, he brings us a unique perspective on the who, why and how
this strange concept came to be and where it might be going. Later as a
principal of the nation’s leading industrialized housing consulting firm, he
had the opportunity to grapple with the generally futile efforts of our largest
corporations to industrialize the process.
Using learning curve theory, he puts forth a convincing case that the mobes
had it right the first time and remain viable today. We only need the kind of
leadership and savvy management of the early years, but without its
fragmentation, to once again mass produce affordable housing.
Retired from 50 years with the mobes and