Wednesday, April 29, 2020

How Will COVID-19 Impact Modular Housing Industry?

The bearers of bad news are never popular and COVID-19 has made bad news bearers of everyone as it is the only topic of concern for modular home factories and modular new home builders across the country.

Yesterday the price of oil dropped to -$37 a barrel. That means that the oil refineries will pay you to store their oil. President Trump just announced he is replenishing the Federal Oil reserves with 75 million barrels. Smart move.

Now if only every modular home factory had a 100,000 barrel storage tank in their yard, many of them could take comfort knowing they have a potential pot of gold just outside their office window.

But that’s not going to happen so let’s get real.

One of the first things that happened to every industry has been the delay of materials into the factory which delays production. Most factories I’ve talked with don’t seem to have shortages at the moment. Soon however, factories will see future material orders shorted as most factories will reopen at approximately the same time.

Supplies from offshore will be hard hit for quite some time until they make their way back into the supply chain and the law of Supply and Demand will rear its ugly head once again. And let’s not forget Murphy’s Law always lurks around waiting to pounce.

Moving onto the production floor, workers will be required to practice safe distancing and probably told they must wear masks. It will be awkward for many production line workers at first but expect it to become the new normal.

For modular factories doing 5 line moves a week, this should only be a minor inconvenience but a lot of factories do that number or more a day which could actually slow down the line.

Development money will be harder to obtain. With the billions and billions of dollars the Fed and state governments are dishing out, there may be a shortage of funds to finance affordable housing projects, college dormitories and even hotels which are not expected to see pre-COVID-19 occupancy levels for 2 years.

Look for legal disputes to increase between factories, builders, developers and customers. Many legal contracts in the past excluded time delays caused by viruses and disputes worth billions of dollars could end up in court battles for years.

One of the most important things suppliers, factory owners and builders can do is to monitor each other’s behavior and keep a lookout for changes that could tank them. Extreme numbers of layoffs, all phone calls going to voicemail and no replies to emails should be warning signs that something could be amiss.

Today it’s hard to write any type of article without mentioning COVID-19 and if that makes me one of those awful “Bearers of Bad News”, I apologize.

Rest assured however, we will survive this as we are a nation of entrepreneurs that will soon be putting COVID-19 behind us and start building projects and new housing to even greater levels than anyone thought possible.

Gary Fleisher is a housing veteran, editor/writer of Modular Home Builder blog and Modular Construction Industry Observer and Information Gatherer

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