By Tim Aurentz
Business Review ReporterCharles M. Farrell's
family got into modular-home business in the late 1970s when the industry was in its
infancy and few people were familiar with the new concept in housing.
" Some people still think 'modular' and 'mobile' are the same thing, "
Farrell said, admitting that viewed from the street single level modular homes built 20
years ago looked much like mobile homes.
Exterior appearance don't tell the whole story, though, because " it's what you
can't see on the inside that counts, " he said, referring to the more solid, stable
construction of modular homes, which, when fully assembled are anything but mobile.
And the modular home styles today range from those 1,100-square-foot, single story
styles that once dominated the market to multi-story structures about 2,500 square feet.
Still many potential buyers don't realize the flexibility Farrell Homes Inc. has in
customizing a modular house to suit clients taste and needs, even though each house
is built in sections in a controlled indoor environment and then shipped to the buyer's
lot.
"We don't use manufactures generic plans at all, " said Farrell, who now
heads the company he started with his father, Charles D. Farrell, in mid 1980's. " We
build to satisfy this market. Educating buyers, then, is 1 of the Grafton company's
primary goals. So much so that Farrell encourages his customers even those who come
to him because of a recommendation from a satisfied client to shop around.
"It's technical- type selling, " Farrell said. " People think everybody
has the same product [ in this industry]. "
Chauncey Strevell, assistant director of the Troy manufacturing field office of the
State University of New York's Small Business Development Center, said such a sales
technique can build loyalty.
"Consumers can be so savvy now, " he said. " It's a wise move. He's
showing customers that he thinks his products are the best of the best, and he's showing
that he's prepared to answer questions. "
Farrell homes products are different, Farrell said, because the company has been made
able to push the two manufacturers it deals with to develop new products and do more
custom work.
That influence hasn't come by accident, however.
Farrell decided that in order to be profitable
and grow, his company would have to rely on volume. And because price is a primary concern
for most homebuyers, he cut his margins in order to produce |
the volume, which in
turn provided the leverage needed to influence manufacturers. Cutting margins can be a
dangerous move, Strevell said, but if it has produced the desired growth and profit
results, then it was worth the risk.
"Obviously, it's a strategic move, " Strevell said. " It's an applicable
strategy. "
The move to thinner margins was necessary because of competitive nature of the
construction industry, Farrell said.
"This is a business you can get into relatively easy, " he said. " There
are 'kitchen-table' builders who build two or three homes a year and have other jobs.
There are a lot more of these guys than people realize. "
Farrell said it took about 2 years to realize the gain he expected from lower prices
and larger volume, as he expanded his market with additional types of modular homes. The
company initially focus on carving out a niche selling mid-range houses, but the push for
volume enlarged its scope to include the full spectrum of possibilities, from the small,
single story modular homes to larger Ranch, Colonial and Cape Cod styles.
Farrell homes has also sold some modular duplexes, the 99 percent of its business is in
single-family homes.
While Farrell customizes the houses he sells, he is limited to some degree by
Manufacturers' capabilities and because of some point the sections of the houses will be
transported over highways. The modules or "boxes" as Farrell calls them are a
Maximum 14 ft. wide and 70 ft. long.
"You take the customer's floor plan and designed so it fits into this box, "
he said. " A six or eight box gets pretty complicated. "
So complicated, in fact, the Ferrell has discovered that finding people other than
himself to handle sales has been a challenge.
In the 70's, buying a modular home was much like buying a car, with options limited to
color and some interior modifications, Farrell said, Now with all the potential
permutations of floor plans, sales people need to be knowledgeable in general construction
and need to know the manufactures' capabilities .
Farrell said pricing a house is especially difficult to learn, so he develop a
quick-reference guide to help his four person sales force. Even with that guide, someone
who is a quick study will take about a year to be able to price a house well enough to
provide estimates for up to 30 potential clients a week.
Obviously, not all potential customers turn out to be buyers but Farrell Homes has sold
an average of 50 houses a year which translates into an annual sales of about 3.5 million. |
And those houses have to be put together properly
at the customer's lot, which creates another personnel challenge for the company. While
Farrell Homes hires subcontractors to do much of the site work, a company
supervisors oversees the work to make sure quality is maintained. And the final interior
finish work is done by company employees, whom Farrell calls technicians.
" Technicians have to be good at a number of things, but people with experience
are not out there, " Farrell said, adding that he wants to hire four additional
technicians on a seasonal basis.
To address the problem, Farrell has set up a kind of apprentice program in which the
supervisor trains the technicians.
" A lot of us wear more than one hat here, " he said, adding that in addition
to the sales, he works as an on site supervisor. And he keeps the number of management
people to a minimum, which means that he and his wife, Marge, and his father handle
administrative duties, such a bookkeeping and billing.
" It works for us, " he said. |
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