For millions of people, perception is reality. In fairness, it is understandably so. That noted, today’s production report for April 2020 provided by the Manufactured Housing Association for Regulatory Reform (MHARR) which uses the official data compiled for the Department of Housing and Urban Development (HUD) will be followed by some additional information. That data will then get a brief analysis in the light of other facts.
FOR IMMEDIATE RELEASE Contact: MHARR
(202) 783-4087
Manufactured Home Industry Production Falls Amidst COVID-19 Closures
Washington, D.C., June 3, 2020 – The Manufactured Housing Association for Regulatory Reform (MHARR) reports that according to official statistics compiled on behalf of the U.S. Department of Housing and Urban Development (HUD), HUD Code manufactured housing industry year-over-year production fell in April 2020. Just-released statistics indicate that HUD Code manufacturers produced 6,639 homes in April 2020, a 17% decrease from the 7,993 new HUD Code homes produced during April 2019. Cumulative 2020 production now stands at 31,950 homes as compared with 30,352 homes produced over the same period in 2019, an increase of 5.3%. This April 2020 production decrease comes amidst the Coronavirus pandemic and related closures under state “Stay at Home” orders.
A further analysis of the official industry statistics shows that the top ten shipment states from the beginning of the industry production rebound in August 2011 through April 2020 — with cumulative, monthly, current year (2020) and prior year (2019) shipments per category as indicated — are:
The April 2020 production data does not result in any changes to the cumulative top-ten list.
The Manufactured Housing Association for Regulatory Reform is a Washington, D.C.-based national trade association representing the views and interests of independent producers of federally-regulated manufactured housing.
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The next report was the one provided last month, on May 4, 2020 for March 2020 data. We published this previously with a report and analysis at this link here. But the original report as provide by MHARR is being reproduced for specific reasons, which will be made clear in the MHProNews analysis and commentary that follows.
INDUSTRY PRODUCTION REACHES SEVEN
CONSECUTIVE MONTHS OF GROWTH IN MARCH 2020
Washington, D.C., May 4, 2020 – The Manufactured Housing Association for Regulatory Reform (MHARR) reports that according to official statistics compiled on behalf of the U.S. Department of Housing and Urban Development (HUD), HUD Code manufactured housing industry year-over-year production grew in March 2020. Just-released statistics indicate that HUD Code manufacturers produced 8,338 homes in March 2020, a 9.8% increase over the 7,590 new HUD Code homes produced during March 2019. Cumulative 2020 production now stands at 25,311 homes as compared with 22,359 homes produced over the same period in 2019, an increase of 13.2%.
With the March 2020 statistics, the industry has now reached seven consecutive months of production growth, dating back to September 2019. While this increase represents positive news for both the industry and consumers of affordable housing, expectations going forward must be tempered by the potential market impacts of the COVID-19 pandemic and related closure orders. Meanwhile MHARR will continue to provide the industry and consumers with accurate and factual information regarding production and shipment information for federally-regulated manufactured homes.
A further analysis of the official industry statistics shows that the top ten shipment states from the beginning of the industry production rebound in August 2011 through March 2020 — with cumulative, monthly, current year (2020) and prior year (2019) shipments per category as indicated — are:
The March 2020 production data does not result in any changes to the cumulative top-ten list.
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MHProNews Analysis and Commentary
For this factual analysis, let’s focus on two lines from the two monthly MHARR reports. Quoting:
- Just-released statistics indicate that HUD Code manufacturers produced 8,338 homes in March 2020, a 9.8% increase over the 7,590 new HUD Code homes produced during March 2019
- Just-released statistics indicate that HUD Code manufacturers produced 6,639 homes in April 2020, a 17% decrease from the 7,993 new HUD Code homes produced during April 2019
More specifically, let’s narrow those down to these data points.
- 8,338 homes in March 2020
- 6,639 homes in April 2020
That’s a drop of 1,699 units from March to April, or about a 20 percent (.79623411 or some 20.4%) drop. This may be noteworthy for several reasons, which will become clearer in the light of the following.
Yesterday there was a report on Skyline Champion (SKY), linked above, which provided their data and official commentary in depth. Here is a pull quote from SKY’s Mark Yost.
Mark Yost, President and CEO of Skyline Champion (SKY) said on that “in the first 2 weeks of April, we [SKY] were running at 40% of last year’s levels. In the latter part of April, second half of April, we were at 60% of last year’s levels. And then most recently, in May, first 2 weeks of May, we’re running at 75% to 80% of last year’s levels. So it’s been increasing 20-ish percent per — every 2 weeks-ish through that time period. And I expect it to remain in that 75% to 80% through the remainder of the quarter, really driven on — sales is really not as much of the issue right now as production. So we’re ramping production back online to get our dealers product, and our dealers have — actually have seen very good demand. Many of the dealers are just now reopening. So as a result, they’re just able to take products. So it’s really a timing issue.”
MHARR reported that there were “7,993 new HUD Code homes produced during April 2019” a “17 percent drop.” Yost is telling NYSE:SKY analysists, investors, and shareholders that they were “running at 40% of last year’s levels.” That means a 60 percent drop. SKY is the number 2 producer of HUD Code manufactured homes, according to published reports, including that provided by Skyline-Champion.
Compare that to what William C. Boor, President and Chief Executive Officer (CEO) of Cavco Industries said in official statements about that same timeframe.
“Our plants experienced episodic downtime due to a variety of COVID related causes. The vast majority of that downtime occurred in April after the year-end. While it fluctuated on a daily basis for a period of time, we peaked at six of our 20 plants down. The most days down for a week occurred in early April when we did not run 25% of the possible plant operating days.
However, for the second half of April, the typical downtime was closer to 5%, or said a different way, about one out of our 20 plants at any given point in time. Over the last couple of weeks, all of our plants have been operating for the most part.”
That comment wasn’t as clear as the one made by Yost. So, in response to analyst questions, here is what Daniel L. Urness, Executive Vice President (EVP), Chief Financial Officer (CFO) and Treasurer of Cavco had to say to clarify.
“So, yeah you’re saying that we were — we dropped in the middle of, kind of the pandemic, if you will, down 40% and then we are up to — back 20% around mid-May and that’s compared to pre-pandemic levels. It’s not compared to say a year ago, it’s not compared to the end of December sequentially. When we say those numbers, we’re comparing to kind of a shortened period of time that we call pre-pandemic levels and that’s roughly a few weeks leading up to the first week or so in March.”
Urness stated that NASDAQ:CAVCO was down 40 percent in April production compared to March 2020. Yost said they were “running at 40% of last year’s levels” which would mean a 60 percent drop.
Those are the number #2 and #3 producers in manufactured housing, comprising some 30 percent of all HUD Code manufactured housing between the two firms. The median figure would be a 50 percent drop, yet interpreting MHARR’s statement of HUD data reporting year-over-year in April of 2020, yielded a 20.4% drop.
That apparent disconnect shown above begs several questions, which because Clayton Homes doesn’t provide similar reporting to the public are not readily available. For example. Did Clayton outperform during the period of Wuhan Virus related closures? After all, they are roughly 50 percent of all HUD Code manufactured housing. If they did, why or how did the accomplish that feat?
Or did Clayton and the independents collectively outperform? Independents – the non-big 3 producers of Clayton, Skyline-Champion and Cavco – comprise about 20 percent of all HUD Code production.
Given the years of various purported disconnects in statements from members of the Manufactured Housing Institute (MHI), and from MHI itself, that may not be a merely academic topic. It may reflect genuine areas for concern, especially to the independents, investors and possibly the regulators of the HUD Code manufactured home industry. At a minimum, it bears scrutiny.
It is no surprise that production dropped during the known peak of the Wuhan Virus pandemic’s impact. Geographical locations and the varied closures by state were certainly a factor, as the publicly traded firms themselves have said. Drops in orders from communities during that coronavirus outbreak peak are also a factor, as are possible retail closures. But Clayton Homes covers much of that same geography.
Thus the question, is there more to know? How does it fit in with prior concerns?
MHProNews will continue to monitor and welcomes insights from those who may have additional relevant data.
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By L.A. “Tony” Kovach – for MHLivingNews.com.
Tony earned a journalism scholarship and earned numerous awards in history and in manufactured housing. For example, he earned the prestigious Lottinville Award in history from the University of Oklahoma, where he studied history and business management. He’s a managing member and co-founder of LifeStyle Factory Homes, LLC, the parent company to MHProNews, and MHLivingNews.com. This article reflects the LLC’s and/or the writer’s position, and may or may not reflect the views of sponsors or supporters.
Connect on LinkedIn: http://www.linkedin.com/in/latonykovach
Related References:
The text/image boxes below are linked to other reports, which can be accessed by clicking on them.
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“Never Let a Good Crisis Go To Waste” – COVID19 Pandemic – Problems and Solutions
“MHI Lies, Independent Businesses Die” © – True or False? – Berkshire’s Joanne Stevens Strikes Again
