The nation’s largest manufactured home builder has joined forces with the nation’s largest developer of site-built homes to create a chain of manufactured home retail centers.
Riverside-based Fleetwood Enterprises Inc. recently teamed up with Michigan home builder Pulte Corp. to create a new company called Expression Homes, according to announcements by both companies.
Paul Bingham, Fleetwood’s vice president and chief financial officer, said the venture will create a chain of manufactured home stores through acquisition and the development of new centers.
The new company will give Fleetwood, the nation’s top maker of manufactured homes, a chain of new outlets through which to sell its products.
Citing proprietary concerns, Fleetwood officials wouldn’t say how many centers the new company plans to open, how many homes it hopes to sell or how much capital is being put into it.
Bingham said Fleetwood officials hope the centers will add substantially to Fleetwood’s revenues. He would not disclose sales projections.
The partnership with Pulte is a significant change in strategy for Fleetwood, said Guy Nielsen, an analyst with Nutmeg Securities Ltd. who covers Fleetwood and once covered Pulte.
Although Nielsen said he hadn’t yet formed an opinion as to whether the deal will be a good one for Fleetwood, he said two of the company’s recent deals with home developers have shown it is finally reacting to its dwindling manufactured housing market share and increasingly tough competition.
Until recently, Fleetwood has relied almost entirely on independent retailers to sell its homes, while competitors like Michigan-based Champion Enterprises opened in-house sales operations–and as a result enjoyed large gains in market share, Nielsen said.
In April, however, the Riverside company signed a deal with a Cincinnati-based home builder, Zaring National Corp., to supply Zaring’s new manufactured home retailing subsidiary with Fleetwood products.
Champion signed a similar deal to supply Zaring in August.
Now Fleetwood has signed another deal with a major home builder who has a great deal of experience in marketing and displaying homes.
“(The new company) gives us an additional avenue in the distribution system to market our homes,” said Fleetwood’s Bingham. “I think it’s quite appealing to be in partnership with Pulte, because they have a lot of expertise in the area of merchandising and marketing homes.”
Bingham said Pulte was looking at expanding its manufactured home retailing business. “It was clear to us that they were going to be in the business with or without us. We thought ‘with us’ would be better,” he said.
Even with the new deals, analyst Nielsen thinks Fleetwood is going to have a tough time holding onto its market lead. Competitor Champion is gaining too quickly, he said.
“(Champion) is going to be bigger than Fleetwood” in terms of market share for manufactured housing, Nielsen said. “I can’t tell you in which cycle that will happen, but it will.”
Fleetwood’s market share dropped from 21.6 percent in 1994 to 18.5 percent in 1996, while Champion’s share shot up from 7.7 percent in 1995 to 16.4 percent in 1997, according to Fleetwood’s 1997 annual report.
A Champion earnings statement in June put the company’s market share at 17.4 percent.
Fleetwood will have a 49 percent stake in Expression Homes, according to Bingham.
Expression Homes will focus first on markets in Texas and South Atlantic and Pacific Northwest states, Bingham said. Depending on geography and market needs, the centers won’t be limited to selling just Fleetwood homes.
