Boom and Bust

Between 1994 and 1999 the manufactured housing firm, American Homestar Corp., opened 11 manufacturing plants and 110 retail outlets. But, shipments of manufactured housing in 2000 fell by 250,550, 28 percent below the previous year. In the first quarter of this year, shipments were 41 percent below the same quarter in 2000. Kortney Stringer reported in the Wall Street Journal that a quarter of manufactured housing plants have closed, and that American Homestar Corp. filed for protection under Chapter 11 in January of this year.

In this industry, the manufacturers are unusually vulnerable to a downturn since they customarily co-sign loans that dealers obtain to finance their inventories. The largest manufactured housing firm, Champion Enterprises, Inc., gained a $333.6 million tax break when its largest independent dealer filed for bankruptcy in 1999.

Needless to say, a number of banks and finance companies have felt their pain. Lenders had been caught up in the boom and had been offering mortgage loans with no down payment and 30-year maturities. There were an estimated 75,000 repossessions last year, with the result that truckloads of manufactured housing were dumped back into an already overcrowded market.