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Financial
Times of Canada Building on the ashesModular homes maker Guildcrest overcomes bankruptcy to prove that smaller really may be better for more buyers By Randy Ray David Poupore thinks everyone should be living in modular homes. Small wonder. His company manufactures homes in a factory in Morewood, a tiny community southeast of Ottawa. But as the president and 40% owner of Guildcrest Building Corp., a firm he helped resurrect from bankruptcy less than two years ago, Poupore has a more realistic corporate strategy. He's focusing his sales efforts on small and medium-sized builders who handle scattered lot development or small subdivisions. And he's limiting his marketing area to eastern and central Ontario, areas easily reached by the trucks that deliver Guildcrest's homes. The strategy appears to be working. Guildcrest sold a record 15 units in August and expects to break even in 1992, only its second year of operation since rising from the bankruptcy ashes of Morewood Industries Ltd. in March 1991. The growth is gratifying for Poupore, 39, and the five other ex-Morewood managers who purchased the 20 year-old company's assets. In 1991, the company fell slightly short of its sales target, selling 72 of the 75 homes projected, with gross sales of $4.3-million. This year, he predicts the firm will sell 90 homes worth $5.5-million. For 1993, he's forecasting sales of 135 units worth $8-million.
The 50 workers in Guildcrest's climate-controlled factory make 30 different modular homes with 48 different floor plans. The houses are delivered to a building site as finished modules, complete with kitchen cupboards, rugs, wiring, plumbing and exterior siding. A crane at the site lifts the modules into place to be bolted to a foundation. Guildcrest's units range from the 1,010-square-foot Almonte selling for $65,250, including foundation, to the two-storey, 2,800-square-foot Rockliffe, listed at $169,900 with foundation. Modular homes make up 2% to 4% of all new homes built in Ontario. Guildcrest's main competitors are Royal Homes, which builds about 350 homes a year at plants in Wingham and near Peterborough, and Quality Homes, which sells about 120 homes a year from its factory in the southwestern Ontario community of Kenilworth. So far, Guildcrest's market has been made up mainly of individuals who buy their own building lots. Poupore would like to do more volume deals, such as a recent one with a North Bay, Ont., developer who is planning to use Guildcrest's homes exclusively in a 100-lot subdivision. But he admits it will be a challenge. "it can take years for a development to receive the necessary approvals, so we must get in on the ground floor when a subdivision is being planned and persuade small builders that we are suppliers, not competitors," he says. "We must convince builders that we can deliver good quality at a competitive price, quicker and easier, with lower working-capital requirements for them than is the case in conventional home building." Poupore acknowledges that his message isn't always what builders want to hear. Nor are builders Guildcrest's only education challenge. To overcome the public perception that modular homes are glorified mobile homes, Guildcrest has hired four full-time sales staff to sell the quality on display in the three models next to the factory. Two of Guildcrest's 15 Ontario distributors also have display model homes. In fact, Poupore argues that factory-controlled quality of modular omes is equal to or better than that of conventional buildings. Computer-designing techniques and permanent jigs ensure square walls and level floors. And since they're built indoors, weather doesn't influencer quality, cost or delivery. The company's assembly line can turn out a complete new home in 13 days. Employees in the factory, members of the United Brotherhood of Carpenters and Joiners of America, work in self-managed teams responsile for supplies and tool budgets. The teams also participate in the hiring process and Guildcrest's profit-sharing plan. If Guildcrest sells 200 homes, for example, each worker is in line for a $2,000 bonus. Carpenter Don King, union shop steward and a 12-year veteran in the factory, says the incentive helps keep Guildcrest costs in line: "We control waste because we know there will be a reward at the end of the process." One of Guildcrest's biggest difficulties is expanding its geographical market. Transportation charges chew up profits when houses have to be truked too far. And while Poupore doesn't rule out another plant, perhaps in the northeastern United States, as former executive vice-president of Morewood Industries when it went into receivership, he's wary of making the mistakes of Guildcrest's predecessor. "The previous company was trying to be all things to all people.... It tried to sell homes on a retail basis, and at the same time huge subdivisions were also part of its target. We're trying to stay away from that."
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