Champion will build units at 27 factories; model for North Dakota
SANTA ROSA — HybridCore Homes, a designer of modular rooms to make construction faster and more efficient, has signed an agreement with a major factory home builder to make the units throughout North America and the United Kingdom.
The deal with Troy, Mich.-based Champion Home Builders, one of the largest builders of modular homes and structures with more than 1.7 million units completed, will produce HybridCore’s kitchens, bathrooms and laundry rooms from 27 factories. HybridCore will provide designs for the modular rooms, and Champion will make and sell them through its network of distributors, retailers, developers and builders. HybridCore would get a royalty.
“It’s a big step for our company,” said Shaun Faber, one of the founders of HybridCore and managing partner. “It relieves a lot of the sales burden from our company in staffing up.”
The company currently has three salespeople.
“Our independent analysis of HybridCore Homes designs and processes revealed many advantages that will improve the traditional homebuilding method,” said Tom Pernsteiner, Champion executive vice president of U.S. operations.
Started by a homebuilder and an architect in 2009, HybridCore Homes has designed room units outfitted with appliances, cabinetry, electrical wiring and plumbing that can be trucked from the factory to the job site. One or more units are moved into place on the foundation, and the rest of the structure is completed around them.
Factory-building labor-intensive portions can save up to half the time during site construction and 20 percent to 30 percent of the cost, according to Mr. Faber. Other examples of North Bay factory-build homes and structures are those made by M4 Homes, Genesis SFS, Tumbleweed Homes and Healthly Buildings Technology Group.
HybridCore signed a letter of intent with Champion to build two demonstration homes by this fall with HybridCore units. One will be in the suburbs of Washington, D.C. and the other in Williston, N.D.
The latter is part of a 1,400-home development targeted at workers involved in the booming oil industry, according to Mr. Faber. North Dakota has the nation’s lowest unemployment rate, which was 3.2 percent in June, and a housing shortage.
In the early stages of the comapny, HybridCore considered shipping modular rooms to far-flung markets from the existing partner factory in Sacramento. The shipping cost to North Dakota would have been $5,000 to $6,000. But given median home prices in North Dakota — about $149,000 — that cost adds up over 1,400 homes, Mr. Faber said. So the modules for the North Dakota development will be made in Champion’s Minnesota plant.
HybridCore founders Clint Wilson, Robert O’Neel, Kevin Farrell and Mr. Faber have established a production agreement with large modular home builder Clayton Homes, part of Berkshire-Hathaway Inc. Clayton currently makes HybridCore units just at its Sacramento plant, but production could expand to Clayton’s 30-plus other plants, according to Mr. Faber.
“We can license our product to two major companies,” he said about the nonexclusive arrangements. “It gives us the opportunity to avoid having all our eggs in one basket.”
The deal with Champion has been more than a year and a half coming. Officials from HybridCore and Champion met at a Las Vegas trade show, but Champion at the time was working through Chapter 11 reorganization, so HybridCore signed up with Clayton. A demonstration home was finished in Santa Rosa last fall, and units for Los Altos are in the works.
Then HybridCore Vice President of Construction Otis Orsburn reconnected with Champion Chief Financial Officer Phylis Knight via LinkedIn. Champion had recapitalized via new ownership last year. Dialogue started about a production and marketing deal. Two months and several trips to Michigan later, it was done.
The downturn in the Sonoma County homebuilding industry persuaded the founders of HybridCore to plan for the company’s growth outside the county and even the state, according to Mr. Faber.
The slowdown also has pushed back the break-even point for the venture, which now appears to be a year and half away. The company is half-way through a $1.5 million round of funding to increase engineering and marketing capabilities. HybridCore currently has 100 unit designs, a unit placement guide and nine home elevation design options.
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