Politics & Government
Alert: Is Affordable Housing Linked Scandal at Champion Homes Brewing?
Is Champion Homes (SKY) Joining Manufactured Housing Institute (MHI) Members Hit by Conflicts, Fiduciary Fails, Probes and Legal Actions?
Investors, public officials, attorneys, affordable housing seekers and advocates apparently ought to be among those who should take a closer look at what has been occurring at Champion Homes (SKY) which recently ditched their President and CEO Mark Yost for newly appointed replacement Timothy Larson. According to Champion, Yost left without any reported drama.
https://www.manufacturedhomepr...
In their press release, Champion touted their transparency. But despite multiple efforts over the course of several days by MHProNews to get Champion Homes (SKY) or Larson to respond to the facts and related concerns raised in the article linked above, Champion and their leadership reportedly declined comment. What are the concerns that Champion Homes is ducking on? Why are the not living up to their own claims of transparency?
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In no particular order of importance are the following facts, insights, and potential corporate fails that should cause investors and others to lean in.
1) Continued corporate support for the obviously failed CrossMod (R) homes program. Per their November 2024 Investor Relations pitch is the following, with the annotation and illustrations added by Manufactured Home Pro News (MHProNews).
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2) The graphic above is either incorrect and thus should be corrected, or it points to the absurdity of the failed Crossmods program launched by the Manufactured Housing Institute (MHI- a.k.a.: the Institute, Machiavellian Housing Institute and Monopolistic Housing Institute, etc.). CrossMods (TM) has had the corporate support of Clayton Homes (BRK), Champion Homes (previously called Skyline Champion), and Cavco Industries (CVCO).
3) CrossMods have been under fire for years from industry professionals that included the Modular Home Builders Association (MHBA) and its Executive Director Tom Hardiman.
4) Mark Weiss, J.D., President and CEO of the Manufactured Housing Association for Regulatory Reform (MHARR) is among the manufactured home industry professionals who has lashed MHI's decision to essentially undermine what MHARR calls "mainstream" manufactured housing in order to continue to attempt to push a program that MHI insiders have told MHProNews has "no traction."
5) The CrossMods product was launched with great fanfare by MHI and its "Big Three" producers: Clayton Homes, Champion Homes, and Cavco Industries. But the results are apparently so poor that none of the Big 3 have provided any total sales data for their own or their collective sales to date.
6) In stark contrast to the lack of disclosures on CrossMod sales, Champion has provided investors with data on mainstream manufactured homes, modular housing sales, and also on so-called park model housing that isn't built to the HUD Code for manufactured housing.
7) Per Champion's own IR presentation disclosures and materials, modular home sales are down, and mainstream HUD Code manufactured home sales are up. Which begs the question: why keep CrossMods? Why push a product that per their own graphic is more costly than a modular home and significantly more costly than a mainstream HUD Code manufactured home, even though they may look much the same?
8) Some estimates of total CrossMod sales over a 6-year period are around 100 units between all three MHI member companies. The results are so poor that none of the "Big Three," nor MHI, have been known to openly and proudly stated that data point precisely. When asked repeatedly for that information on numbers of units sold, Champion declined to say. But their own graphics suggest that the totals of CrossMods sold by Champion are less than 1 percent of all of their sales, because they have previously shown sales levels of as low as 1 percent for commercial products.
9) Most volume producers would quietly take such a poorly selling model off their production list for failure to gain public interest. But instead of shelving the concept, Champion has kept the product in its mix. Meanwhile MHI has kept pressing the case for the product and its producers have kept getting the same poor results.
10) MHBA's Hardiman aptly noted that the product lacked logic when he said that it undercuts the marketing message that MHI ought to be promoting for all manufactured homes, not just CrossMods. While Hardiman represent a different segments of factory-built housing, Hardiman and MHARR's Weiss have similar observations and reasoning in publicly opposing the MHI branded product.
11) To the degree that Champion's corporate leadership is participating in that problematic decision to keep pushing CrossMods despite market failure and potentially harming other manufactured home sales, they are arguably failing in their fidicuary duty to investors. Champion Homes leadership are potentially failing to properly disclose to investors the apparent risk that this product has at harming, rather than helping, the firm's own factory-built housing sales. If so, then there is seemingly a lack of SEC required materially important disclosure issue involved in this controversy too.
12) But there could be more involved in this matter than poor corporate decision making and/or a lack of their promised (and required) transparency.
13) Research by antitrust and consumer advocate Samuel Strommen while he was at Knudson Law reveals evidence that Clayton, Champion, and Cavco could be acting in a fashion that violates antitrust law. Strommen made a 17-page case with over 130 footnotes that stressed the harm for those who need affordable housing, which are presumably among Champion's claimed stakeholders.
https://www.manufacturedhomepr...
14) As this series on the Patch has spelled out in a prior article, linked below, monopolization can take several forms which can include oligopoly style antitrust violations. The quote below from a longer federal statement explains aspects of the larger picture caused by monopolistic behavior.
"Inadequate competition holds back economic growth and innovation. The rate of new business formation has fallen by almost 50% since the 1970s as large businesses make it harder for Americans with good ideas to break into markets. There are fewer opportunities for existing small and independent businesses to access markets and earn a fair return. Economists find that as competition declines, productivity growth slows, business investment and innovation decline, and income, wealth, and racial inequality widen."
15) But as Strommen noted, antitrust and market-manipulating violations also carries risk that investors should be aware of that could put their investment at greater risk.
16) Strommen has specified Champion's and MHI's respective roles in this purported effort to consolidate the manufactured home industry's production into the hands of the Big Three. As the report with analysis linked below explores in detail, others have raised related research that arguably supports concerns Strommen's research raised.
https://www.manufacturedhomepr...
17) There are numbers of researchers who have peered into manufactured housing and asked the question, why is the industry underperforming during an affordable housing crisis? The curious behavior of Champion with respect to CrossMods may shed light on those issues. As Champion's own illustration (annotation, some logos and arrows are added by MHProNews) indicates, manufactured home production is about 1/4th of what it was in 1998, even though the population has grown.
18) The claims made about the supposed wonders of CrossMods are readily debunked by an array of evidence, so long as someone is open to looking at evidence instead of the Champion sales pitch.
19) It should be recalled that MHI member Frank Rolfe was quoted earlier in this series saying that there is no authentic desire to solve the affordable housing crisis because special interests like the status quo.
https://patch.com/florida/lake...
20) There is more that affordable housing advocates and investors should know about Champion and the related subjects that are found in the reports linked here and above. While this writer is a manufactured home advocate, there should still be accountability for the seemingly problematic behavior of several MHI linked companies. The fact that last year multiple antitrust suits were launched against several higher profile MHI members are just one more reason for public officials to probe the association and some of their 'leading' members to see if these concerns have in fact violated antitrust laws as Strommen and others allege with evidence. Given that Cavco was caught up in a SEC issue that apparently included a member of the Skyline Champion team, and Cavco and its team members reportedly spent millions defending and settling that action, the evidence and concerns about Champion's troubling behavior merit a deeper look.
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---> L. A. “Tony” Kovach is a publisher who has earned multiple awards in history. He and his family live in a manufactured home on private property in Winter Haven, FL. He is the co-founder of Manufactured Home Living News.com (MHLivingNews.com) and Manufactured Home Pro News.com (MHProNews.com), trade publications serving segments of the manufactured home industry. Having worked in several segments of the manufactured home industry for over 3 decades, Kovach is a widely acknowledged and often praised expert on manufactured housing. ###
