Horton Homes, Inc.

views updated

Horton Homes, Inc.

P.O. Drawer 4410
Eatonton, Georgia 31024
U.S.A.
(706) 485-8506
Fax: (706) 485-4446
Web site: http://www.hortonhomes.com

Private Company
Incorporated: 1970
Employees: 1,500
Sales: $294 million (1996)
SICs: 2452 Prefabricated Wood Buildings; 3448 Prefabricated Metal Buildings

Horton Homes, Inc. is the seventh-largest maker of manufactured housing in the world, and the largest privately owned producer of modular homes. Manufactured or modular homes are a far cry from the house trailers of the 1970s, which had a reputation as unattractive and often dangerous dwellings; Horton Homes, by contrast, maintains rigorous quality standards which meet or exceed those for traditional “site-built” housing. The company, located on a 100-acre facility in Eatonton, Georgia, produces between eighty and 100 “floors” (a floor is the equivalent of a single-wide trailer) a day, and applies innovative programs to motivate its workers. In 1996, it had revenues of nearly $300 million, exceeding a 1992 prediction by founder Dudley Horton that the company’s annual sales would exceed $250 million by the end of the century.

A Business Born in a Chicken House

In 1987, Georgia Trend ran a lengthy profile of the town where Horton Homes is located—Eatonton, Georgia. According to the article, the town “sits in the middle of Putnam County, in a part of the state where dense stands of slash pine and loblolly alternate with the blasted landscapes of clear-cut timber land and pastures dotted with dairy cattle. . . . Seen from U.S. Highway 441, Eatonton consists of a pair of traffic lights, a few strips of aging shops arrayed around an 80-year-old courthouse, and a trio of newer shopping centers nearby. A statue of Brer Rabbit on the courthouse lawn stakes Eatonton’s claim as the hometown of Joel Chandler Harris, who wrote down the recollections of Putnam County’s former slaves in his Uncle Remus stories.” Another depiction of life in old Eatonton came from Alice Walker in the book—and later movie—The Color Purple.

The town, however, more closely echoed the work of another Southern writer, William Faulkner. Like something out of a Faulkner story, Eatonton’s businesses were divided between those which supported the venerable old Farmers and Merchants Bank, founded in 1922, and customers of the younger, more brash Peoples Bank—the bank of “outsiders.” One such outsider was Dudley Horton, who was born in Eatonton in 1934. Horton’s father, a car dealer named N. D. Horton, had moved to Eatonton in 1925. A handsome and dynamic man, he married a girl whose father, a successful cotton merchant, had come to the area from Savannah. Thus the marriage did nothing to solidify the elder Horton’s ties to the area; nor did an incident which took place in front of his car dealership in 1939. A lawyer had come after N. D. with a screwdriver, and N. D. shot and killed him in self-defense. According to Mieher, “public opinion on the point is divided even today.”

Less ambiguous was the opinion toward N. D. Horton’s son. “Outsider” or not, he set up a business called Horton Homes in Eatonton, which later virtually saved the economy of the town. In the mid-1980s, the area was reeling from the closings of two plants, both based in the North. First to go had been a clothing factory, followed by a cookware manufacturer which had employed some 300 people. Horton Homes, with 650 workers at that time, had long been the town’s leading employer.

Horton Homes was in no danger of closing, however. The company’s founder, a former lawyer and state legislator who had operated as a builder of conventional homes, began the enterprise in 1970 with a few friends and a handful of workers. Working in an abandoned chicken house, Horton and his crew managed to produce between three mobile homes a week and two a day. In 1987, by which time Horton Homes had established its headquarters in an enormous facility that had once been part of the county airport, production had risen to forty homes a day. Horton, a deeply religious man who at one point left Eatonton’s First Baptist Church to join a smaller charismatic congregation because he said he needed “a closer walk with the Lord,” continued to be a maverick. In the 1980s, his business was just picking up steam, and in the early 1990s, he and other builders would literally change the face of the manufactured housing industry.

Manufactured Housing: Not What It Used to Be

In 1992, Tom Eblen of the Atlanta Journal and Constitution reported that Horton had built a 9,000-square-foot home with ten-foot ceilings, hardwood floors, and an enormous swimming pool. That in itself was not so unusual, given the fact that by then he owned a multi-million dollar business. What was significant was the fact that the entire house had been assembled at the Horton Homes plant in eight sixteen-foot-wide prefabricated units. Not only did he save twenty-five percent off the cost of a site-built home, Horton said, construction had taken a third as much time—and the majority of the work had taken place during a period of rain, when an ordinary construction project would have been on hold. “Not bad for a trailer, huh?” quipped the company’s purchasing manager as he led a tour of the Horton mansion.

One key to the success of the manufactured housing formula was mass production. “As Henry Ford discovered with automobiles,” Eblen wrote, “it’s cheaper to build things on an assembly line.” The fact that the mass labor took place inside a factory further enabled builders of manufactured housing to gain an edge on their counterparts in the traditional construction industry: there is no rain under the factory roof.

Horton’s 9,000 square foot mansion, however, was not necessarily indicative of the future of manufactured housing. Rather, most manufactured homes were made up of two smaller boxes eight feet wide and forty feet long—creating two “halves” of a home. The creation of the product according to those dimensions represented a coup in packaging and marketing: the boxes were made to exactly fit the regulation ISO (International Standards Organization) shipping container by which freight is sent on oceangoing vessels around the world. Before the company hit upon this solution, it was costing Horton Homes $25,000 to ship a home overseas, which eliminated its profits. With the innovation in sizing, costs dropped to a mere $2,500, and profits soared. Horton suggested that these ready-to-ship houses could provide an answer to the world’s housing problems: in 1990, for instance, the State of Israel bought 450 homes from Horton for the use of settlers populating the West Bank of the Jordan River.

Manufactured housing became a Wall Street favorite, but this fact did not necessarily affect Horton Homes, a privately-held enterprise whose owner displayed no intention of ever taking it public (the publicly-owned D. R. Horton construction firm, based in Dallas, Texas, is an entirely different company). Horton had played a part in improving the industry’s prestige, however. For years, jokes had persisted about manufactured housing—or rather trailers, sometimes nicknamed “tornado bait.” The homes had been considered to be shoddy, unattractive, substandard, and (in the case of a tornado or even of high winds) unsafe. Starting in the 1970s, however, that began to change. In June 1976, the United States Department of Housing and Urban Development (HUD) set new safety standards for mobile home construction. In the wake of hurricanes Hugo (1989) and Andrew (1992), HUD increased its requirements, declaring that manufactured homes should be able to withstand winds of 110 m.p.h. Horton decided that his own product should meet even higher standards, and in 1997 the Atlanta Business Chronicle reported that some Horton Homes could sustain winds of 135 m.p.h.

Horton Homes were made of the same quality of material as ordinary houses, but they cost just $26 a square foot in 1996—less than half the cost of a regular site-built home, which averaged $58 a square foot. In the same year, the Atlanta Journal and Constitution reported that whereas owners of traditional homes in Georgia paid an average of $765 a month, and renters $487, manufactured housing cost its owners just $323 on average. Hence Mickey Higginbotham of the Atlanta paper quoted the owner of a new 1,300-square foot modular home, whose elation would have been complete if he had realized in advance what he was purchasing: “I didn’t know these things were so nice,” the new homeowner said. “I could have gotten 2,000 square feet and probably two acres of land” with the money saved. The homeowner, formerly a car salesman, became a manufactured housing salesman.

William I. Weeks, Horton’s executive vice-president, gave the Atlanta Business Chronicle a very telling piece of evidence that the status of manufactured housing had changed: “In the 1980s and before,” he said, “these were temporary homes, financed as temporary housing and personal property, not as real estate.” By the late 1990s, however, buyers of manufactured housing could qualify for thirty-year mortgages.

Company Perspectives:

Horton Homes. It’s more than a name. For over a quarter-century it’s become a tradition of quality for homeowners throughout the Southeastern United States and the world. Combining superior construction with energy efficiency and loads of amenities, Horton Homes is a leader in the manufactured housing industry. Located in Eatonton, Georgia, Horton Homes is the leading producer of HUD code manufactured homes at a single facility in the nation. Manufacturing three homes a week from an abandoned chicken house in 1970, Horton Homes has grown to a 100-acre facility, with a manufacturing capacity of 100 floors a day. The dramatic growth is directly linked to Horton Homes’ commitment to offer the consumer an attractive and affordable home that is designed and built with today’s modern technological advances. The indoor construction process and self-owned, centrally located facilities allow Horton Homes to offer the winning combination of quality construction at an affordable price.

A Boom in Manufactured Housing

Horton’s sales experienced a dip in 1991, but ultimately the recession of that period worked to the company’s favor, since it meant that more people than ever were looking for inexpensive housing. In 1992, Horton Homes had revenues of $100 million, which Horton predicted would increase to $250 million by the year 2000. Of the latter figure, he predicted that one-fifth would be in exports. As it turned out, he was wrong about the overall sales figure: in 1996, according to Manufactured Home Merchandiser magazine, Horton Homes already had revenues of $294 million, with 12,006 homes sold. The Atlanta Business Chronicle in 1997 reported that Horton Homes, having opened two new Eatonton facilities in July 1995, had doubled in size since 1992.

Not only was the company itself growing rapidly, so was its environment: Georgia in the early 1990s produced more of the manufactured housing in the United States—fifteen percent—than any other state. Of the 43,369 floors produced in the state in 1994, more than a quarter, or 11,765, were manufactured by Horton. As for the industry itself, manufactured housing had become a $12 billion industry. The future promised only more growth.

With its six production lines and its 7.7-acre manufacturing site, Horton Homes continued rapid production. “While many American industries are struggling to stay afloat,” wrote Cheryl Fincher in the Macon Telegraph, “Horton Homes Inc. is fighting to keep up with demand.” As of September 1995, the company faced an eight-week backlog.

A spokesman for Horton told Fincher that the company’s success could be attributed to two simple factors: a strong incentive program, and a quality product. As far as incentives went, the company set a weekly quota, and departments that met or exceeded their quota received bonuses; on the other hand, arriving at work late or missing a day disqualified a worker from receiving a bonus for the week. Likewise, if a dealer had to make a service call due to problems with workmanship, the company traced the error back to the department responsible, and charged a penalty on their bonuses. This led to accountability for a quality product and quality service by everyone in the company.

Horton had its own trucking and distribution system, and maintained a large inventory of building supplies at its plant. As of the late 1990s, it sold its product through 212 retailers in 11 states, eighty-nine retailers of whom sold Horton Homes exclusively. With regard to the quality of its housing, using a higher minimum standard than that which applies to site-built homes, the company ensured that its product exceeded federal regulations. “Horton’s commitment to quality,” according to the Horton Homes World Wide Web page, “is evident in its demand of its employees to build each home as if they were going to live in it themselves. By doing so, Horton Homes represents America at its best, producing a quality product backed with pride.”