Last month, the SEC put more than 700 financial services firms on a list that gave them protection from short sellers.  The idea was to to thwart short-term short selling the exposed companies to runs on the value of their shares.  

It was not just banks, but also some builders, some insurance companies, and plenty of consumer finance firms.  There were a few odd exceptions (HSBC, GE), but the list was complete in its detail.  

Elsewhere, Congress extended huge loans to our automakers.  Now they are talking about more action.

But, what if you were in the business of making homes, financing them, and also providing vehicles for traveling?  

You would be out of luck.  Fleetwood (FLE) could use the help, as could just about anyone in the manufactured housing business.  Fleetwood makes homes and also vehicles (although they have exited finance) and their share prices are really low right now.  Their own access to credit is part of the problem — they have to pay off some notes by December at a time when their cash flows are not great.  

The same protections could be sorely needed at Champion (CHB) which has dropped from 13 to just 2.17 in the last twelve months.  

This is an industry that supplies a good percentage of America’s affordable housing.  

Now there

The latest round of earnings reports by some of the leading builders of manufactured homes shows that many are looking for new markets. The environment is tough right now: shipments of HUD-Code homes continue to be way below historical norms. Now, a larger crisis in lending is reducing the ability of buyers to finance new home purchases.

“It is now hard to imagine that the industry will surpass its 2007 shipment level of 95,800,” said William Griffiths, chair of Champion Enterprises, during the firm’s recent annual meeting.

That is bad, but what makes it worse is that there is an eery match between where the lending crisis is the worst and where manufactured housing typically makes its best sales. States like Florida, California, Nevada, and Arizona have witnessed the lending environment tighten this year. Those are places where manufactured housing is very popular, for a number of reasons. They are good places for retirees. They have expensive housing markets. And, they are popular places to live. A lot of people have been moving to these states.

Shipments at Champion, for example, are down by 30 percent in California, Arizona, and Florida. Industry wide, only shipments to the eight Southeastern states are increasing. The South (including Texas) now accounts for 46.5 per cent of new shipments!

For Champion, that is bad news, because they only have one plant in that region. Their firm has a much larger footprint (28 percent of capacity) in the three states mentioned at the top of this paragraph.

In the latest round of reports, though, manufacturers all seem to be hinting that they are looking beyond housing to keep afloat. Fleetwood is looking to expand the focus it has on selling to military bases. Champion is looking into two new segments – education and health care. Their modular business in England (known as ModularUK) will begin working on products for prisons.

Its not an impossibility that a recession could restore the manufactured housing sector.
Consumers often change their purchasing habits when times are tough. You know the logic — less steak, more hamburger.

Today, we have evidence of some of that kind of thinking. Dollar Tree just blew away its earnings (more…)