Fleetwood, Pulte to Form Alliance

Looking to enhance its distribution of factory-built homes, Fleetwood Enterprises Inc. said Wednesday that it will form a joint venture with the country’s biggest home builder to establish retail centers nationwide.

The Riverside manufacturer and Pulte Corp. of Bloomfield Hills, Mich., agreed to form a new corporation, Expression Homes, to sell manufactured houses and to provide home financing and insurance through a growing number of outlets.

Pulte, which has been dabbling in the manufactured housing arena for the last two years, will convert its retail center in Raleigh, N.C., into the first Expression Homes office.

Pulte, which would own 51% of the operation, hopes to bring the experience of its selling of site-built homes to bear on the largely fragmented selling efforts of the manufactured housing industry.

Fleetwood, the nation’s largest maker of factory-built homes, would gain a nearly exclusive sales network designed to market housing in a consistent, cohesive manner. Fleetwood, founded by Orange County socialite John Crean, also is the nation’s largest maker of recreational vehicles.

“Pulte brings a lot of experience on how to market homes,” said Paul M. Bingham, Fleetwood’s vice president for finance. “We think their involvement will help to upgrade the way manufactured homes are marketed.”

Last year, Pulte and Fleetwood built more than 79,000 homes, capturing 5.4% of the entire U.S. market for single-family housing.

Expression Homes is expected to grow through acquisitions, including the purchase of some of Fleetwood’s 1,350 independent agents. Neither company would provide an estimate of how fast the new operation would move.

The deal would give Pulte a toehold in factory-built housing market. Such homes sell for $25,000 to $65,000. Pulte homes are priced at an average of $160,000.

“We see this as an opportunity to get into manufactured housing and a method to add some value to the retail side of the business,” said Pulte spokesman Scott Campbell.

In Raleigh, Pulte has developed five subdivisions of manufactured houses. The center there also offers mortgages and insurance, services it will bring to Expression Homes.

Pulte’s research in Raleigh shows that the factory-built market will grow, Campbell said. Last year, that market accounted for more than 30% of all homes built on site or made in factories.

“Demographics show that as baby boomers grow older, they don’t need as large a house, and this kind of home is an option for them,” Campbell said.

But some don’t see the growth coming.

Since the 1970s, manufactured housing has made up about 25% of the total housing market and has been limited mainly to rural areas, says industry analyst Barbara K. Allen at Arnhold & S. Bleichroeder in New York.

“I disagree that manufactured housing takes away from the site-built home market,” she said.

Allen also said she isn’t sure what Pulte can add to the factory-built business.

“From Fleetwood’s perspective, it’s a positive step in terms of having more of an exclusive dealership. But I don’t know what Pulte believes it will be able to offer to dealers.”

Bingham and Campbell, though, say that Expression Homes will become a nationwide standard, with professional sales efforts, common signs and colors and a host of furnished, air-conditioned models in landscaped areas for buyers to see.

Although some dealers do an excellent job, Bingham said, too often others simply line up a few empty models on a lot as if they were used cars. They let customers meander through the models without a salesperson to point out the advantages. Those are the ones Fleetwood wants to target, he said.