Excel Homes

Source: Construction Digital

Date :31/10/2007 10:07:33

Excel Homes builds your dream home, customized to your exact specifications – and assembles it in little more than a day. President Steve Scharnhorst tells ExecUS about the firm’s modular homes.

Written by Ben O’Hanlon and Produced by Sean Bakke

Since it was founded in 1984 Excel Homes, based in Camp Hill PA, has grown to become one of the country’s leading providers of modular homes – they’ve constructed more than 20,000 in the past 20 years. Company President Steve Scharnhorst took over in April and there’s a refreshing simplicity in his description of his role: “My primary mission is to make our customers happy and to grow the business.” Steve was previously vice-president of multi-industry conglomerate Johnson Controls, a company whose annual revenue exceeds $34 billion, so he’s well-placed to deliver.

The homes are constructed in one of three plants at Liverpool PA, Avis PA and Ghent WV and then transported in blocks or ‘modules’ to be assembled on site. But the company is keen to detach itself from the perception that modular means a manufactured, ‘HUD Code’ property lacking in individuality. In fact Steve argues that you can’t tell the difference between one of their modular homes and one that’s built on site. When you take a look at the company philosophy you can start to see why.

Customization is the Key

Excel markets itself on three core principles of quality, efficiency and selection.

As an example, the company offers over 41,000 different customization options. Choices range from floor plans and cabinets right down to the faucets in your bathroom. There’s flexibility in size too with typical homes ranging from 1200 sq ft right up to 10000 sq ft. This adds up to a pretty healthy competitive edge. “There are a lot of modular builders in the market but they don’t tend to deal with customization very well. There’s probably two or three manufacturers that have the ability to compete with us, but none on the same scale”, says Steve.

And given that it has to be able to withstand transportation, the final product is more robust than a standard home, with around 25 percent more material used than otherwise. This was the focus of a Government study, which confirmed that modular homes withstood the force of a hurricane far better than site built homes. As a result Excel homes are particularly popular in coastal areas where environmental pressures are higher.

For all their benefits modular homes haven’t escaped the slowdown in the housing market, but they’ve got off pretty lightly – around a 19 percent retraction compared with 25-26 percent across the industry as a whole. Excel’s done even better. The company’s been experiencing annual growth of about 15 percent since it was founded. Steve largely attributes this success to the efficiency of the process: “If you deliver a plan to me this Friday then within one week we’ll give you a price and we’ll deliver a home to your site three to four weeks later.” Impressive given that when it arrives on site, a house can be as much as 90 percent complete. Even the walls will be primed and painted.

Inside to Outside

By completing so much of the production inside, there’s much less to go wrong. Not only are materials protected from the elements, but also they’re precision cut under standardized factory conditions. This allows for a much ‘tighter’ house – something highlighted in Excel’s ability to produce Energy Star homes. The Energy Star label is provided to homes that operate at least 15 percent more efficiently than a standard home. There’s also a further environmental benefit in the reduction of waste by using standardized processes.

Although craftsmen complete the bulk of the work in one of the three plants, it is independent builders who add the finishing touches on site. These builders are also the main contact for Excel’s customers, helping to outline requirements and agree plans. “The residential building market is very local”, explains Steve. “Building a house is a personal process so our main relationship is through local builders though we’re very much in tune with the end customer.” In order to maintain this relationship, the company invites all its associated builders to quarterly regional meetings and gives them a tour of the plants, explaining new building processes. In fact, customers are welcome to have a look round too.

Continuous Improvement

Steve explains that the corporate vision is “to be the preferred residential business provider for the market we are in.” Fundamental to this, he says, is the company’s ability to constantly reassess itself and improve. To help them do this they’ve set up a continuous improvement group, which conducts benchmark tests and reviews best practices. “Continuous improvement at Excel is a way of life, it’s what we do every day. So we really have a focus on operational excellence. The customer should be able to order exactly what they want and receive it in a timely manner at the right price.”

Excel’s relationship with its suppliers is a good example of this focus on operational excellence. Steve explains that the company views them as partners, saying that there’s a mutual focus on improvement: “We want our vendors to be free to challenge us in terms of how we do business in order to lower costs for both of us.” It’s much the same with staff. There are communication channels in place so that all 800 employees understand the mission from the top, but also a feedback loop. Specifically, the management team has just introduced employee surveys.

Excel is well placed to deliver its vision. Since April, Steve has been focusing on recruiting talent from Fortune 100 companies. New recruitments include Nick Kaczmarek, a man who previously commanded a $50 billion annual budget and Jay Kedia, who increased sales at his last company by 500 percent in two years. The team is already placing its focus firmly on the future. They’re currently considering acquisitions in the northeast and southeast corners of the country.