Currency Trends and Modular Homes

While you may not suspect the currency market could affect the modular home industry, it actually does. The impact of this currently has been regionally, but as time moves forward, modular home competition may occur in a global market. As a result, the strength of the U.S. dollar would determine how strong the modular home market is in the U.S. itself. If the dollar weakens in relation to foreign competitors, it may become more cost effective for global manufacturers to compete for modular home consumers not only within their own country but also abroad.

In the New England region, especially in states such as Maine and New Hampshire, Canadian manufacturers of modular homes had a significant advantage in the recent year supplying homes to residents. Transport costs were inexpensive because the region of interest was close to the Canadian factory, and prices could be dropped for the consumer since the Canadian currency had surpassed the U.S. dollar in value. It was difficult for the U.S. manufacturers to compete on a cost basis.

Regardless, U.S. manufacturers were able to diversify into other areas of the country and still compete on a patriotic platform to homebuyers. But what if this occurred on a larger scale? With continental trade alliances, import costs are negligible in some cases, and it may be that manufacturers with ample resources of labor and materials could pose serious competitive threats. Shipping costs for placing modules on a barge headed for the U.S. may be affordable since there would be savings in other costs of production. In short, despite the additional shipping expense, a modular home could be made and sold for less money compared to a U.S. manufacturer.

Suppose the currency in other countries continued to increase in value compared to the U.S. dollar. If a country had a starting point of 30 percent greater value in their currency strength, then effectively they could compete in many markets including the modular home market. There would be value already built in to offset export and import costs. If another country was able to add even further to production efficiency and quality, this would be an even larger issue. In effect, this would be similar to the explosion of foreign automobile manufacturers in the 1970's.

Global competition has yet to reach the modular home industry, but certainly there are other modular home factories overseas and around the world. The largest market for consumers however remains in the U.S. currently, and therefore, the battleground for foreign competition will likely be here. For the consumer, a less expensive, higher quality product is a win-win, especially when the U.S. dollar is shrinking and housing markets readjusting. But eventually it affects employment opportunities locally and other factors.

It is therefore important that U.S. manufacturers continue to be alert to opportunities to improve efficiency, quality and expense so that the best product can be developed. Likewise, seeking areas elsewhere in the world where modular homes may offer great rewards may be strategic.