Modern Prefab on the Ropes: Michelle Kaufmann Packs It In

Michelle Kaufmann standing on stage speaking at a green festival event.

Chris Eaves / Flickr / CC BY-NC 2.0)

A year ago I wrote that modern prefab had lived fast, died young and left a good looking corpse. But I thought if anyone would survive it would be Michelle Kaufmann, the queen of prefab design and marketing, who when I wrote her best of green award, said "an entire industry rides on her coat-tails."

When times were good, Michelle could not find factories to build her stuff; they were making too much money building crap. When the crap market dried up, so did they. Then the banking crisis delivered the final cut, and it is over.

It is completely stupid; Michelle has a backlog of probably twenty clients. There are factories and workers who can build those houses, all closed down. There are clients with good jobs and credit scores who cannot get financing because modern prefab is a bit weird for the suddenly "conservative" bankers who act like all bankers everywhere- sheep that follow trends, and if real estate is suddenly toxic, everyone goes down.

Single family housing is an archaic industry; it is still little more than a collection of guys with pickup trucks with magnetic signs on the side and skilsaws and nailguns in the back. It has never been properly organized, Deminged, Taylorized, or Druckered.

Michelle tried to turn it into a system; not just the design and production, but the marketing, sales and promotion. She was a mashup of Henry Ford and Martha Stewart, out to change the way the industry worked. She succeeded, only to fall victim to a crisis not of her making, a crisis of vision.

I talked with Michelle last night and asked:

LA: What happened?

MK: "We had gotten lean, and I was sure we were going to survive, but two weeks ago we had a factory partner close, we had a number of projects were ready for construction that looked like the financing was all set and then the lending fell through and it all happened all at once. It is so difficult for a small company without big cash reserves to deal with that all happening at once. This was on top of what happened six months ago when we had this factory in southern California that went bankrupt, and they left us in a really bad spot on two homes, one in particular that we essentially had to pay for twice, because we were holding the contract. We were out a lot of money and that is tough for a small company; if that had been the only thing we would have been fine, but add on what happened two weeks ago, it's too much.

We have been trying to understand what it all means and what our options are, and trying to get our clients on track, and I am having conversations with builders and developers to purchase our intellectual property, our preconfigured designs. These are the closest thing I have to children, and it couldn't be more like a knife through my heart.

On the other hand, to achieve our mission of making sustainable design affordable and accessible, it requires scale.

LA: I thought you had scale.

MK: So far we have done forty single family homes. We had two communities we were actively working on which would have meant we would have have had hundreds in the next eighteen months. Now I will still be focusing on the communities because that it where my head is going anyways.

LA: And where it should be because the future of the single family home in the country is probably a limited one.

MK: It is. That is what what was needed to get proof of concept, but as you know, the suburbs are the new ghetto, luxury living has become about living in the cities. We are redefining what sustainable communities are. And both of the communities that I am working on are affordable.

LA: I think this is fundamentally wrong. I understand why prefab would be going through tough times, but you have contracts in the bag. But you have nobody to build? Why don't you buy a factory?

MK: I know, they are cheap these days. But the other problem is the stupid f**king lenders. It is different from buying an existing house. When you are building from scratch you have discussions with a lender at the beginning of design, and by the time the construction starts, we find that the lenders have been bought out by somebody else, have disappeared, have changed their rules and it is impossible for a family to finance their home.

UPDATE: Michelle in her own words on her website:

Today’s post is a heart-breaking one...
...and, yet, a hopeful one at the same time.

Despite our best efforts, the financial meltdown and plunging home values have caught
up with us. The recent closing of a factory partner as well as the gridlocked lending faced by homeowners, has proved more than our small company can bear.