Huf Haus, a Germany-based manufacturer of high-end modular homes that is active in more than a dozen countries, now has its eye on the United States. Earlier this year, it established a sales office in Cleveland, and next April the company expects to begin production on its first home for an American customer (who happens to be a German-born emigre) living in the Seattle market.
Alexander Kolbe, president of dotGreen Inc., the name under which Huf Haus is going to market in the United States, says his company would be “thrilled” if it sells three or four houses in its first year here. The “long-term” goal would be 10 houses per year, but if the company can bump that up to 25 it might consider opening a plant on American soil. Volume will also dictate when Huf Haus builds its first show home in the United States, which Kolbe believes is an essential ingredient for future sales. “People want to see what they are buying.”
Huf Haus began in 1912 as a lumber mill and got into carpentry in the 1940s. It produced its first manufactured home in the early 1960s, but its breakthrough came in 1972. That's when it hooked up with architect Manfred Adams and built its first house using post-and-beam architecture and construction techniques that dispense with load-bearing walls and, therefore, open up the interior design of the house considerably.
In 2008, the latest year for which figures are available, Huf Haus produced around 150 houses that generated US$145 million in revenue. While the bulk of its sales have been in Germany, where it has 16 sales offices, Huf Haus has distribution in 17 countries, including the United Kingdom, where it built its first home in 1997; and China, which it entered in 2008 and where Kolbe says he’s designed homes for five clients. “We see potential there,” he says.
Kolbe sees his company’s business in the United Kingdom as a kind of dress rehearsal for its entry into the United States, primarily because markets in England, Scotland, and Ireland can be different and, at times, convoluted in terms of their permits and regulations. “After our U.K. experience, I’m quite relaxed about coming to the U.S.,” says Kolbe. He also doesn’t sound overly concerned about America’s ongoing housing slump, observing that “it’s always good to start a business when things are going down.”
Including shipping costs from its manufacturing plant in Germany, the selling price of Huf Haus’ homes typically fall into the $500- to $600-per-square-foot range, and possibly more depending on the size of the house and its options. Kolbe says real estate agents he’s spoken to in the States have been enthusiastic about Huf Haus’ products and sales potential. Huf Haus will initially focus on affluent markets along the east coast, such as Long Island, N.Y.; and other tony markets such as Aspen, Colo., and Southern California.
Since Kolbe and his wife Michelle (who is American-born) emigrated here last March to set up dotGreen, he says the sales office’s Web site is getting around 400 hits per week. For the time being, though, it appears that Huf Haus’s marketing will rely primarily on word-of-mouth and press buzz about its houses.
Manufactured homes historically have accounted for only about 4% of closings in the United States. But Kolbe is convinced there’s a niche market here for custom modular homes with unique designs that are constructed with perpetuity in mind. (It’s common throughout Europe for houses to be built to last for centuries and to be passed from generation to generation within families.) He also says that Germany’s reputation for making quality durable products is generally accepted and well-received by a certain portion of American buyers, particularly among those who can afford it.
In terms of its business model, Huf Haus is unusual among modular manufacturers. For one thing, it does all of its design, construction, and installation internally, and maintains on staff teams of architects, crews of builders, and corps of apprentices who often end up staying with the company for decades. The company also has eight subsidiaries that provide services such as furniture production, landscape architecture, and HVAC technologies.