For mobile-home industry, smooth highway has developed potholes

At the peak of the oil boom in the early 1980s, people were pouring into Texas and neighboring oil-producing states so fast that housing construction could not keep up with demand. It was ``fat city'' for the manufactured-home industry.

In Oklahoma, motels in the Anadarko Basin were made up of clusters of mobile homes around an office, itself a mobile home. Whole communities of manufactured housing sprang up for the families of offshore oil workers in Louisiana and oil-field workers in west Texas.

``People needed something fast to live in,'' says Mick Barker, general manager of a Schult Homes manufacturing plant in this town north of Houston.

But then the oil boom went bust, and so did the manufactured-home industry. At least one housing researcher at Texas A&M University warns that the United States could be losing an important source of low-cost housing, even as escalating prices for conventional housing continue to freeze many aspiring homeowners out of the market.

In 1984, more than 50 mobile- or modular-home plants in Texas produced more than 42,000 mobile homes. This year, the eight plants that remain will manufacture fewer than 8,000 units.

Not only did people stop flooding the oil patch a few years ago, but many of them have returned to the Midwest or Northeast, leaving behind thousands of mobile homes, glutting an already oversupplied housing market.

From 1980 to 1983, net migration into Texas was nearly 1 million people. Though the trend slowed, net migration added more than 400,000 more people to the state over the next three years. Yet in 1987, the last year for which the Bureau of Census has data, 87,000 more people moved out of Texas than moved in.

The exodus is also pronounced in neighboring Oklahoma, where total population fell by 40,000, to 3.3 million, between 1986 and mid-1987.

The high mobility was the industry's golden egg, but more recently it has also been its undoing: not only because people left as quickly as they came, often abandoning mobile homes, but also because the boom encouraged a ``build-'em-quick'' mentality in some manufacturers. Although many of those builders are now defunct, their shoddy products continue to smudge the industry with a bad name.

``Many of the most transient people bought houses at the low end [of the product scale], and those were houses not necessarily built to last,'' says Rick Martin, a sales manager with Palm Harbor Homes in Austin. ``When the work ran out, people just walked away from them. A lot of those homes are now just sitting by the highway, and that hurts us.''

Lower prices for houses have also hurt manufactured-home builders. ``Our magic had always been that we could sell a house of comparable size for 15 to 20 percent under a site-built house,'' Mr. Martin says. ``But in Houston right now you're seeing lots of 1,700-square-foot-plus houses, on a piece of land and with a garage, going for $40,000 to $45,000.''

Charles Graham, associate director for housing research at the Center for Urban Affairs at Texas A&M, says the country cannot allow the manufactured-home industry to decline into insignificance. Nationally, the number of manufactured units produced has fallen from nearly 300,000 in 1974 to an estimated 220,000 this year. At current trends, the number would fall below 200,000 by 1991.

``We need to consider what we can do to make this kind of affordable housing available to more people again,'' he says. Among possible solutions are better financing and insurance options, he says. Interest rates are typically higher for mobile homes, and mortgage money is harder to come by. Furthermore, many insurance companies will not insure them, even though manufacturers say their reasons are based on low-quality units prone to storm damage and disrepair.

In the meantime, industry survivors say they are listening to customers and delivering a higher-quality product.

``We're not making cookie-cutter houses,'' says Barker, standing in the master bath of a new home where an employee is installing a large Jacuzzi bathtub. He says Schult, which has been manufacturing homes since 1934, grants the manager of each of its seven plants around the country the ``flexibility and autonomy'' to respond to regional tastes. After reaching a peak of 900 units a year in the early '80s, Barker's plant now builds about 700 homes annually.

``We're skimming along the bottom, and I don't see us picking back up for another few years at least,'' Martin says. ``But when we do we'll be better manufacturers selling a better product to a significant market.''

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