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Modular homes company in Montevideo, Minn., firing on all cylinders

Adrian Wahlstrom uses as flashlight to identify and note any imperfection or mark that will be corrected before a newly-constructed Friendship Homes unit is ready for sale. Tribune photo by Tom Cherveny

MONTEVIDEO -- Montevideo's industrial park in the Smith Addition may be an unusual location to look for the start of a housing recovery, but it's where you can find it.

After feeling the effects of the country's housing downturn since 2008, modular home builder Friendship Homes is humming on all cylinders. Its work force counts more than 200 and the "help wanted'' sign is always up.

There's a backlog of orders, with orders for some 20-foot-wide units sold through the remainder of the year.

General Manager Mark McMahan is confident the company will soon go ahead with plans for a major expansion that will nearly double its daily production of modular housing units from seven to 12 a day.

McMahan said the upturn started one year ago in June. "It's just been crazy ever since,'' he said.

The company's location in Montevideo is "definitely'' a major factor in this growth, according to McMahan. It is well-poised to serve fast-growing markets in the Dakotas and Canada.

Friendship Home's modular houses are going west and north in increasing numbers to meet the needs for housing in the oil patch of western North Dakota and to large-scale energy and mineral development projects in Canada.

Plant Superintendent Mark Allickson was watching a television show about Canada's winter ice roads and realized the house being transported was a Friendship Home built in Montevideo. He knows of others that have gone to the Yukon. Another was squeezed on a barge with inches to spare and floated across a northern lake.

A favorable exchange rate benefits the company in Canada.

Yet Friendship Homes must also focus additional resources to serve the market to the north. Everything from housing codes to insulation requirements, even wiring and appliances, are different in Canada.

The Canadian markets represent 25 percent of production at the plant, according to McMahan.

The demand for "man camp'' housing in the oil patch of western North Dakota is also a major driving force.

Demand is strong too for Friendship Home's commercial units for use as everything from bed and breakfasts and restaurants to even school houses.

There is encouraging news on the residential side as well. Demand is trending upward, and not only in the Dakotas. It's up in Minnesota as well, and the company's markets in neighboring, northern tier states are improving as well.

The residential demand is across the board, everything from entry level housing for new families to lake cabins for middle-aged and retired couples.

Underlying all of this is the development of the modular housing industry itself. Since 1982, Friendship Homes has been part of Fairmont Homes, a family owned-company based in Nappanee, Ind.

It produces more than 100 different models today, everything from manufactured units mounted on steel frames to modular units that come in three separate sections and have footprints equivalent to homes built on-site.

The industry is fast relegating the "trailer" stigma' to history by producing units that are every bit the equal of stick-built housing, according to the plant's management team.

"It's more a 'house' house than it was in the past,'' said Allickson, who has been with the company since 1977. Today's modular homes feature 2-by-6 sidewalls and 2-by-10 floor joists; and 2-by-4 and 2-by-6 rafters are now the norm.

In response to the housing downturn, Friendship Homes made itself a leader in customized housing, something that many modular home builders are hesitant to offer, McMahan said. Nine-foot ceilings, stonework fireplaces, even split-level units are part of the customized options available.

Customized home sales have grown and proved especially important during the housing slump, he noted.

Montevideo also offers a skilled and motivated work force, which is very important to the company's success, said Steve Jorgenson, human resource director. The complexity of building customized units, and simultaneously building units for U.S. and Canadian markets, requires a talented work force.

The Montevideo plant builds all of its units -- and steel frames -- with the primary materials: the manufacturing equivalent of scratch baking. A work force including in-house engineers, welders, carpenters, and electricians gives it the flexibility to meet ever-changing demands in the market, explained McMahan.

"We can change anything on a dime,'' he said.

The company is projecting steady demand in the years ahead, if only due to the growth in the energy and mineral fields north and west.

Admittedly, not many people will drive Town Road into the Smith Addition to see the upturn in housing, but no matter. McMahan noted that Friendship Home's economic growth translates directly into increased economic activity in the region. The company is a major purchaser of supplies and services from other business in the community and region.

Tom Cherveny

Tom Cherveny is a regional and outdoor reporter with the West Central Tribune in Willmar, MN.

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