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Clayton Homes

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Clayton Homes
Company typeSubsidiary of Berkshire Hathaway
Genresubsidiary
Founded1956
FounderJim Clayton
Headquarters
Maryville, Tennessee, U.S.
,
United States
Key people
Kevin T. Clayton (President & CEO)

Clayton Homes, a component company of Berkshire Hathaway, is the United States' largest manufacturer of manufactured housing and modular homes.[1][failed verification] The company is vertically integrated; it builds, sells, finances, and insures manufactured and modular homes. Additionally, the company builds and sells commercial and educational buildings.[2] Clayton's corporate headquarters are in Maryville, Tennessee. It operates 35 manufacturing plants in the United States and markets its products in 49 states through 448 company-owned retail outlets and more than 1300 independent retailers.[2][3] Its subsidiary Vanderbilt Mortgage and Finance Inc. specialize in mortgages for manufactured homes. Another subsidiary, HomeFirst Agency, provides insurance for 160,000 families.[2]

History

Jim Clayton founded the company by 1966. The company went public in 1983, trading on the New York Stock Exchange. It was acquired by Berkshire Hathaway Inc. in 2003 for $1.7 billion.[4] As of 2007 Kevin T. Clayton, son of the founder, was President and CEO.[3][dead link]

As of 2007, the company website reported that Clayton owned and operated 68 manufactured housing communities and 12 subdivisions.[2] However, in July 2007 Clayton contracted to sell 65 manufactured housing communities in 11 states.[5] They produce homes under the brand names of Buccaneer Homes, Cavalier Homes, Clayton Homes, Crest Homes, Giles Industries, Golden West Homes, Hart Housing, Karsten Company, Marlette Homes, Norris Homes, Oakwood Homes, Schult Homes, Southern Energy Homes and TruMH. Clayton Homes also owns TruValue Homes, Luv Homes and Oakwood Homes.[6]

Clayton manufactures one and two-story homes that range from 500 sq ft (46 m2) to 2,400 sq ft (220 m2) in floor space, and below $40,000 to over $100,000 in price.[3]

The i-house brand was introduced in May 2008 as a green, energy efficient package.[7]

In November 2015, Clayton Homes purchased Georgia home builder Chafin Communities for $50 million.[8]

Criticism and controversy

FEMA lawsuit

FEMA sued Clayton Homes in 2011 for providing formaldehyde-laced trailers as part of Hurricane Katrina relief. They provided prefab shelters (through the Clinton Foundation) to Haiti after the 2010 earthquake, where lab tests showed high levels of formaldehyde, a carcinogen, and where many users reported health problems.[9]

Exploiting minority home buyers

In 2015 a report by the Center for Public Integrity claimed Clayton Homes as a company that unfairly targets and exploits minority home buyers with "predatory sales practices, exorbitant fees, and interest rates that can exceed 15 percent".[10] On May 2, 2015, the WSJ reported that Warren Buffett said that he makes no apologies for Clayton Homes' lending practices while defending the company at a shareholders meeting of Berkshire Hathaway.[11]

On December 26, 2015, BuzzFeed reported in an investigation with Seattle Times, that Vanderbilt and 21st Mortgage, also a Clayton lending division, provided many mobile home loans in the United States. The Clayton lending divisions provided 53% of loans to Native Americans, 56% of loans to Latino and Hispanic borrowers, and 72% to Afro Americans.[12]

In January 2016, Jordan Wathen of Motley Fool reported that Clayton Homes had thrived while competitors have gone bankrupt. The three largest manufactured housing companies at the turn of the century had all ended up in bankruptcy. He said that the 2010 financial report claimed underwriting losses from 2006-2010 through the financial crisis at less than 2%. He explained that Clayton recoups more than half of the wholesale cost after only one year, by marking up the cost by 70%, collecting a 20% downpayment and adding thousands of dollars in fees to loans. [13]

Clayton Homes issued a press release on December 26, 2015 in which they denied discriminating against customers or team members based on race or ethnicity.[14] [15]

References

  1. ^ http://www.modularcouncil.org/mc/
  2. ^ a b c d About Clayton: History, Clayton Homes website (accessed October 22, 2007)
  3. ^ a b c Clayton Homes, Inc. Company Profile, Yahoo! Finance (accessed October 22, 2007)
  4. ^ Jennifer Reingold (Illustrations by Christian Clayton)The Ballad of Clayton Homes, Fast Company, Issue 78, January 2004, Page 76
  5. ^ Michael Silence "Clayton Homes getting out of land-lease business" Knoxville News Sentinel, July 31, 2007.
  6. ^ Mike Baker and Daniel Wagner, Minorities exploited by Warren Buffett’s mobile-home empire The Seattle Times / BuzzFeed News, December 26, 2015.
  7. ^ Clayton's I-House: Prefab Green Homes Get Affordable. Popular Mechanics. January 15, 2009. accessed Jan 5, 2013.
  8. ^ Ben Lane Clayton Homes buys Georgia homebuilder for $50 million Housing Wire, November 2, 2015, retrieved 9 February 2016
  9. ^ Isabel Macdonald and Isabeau Doucet The Shelters That Clinton Built The Nation, July 11, 2011.
  10. ^ Daniel Wagner, Mike Baker. Warren Buffett's mobile home empire preys on the poor. Billionaire profits at every step, from building to selling to high cost lending The Center for Public Integrity. April 3, 2015
  11. ^ Anupreeta Das Warren Buffett Defends Clayton Homes WSJ, May 2, 2015. (subscription required)
  12. ^ Michael WagnerWarren Buffett Company wants to sell you a mobile home Buzz Feeds
  13. ^ Jordan Wathen Berkshire Hathaway's Clayton Homes Problem Motley Fool. 6 January 2016, retrieved 9 February 2016
  14. ^ [1]
  15. ^ Michael Wagner Warren Buffett’s mobile-home company denies discriminating against minorities. The Seattle Times. January 11, 2016
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