Company says sales of its prefab homes couldn’t scale up quickly enough to offset financial pressures caused by the sour economy
Architect Michelle Kaufmann, a major advocate of sustainable, modular construction, announced on Wednesday that the prevailing economic malaise, increasingly restrictive lending conditions, and the closing of a key factory partner have forced her company, Michelle Kaufmann Designs, to close its doors.
Founded in 2004 in Oakland, California, the firm offered several models of single-family, green modular homes, completed about 40, had orders for a couple dozen more, and had plans to build a hundred more – all with the aim of advancing affordable green design and scaling up the firm’s business.
The firm and Kaufmann herself attracted plenty of positive publicity and industry recognition. Most recently, she was a featured speaker at the National Association of Home Builders’ National Green Building Conference, in Dallas, and took home the Individual Advocate of the Year award at the conference’s National Green Building Awards celebration.
In a blog published on Wednesday, Kaufmann said even though her company was “successful at the proof of concept of a smarter way to design and build” green prefab homes, her company was not big and financially robust enough to weather the failure of the factory partner and a lending environment that has become extremely difficult for small businesses.
Still, it seems likely Kaufmann will emerge to go green again, perhaps, as she told the Los Angeles Times, with a focus on multifamily housing. She also sounds unwilling to give up on the notion that her innovations in single-family modular design might eventually bear fruit.
“We have built something important here that is not to be lost. The underlying concept works,” she wrote in her blog, adding “… it just might require a different model for scaling it. We are talking to a few larger players in the homebuilding world about potentially having them continue with our preconfigured designs.”
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Another chapter coming soon
I'm sad to hear about this but I had the pleasure to spend some time with Michelle at the NAHB Green Building Conference and her down to earth common sense and positive attitude were inspirational.
Perhaps I was pleasantly surprised because I had been expecting some kind of arrogant phony due to all the hype that has surrounded her company and there is no doubt that the press agents have gotten a lot of media exposure for her but the person I met was thoughtful and positive about the future.
I'm sure she'll be coming up with a new batch of good ideas soon.
Survival is everyones' concern.
Another casualty of our disastrous economic climate. It is a shame that the greed and avarice that caused this economic disaster has closed the doors of a business that has created such a contribution in sustainable housing. Small business is the backbone of our country, and businesses like Michelle Kaufmans' are under extreme economic pressure and are not surviving. Innovation lies within small business and the ideas of the people that develop them. The effects are far reaching and many people will suffer from the closing of this business, not only those that develop innovative concepts. As a small businessman involved in the building market, I understand the economic pressure and how it affects our ability to survive. Whether it is our field of sustainable building, any of the related fields, or small business in general, the challenge to survive in these economic times is the main focus for all of us. Hopefully Ms. Kaufman and all of the people who are affected like this will have the chance to succeed again. We cannot let a soured economy suppress the creativity and innovation of our future. Edward J. Palma
Kudos and lesson learned
Many of us have been inspired by Michelle as a pioneer in our industry. While this is an unfortunate result to a very worthwhile endeavor, there are lessons to be learned that can help us succeed going forward. The demise of MKD has been attributed primarily to lack of scale and availability of customer financing. These are symptoms not the actual problem.
Any new venture must deliver customer value that enables it to move beyond early adopters to broader acceptance and a sustainable existence. Like hybrid automobiles, green sustainable homes are currently purchased by socially responsible individuals regardless of economics, hence both are stuck at roughly 3% market share. Just being green or sustainable is not sufficient to break through this barrier - it must deliver a more compelling (price to performance) value proposition.
By developing innovative products, processes and business models that continually lower (price) costs while improving (performance) quality, resource efficiency, delivery, customer-specific requirements, etc., we will close the current value gap. Only then will we see volumes increase and market share expand in a way that makes green, sustainable homes accessible to all Americans.
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