Tag Archives: log house manufacturer

WHEN A HOUSE MANUFACTURER DISAPPEARS

A Finnish log house manufacturer was declared bankrupt about two weeks ago. Restructuring efforts failed and all their assets are going to be liquidated and sold to highest bidder or bidders. They will not make any deliveries for orders that have not been fullfilled yet.

WHAT ABOUT THE CUSTOMER?

This question usually asked in the privacy of a home. Unfortunately clients are on the bottom of the chain what comes to returning any money, which is owed to them. This means that what ever money client has pre-paid is very unlikely that any of it is paid back. Show me the money.

It is probably needless to point out that the unexpected loss of the house manufacturer also means a serious dent into the construction schedule. In a situation such as that one is bound to pay more attention to double checking the background of the supplier so expect slow progress. Give me a minute.

WHAT TO DO NOW?

Every builder has checked at least two manufacturers while shopping the supplier. Now it is time to continue the project with the company that came second. Good luck.

Lincoln Logs files bankruptcy

Pretty much everybody have now heard about Lincoln Logs’ bankruptcy filing or Chapter 11 reorganization, as the politically correct term goes. Their attorney said intention is not to lay anyone off and to continue operations as usual while negotiating with creditors.

DOUBT
I don’t know about you guys, but if I would be in financial trouble and asked refinancing from my creditors without changing my consumption habits… well, I doubt there would be any reorganization. Personally I expect to see some jobs go or some asset sales.

SURPRISE
For me it was a surprise to see company as big as Lincoln Logs to hit the brick wall. I know that smaller log home companies have already switched from making log homes into renovations etc.

For the most part, I did expect that fervent log home lovers would have kept the industry going, at least for the big players with good brand names. Guess I was wrong, no matter how dedicated customers you have it all comes down to them also having money.

EFFECT
How would you feel if your supplier told that they are having slight difficulties with creditors? I bet that would make you feel insecure. Are you in the stage of making decision between two manufacturers and having very difficult time choosing one… If the other was Lincoln Logs, your life suddenly became lot easier.

No doubt they will lose orders because of this and if they have difficulties now, just wait few months and they really feel the bit of postponed orders or cancellations. Let’s hope they manage to pull through.

Financial results of Honka

Honkarakenne, holder of Honka log homes brand, has published financial results for year 2005. In short, company took a beating on two important export areas, Germany and Japan, while other markets were doing well. Turnover was nearly 80 million euros and loss bit over one million euros.

Sales to Japan fell primarily because of the weak value of yen. American log home companies now have the advantage in Japan, because dollar is not as strong as euro is when compared to yen.

Germany is totally different matter. Country is part of euro zone and currency fluctuations don’t affect the business. However, images and trends do affect. This is why Honka is in trouble. Company has been promoting the idea of ready-made homes but customers have not embraced the idea. Sales have dropped as marketing investments have supported the new business model. As a concrete example, Germany’s share of Honka sales used to be 20% but now Germany contributes with only 10%. Company is now returning back to basics and supports the sale of unique log homes and log cabins.

Russia remains an interesting market area as country’s building tradition favors massive logs. Honka happens to be an expert in log homes and cabins that are manufactured from massive pine logs. Russia’s economy is also regaining strength, therefore creating possibilities for recreational housing investments – golf courses, company getaways and accommodation cabins being high on the list.

United States gets mentioned only indirectly, “The objectives set for 2005 were met in France, other Central European market areas, and in the United States.” Read the paper at Honka investor page.