Modular Homes - Recalling Sears Failure

by Bernard McCormick Friday, June 14, 2024 3 Comment(s)

The business section of last Sunday's New York Times had a long article about a Swedish company that is solving its affordable housing need by building modular homes - factory units that are cheap to build and easy to erect. The article said U.S. companies are starting to pick up on the idea as a way of providing the low cost housing that is in such short supply. The problem is serious in South Florida where so many rich people need poor people, often immigrants, legal or non, to maintain them. Alas the poor people can't afford to live anywhere near that work. Thus a shortage of affordable housing.

The Times piece mentioned some U.S. companies entering the modular field, along with some past efforts that for various reasons did not work. We only read the article because it relates to our family's history in a sad way. To our surprise, for a paper that is usually thorough about such history, there was no mention of the largest pre-fab failure of them all; one involving what was once the most powerful retailer in the nation. From early in the 20th century Sears, known as Sears, Roebuck at the time, had a pre-fab housing business that produced 75,000 houses, many of which are still standing and have become something of tourist attractions. 

Sears ads showed a variety of homes.

That's where it hits home. Philadelphia was a major Sears employer. Most families in our old neighborhood had someone working for Sears. That's where many couples met, including our parents. Dad went to work in the early 1920s and spent most of the next 21 years in the pre-fab division. He specialized in plumbing and heating, which was one of the big attractions of the program. Depending on how much they wanted to spend, buyers could have a house shipped to a location ready to occupy. Buyers had to put the parts together. Some handy people did it alone, although most had neighbors' help. In a few days, a house would appear.

Sears offered a variety of designs, under a banner of "Modern Homes," from very basic structures to elaborate houses that still look good today. But what had been a thriving business took a downtown in the Great Depression. In order to make it easier to sell houses, Sears had entered the mortgage business, and the depression resulted in many defaulted loans. Sears, with classic bad timing, in the early 1930s moved its Modern Homes unit from Philadelphia to a bigger facility in Port Newark, New Jersey. Dad commuted for several years then moved our young family to North Jersey. He was just in time to see the weakened economy catch up with Sears. Facing big losses, Sears closed the Port Newark operation in 1940. Dad managed a transfer to Elmira, New York, where he managed plumbing and heating in the local store. My mom was never happy away from Philadelphia, and in early 1942, we moved back to Philadelphia. Again just in time for Sears, anticipating a loss of business as we entered World War Two, decided to lay off a bunch of middle management personnel. After 21 years of faithful service, my dad was out of work. 

It is difficult to overstate the trauma for a 46-year-old man with three young sons. Dad struggled for a time, then found work in the insurance business. He wasn't cut out for that field. He did not like to gladhand or sell to relatives and friends, but he managed to survive, thanks to the protection of a union. He was always struggling with debt until we got out on our own. But getting canned by Sears permanently scarred him. Before that event, photos showed a confident, almost cocky man. Afterward, he appeared dignified but resigned to having wasted the best years of his life.

A final irony to this story. In hindsight, it appears Sears left the housing business at a very time when it could have been saved. The war produced an urgent demand for new military facilities, hundreds of barracks, and other structures needed for training. Given its experience, those buildings would have been child's play for Sears to produce, and they could be installed by army engineers. By the end of the war. it should have recovered from its pre-war mortgage disaster and be poised to fill the demand for housing from thousands of returning vets starting families.

We wish those companies today entering the modular home field well. Mostly we wish them the one quality that all businesses need. Timing.