A Custom Modular Success Story

Westchester offers lessons on how to build a profitable business in a tough market segment.

• The company has invested heavily in educating builders and homebuyers about modular construction.
• Getting homeowners involved in the design process has proved to be a very effective sales tool.
• Since their builder customers are building unique homes, Westchester’s system includes the ability to meet various builders’ demands.

While this magazine has published plenty of advice on how manufacturers can become more efficient by making the same products over and over, the fact is that there will always be demand for custom homes. One great example of how to thrive in the custom market is Westchester Modular Homes in Wingdale, N.Y. which set its 8,000^th house in June of 2023.

Westchester was founded in the 1980s by Chuck Hatcher and Tom Flood, traditional homebuilders in Westchester County, N.Y. who were looking for ways to build more quickly and efficiently. They explored modular construction and liked it, but they wanted to be able to customize the product.

By 1986, Hatcher and Flood had figured out how to do just that, and so they went all-in and built a 110,000 sq. ft. modular manufacturing facility Wingdale. It was designed specifically to build a product that was more akin to semi-custom, conventionally built homes.

According to John Colucci, the company’s Head of Sales and Marketing, Hatcher was the driving force behind the company’s success. “He was a strong leader who took four twenty-something-year-olds with a good work ethic and instilled in us the need to never stray from our business principles, even in the toughest of times.” Chuck Hatcher died in December 2023; his son Gerry is now president.

Westchester has a staff of 225 employees, including those in the factory, in transportation and in the office. It works with more than 40 different builders and developers throughout New England, New York, New Jersey and Eastern Pennsylvania. It ships an average 225 homes per year and has an annual sales volume of $50,000,000.

The company has faced its share of challenges over the past 38 years, which have included issues both in and out of its control. Their continuing success is a testament to perseverance, forward thinking, flexibility and the ability to listen to clients, Colucci says.

Educating the Market

Success requires finding the opportunities hidden in every challenge. At, or near, the top of the list of challenges for everyone in the modular industry is a negative perception of the product. The Westchester team saw an opportunity to counter this by educating everyone from builders to municipalities to the public, and that effort has been an important contributor to their success.

Company staffers host bi-monthly webinars attended by building professionals as well as by members of the public. Even though the company only sells to authorized dealers and not to retail buyers, Colucci believes “it’s prudent for us to educate them.”

As part of that education, the company also hosts monthly factory tours. “It’s not unusual for 150 to 200 people to attend a live factory open house, some of whom come from as far as 150 miles away to see firsthand how our homes are built and to learn about the process of building a home with one of our builders,” Colucci says.

Builders attend builder-only daysto learn about the advantages of that modular. Colucci says about 10% of builders that come to him go on to build with modular. He credits that success, in part, to Westchester’s willingness to meet builders where they are. “Each builder has their own business model,” he says. “Some sell to customers who own a lot, some builders have their own subdivisions and are building a townhouse or an apartment building.”

Selling by Design

Education goes hand in hand with sales and marketing. And Westchester’s sales and marketing efforts depend on its design prowess.

Colucci credits their early adoption of Chief Architect — an architectural home design software used by the company’s sales force —  with helping to push the sales efforts to the next level. “It gives us the ability to sit with a builder and a customer and design a house from scratch,” he says.

Customers can come to the table with something as rudimentary as a napkin sketch. “We take that idea, design it in a modular format, move cabinets around, add a bathroom, then take the customer through a 3D walkthrough. We get them entrenched in design.” Once the design is complete, the home is basically stick-built indoors. The final product is a full volumetric box “about 80% finished,” according to Colucci.

Giving Employees a Stake

To build those boxes, the company needs labor. While the labor shortage is a hurdle caused by external forces, Westchester’s founders did something internally in 2000 that has set them up for success today. “Chuck Hatcher decided to sell the company to the employees, and we became a 100% ESOP [employee stock ownership plan]. In 2020 we paid the mortgage and became wholly owned by the employees,” Colucci says.

Today, the company has no debt. “Every single employee is an owner and stockholder in the company and shares all its profits,” says Colucci. The result has been low turnover, high employee retention and the ability to retain institutional knowledge. “Customers and builders who come to the factory and meet the people on the factory floor always comment about the sense of ownership and pride.”

External Challenges

In the early days of the company, there were fewer rules and regulations when it came to modular building. “The permit and approval processes were easy. Somebody could literally buy a house from us and three weeks later we could be putting it on the production line,” Colucci says, stressing that Westchester Modular Homes’ homes were built well and to the standards of the time.

But this has since changed. Today’s challenges include more stringent codes, difficulty adapting to the variety of code requirements across all the states they service and a lengthier approval process in general.

Colucci mentions two hurdles in particular:

1. Lengthier plan approval times. “Every part of the plan approval takes more time, from delays in custom truss design, structural engineering, required HERS (Home Energy Rating System) modeling in some markets and the review process to get final approved plans. These issues stem from more regulations and a shortage of staff from some vendors who we rely on for these services,” Colucci says.

2. Government staff shortages. “Municipalities also have staffing issues. Permitting that took a couple of weeks back in the 1990s can now take anywhere from 30 to 90 days or more in some locations,” Colucci says. “This is not just a modular hurdle; it is a hurdle that conventional builders deal with on a daily basis as well.”

Colucci stresses the importance of getting out in front of any issue. He offers the example of Massachusetts’ stretch energy code. “In some towns they’re doing the super stretch energy code,” he says. “It’s even more stringent and puts additional requirements on us and the builder. It also puts more pressure on the retail customer because adhering to these codes costs more money and is driving up the cost of housing.”

The Westchester team dealt with this issue the way they do with anything that comes up. They gathered a group of their builders for discussion and education. For the energy code talk, they had a HERS modeler do a PowerPoint presentation. They talked about the overall requirements such as additional insulation values, new technologies available to achieve betters HERS ratings, options available for increasing the R-value of the windows, ventilation systems and which of these should be handled at the factory level and which done in the field.

“Builders often don’t become aware of these issues until it becomes too late,” Colucci says. “Then they’re reactive, which leads to unnecessary issues for us, the builder and the customer. We want to help them adapt in advance by being proactive. ”

Another important way to combat bureaucratic challenges is to be part of an association. Colucci is past President of the Modular Home Builders Association, and Westchester is a member of NAHB’s Building Systems Council. It’s important to have “organizations like these behind us to advocate for our industry when it’s threatened by legislation that puts us on an unlevel playing field with conventional building companies,” Colucci says. “Individual companies may not be able to afford this kind of support such as hiring lobbyists, but these organizations are focused on helping our members and our industry grow.”

Building Relationships

Bill Potter, Owner of Squash Meadow Construction, is one of Westchester Modular Homes’ independent authorized dealers. He uses the company exclusively for the homes he builds, mostly on the island of Martha’s Vineyard, Massachusetts. In fact, the manufacturer’s 8,000^th house was Squash Meadow’s 100^th.

Potter discovered Westchester after interviewing different manufacturers “up and down the East Coast” back in 2007, he says. He pitched them the idea of building a LEED certified modular home on the Vineyard, which has a fairly discerning homebuying public.

Potter says that Colucci wasn’t fazed by Potter’s proposal, even though it would require some changes to Westchester’s building system. “They agreed to change some of their existing materials to ‘green’ products and even were okay changing and cleaning their paint sprayer hopper and using a different kind of paint for the LEED-certified product,” Potter says.

Potter has stuck with Westchester Modular Homes because, he says, “we’ve developed an integrated team approach. We keep that team together as we go from job to job. Every hiccup, we solve together as a team. It’s an amazing relationship. Together, we’ve created this product on Martha’s Vineyard, and it is so desirable that we don’t even have time to answer the phone. We build about seven homes a year and have a waiting list.”

As part of its relationship-building efforts, Westchester also provides their builder clients with branding and advertising support. “I’m on their webinars, and when we have open houses, we always have representation from Westchester Modular Homes because we’re only about 20 miles away,” says Joe Enright, Vice President and Owner of Design. Build. Modular, another independent authorized dealer.

Colucci says that to have these kinds of relationships, it’s important to market to the right builders. “We don’t market to large-scale production builders, the Toll Brothers of the world. But for small and medium-sized businesses, building modular makes sense. It’s all about education. We attribute a lot of our success to finding builders that have the mentality of Bill Potter and Joe Enright.”

In fact, he says that one of the company’s main challenges is a longstanding one: how to change the stick builder’s way of thinking. “Most builders are focused on price per sq. ft. They don’t consider modular construction’s other benefits. These include the reduced need for on-site labor, an up-to-50% reduction in time to build a home, which lowers carrying costs, reduced overhead, and less jobsite waste to name a few.”

“I can give them the same or better quality, the same specifications and do it quicker for them. They can get in and out of that job more quickly, which brings a cost savings,” says Colucci. “But a lot of them honestly can’t wrap their head around that.”  

Stacey Freed is a freelance writer and editor based in Pittsford, New York. She focuses on construction, remodeling, real estate, sustainability and wellness.