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Ho-Chunk Inc. homebuilder plans to test new regional markets

DETROIT LAKES, Minn. - After 30 years and building more than 10,000 homes, Dynamic Homes is moving toward expansion of its market and production of quality modular homes.

The company, purchased late last year by Ho-Chunk Inc., moved from a publicly traded company to a private company owned by the Winnebago Tribe of Nebraska.

The tribe bought the company as part of its investment portfolio to fuel its economic development. Ho-Chunk Inc. and two board members bought 2.4 million shares at $2.55 per share of the publicly traded company. The 31-year-old construction firm was sold for $5.7 million.

"They felt strongly about the future of the company," said Scott D. Lindemann, company president.

Dynamic Homes brings in more than $12 million annually, selling its product through a dealer network. Homes range from 900 square feet to 3,200 square feet. Retail prices range from $80 to $120 per square foot.

"The average house we build is a 1,400 square-foot, ranch-style house that would retail for any where from $128,000 to $150,000," Lindemann said.

The company was founded in Detroit Lakes in 1969 by a handful of craftsmen who set out to build a better affordable home in a plant setting. Within a year to a year and a half, the company was sold and became a publicly traded company.

Its primary market has been the upper Midwest including North Dakota, South Dakota, Minnesota, Iowa and Wisconsin and it has moved from single-family housing to duplexes, four-plexes, apartments, hotels, banks and office buildings.

Lindemann said the company moved into a more diverse area of the construction industry reacting to market trends and contractors working on larger projects.

"The modular manufacturing system lends itself to larger projects like motels. You have a lot of standardization. You can gather a lot of efficiency on the plant line if you are building 40 to 60 motel rooms that are the same. It creates a lot of benefits to the contractor on site, having the majority of the work done," he said.

Twenty years ago, contractors might have shied away from using modular construction, but in recent years many have chosen it for faster turnaround on building projects. Most people can't see the difference, he said.

Hinged roofing systems allow the company to transport the buildings more readily and the structures more closely resemble those built on site rather than in a plant, the president said.

Even though the company offers a wide range of building plans, the majority of the home-buying clients it services are looking for customization.

"Ninety-five percent of what we build is customized."

Some homebuilders have brought sketches on napkins to the company and homes have been built from the sketches, Lindemann said.

"A lot of design happens that way. We draw it and price it. We eventually get to build it."

Dynamic Homes has had a long-standing relationship with tribal clients.

"We have done a number of projects in Native American communities over the years. Some of the hotels we have built have been for the Native American casino industry. We've done a lot of single-family homes in North Dakota at Turtle Mountain and Fort Berthold. We're quite familiar with the needs of Native American communities," Lindemann said.

The major challenge the company has faced in the past decade has been the change in ownership because of moving off the list of publicly traded companies.

"The transitional pains were prior to the acquisition. There are a lot of hurdles and hoops a company has to go through to go from public to private. It took nearly two years."

By becoming a private company, with a smaller board of directors, it is much easier to make critical decisions in a more timely basis, Lindemann said.

"Our biggest challenge is focusing on the business at hand. I've been so consumed with the acquisition in the past two years as has the board, that I really haven't been able to focus on what do we want to be as a company."

During the past five months, Lindemann said the company as been working on its direction and laying the foundation for a marketing plan that will drive it toward a larger market.

"We're putting together a marketing plan for the first time in the company's history. It is surprising that a 31-year-old company has functioned as well as it has without a definitive marketing plan."

Dynamic Homes produces between 240 to 260 houses annually, but the plant in Detroit Lakes can produce more, Lindemann said.

Last year, production was only 200 homes but he said the plant has been underused.

"We have the capacity to do 325 houses a year. Our immediate goal is to create a system where we can sell 325 houses. I think it is very attainable."

A home can be finished in about 10 working days and the modular approach can save homebuilders half the time it takes to build a conventional home, the president said.

Dynamic Homes officials want to move into Sioux Falls, which has had a great deal of growth in recent years, as well as parts of Nebraska.

Falling interest rates have helped spur business, but today's economic uncertainty and fluctuations in the stock market have slowed consumers, he said.

"While we enjoy seeing interest rates go down, we will need a little better economic bell-wether before we see housing pick up dramatically."

Lindemann expects markets in larger metropolitan areas such as Minneapolis and Sioux Falls will continue fuel growth in the housing starts.

"I expect us to have a very strong 2001. We're ahead of last year's pace. I think third and fourth quarter will be relatively strong."

The company employs 100 people including 60 who work in the Detroit Lakes plant manufacturing homes, 12 to 15 who are in the transportation and setting crews with the remainder in administrative services.

Lindemann, a North Dakota native, was hired three years ago as the company's finance officer. He is an accountant who spent much of his career in the agricultural industry inside a manufacturing setting.

He relocated from a plant in Cleveland, Ohio, and went to work for Dynamic Homes after he and his wife decided to return to the area to raise their children.

"It is fortunate timing for me to be here at Dynamic Homes at the right time and lead this team into new ownership."