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Log home company segmentation

Monday, August 25th, 2008

Log home manufacturers aren’t only competing against each other, but also against other home manufacturers, which use different materials and building technologies. It is surprising to see huge differences in strategies that various log home manufacturers are using. Here’s a short example from Finland.

MARKET SHARE OF LOG HOME COMPANIES
Of all the single houses that are built in Finland slightly less than 8% are log homes. To many this is surprisingly large share of newly-built single homes, but Finland does have long log building tradition and like elsewhere log homes are experiencing some kind of a renaissance.

It’s interesting to observe how companies are focusing on different niches, trying to carve big enough market share for themselves. Some log home companies focus on cabin production and don’t manufacture log homes. Some do everything, but in long term that doesn’t seem to bring good results. Some focus on exports while some remain domestic.

VACATION HOME MARKET SHARE
Honka is extremely strong in all kinds of vacation homes and cabins, as well as on several international markets. However, there are companies that sell more log homes in Finland’s domestic market. We can say that Honka is especially strong in vacation homes.

SINGLE HOME MARKET SHARE
Mammuttihirsi is a log home manufacturer that has grabbed sizeable piece of total market in Finland, but it is not as strong on the vacation home market. Actually it is almost off the radar when we look at cabin side of the market.

EXPORT MARKETS OF FINNISH LOG HOMES
As mentioned above, Honka is the king of vacation log homes and it is that on domestic and export markets. There are markets (eg. Slovenia), which Honka dominates with over 50% market share and that translates into fact of Honka being the biggest log home company in the world.

Right after Honka comes Kontio, which has grown steadily on all markets. Kontio has fared well in all product categories and markets. New contender behind these two giants is company called Finnlamelli, which supplies only glue-laminated logs and custom log homes. Finnlamelli’s strategy has paid off, because of their narrow focus, their quality is high and prices affordable - expect to see this company to close the market share gap to two biggest competitors.

PRODUCT SLATE
Some companies provide anything you can think of. Very tiring strategy and only feasible for marketing companies that don’t actually manufacture everything they sell. Some companies only deliver round logs and some only glue-laminated straight-planed logs. It is evident that wider selection increases costs, because of more complicated production process. This is something that log home companies can’t afford in general, because log buildings are already considerably more expensive than e.g. element or stick-built buildings.

MY CHOICE OF FINNISH LOG HOME COMPANY
First I would check what companies deliver to my area and then I’d choose a company that can provide assembly and installation services. Only after these issues are settled, I would go into style and material. Fact remains that most log home manufacturers consider themselves as custom home makers so projects rarely stall because lack of manufacturing capabilities. No easy answers here, you see, companies are good in different things.

7 reasons why log homes won’t be swept away by finance crisis

Sunday, July 20th, 2008

As any homeowner, log homeowners are deeply concerned about effects of current financial crisis on their homes. Foreclosures are happening left and right, maybe our friends are affected or maybe a family member. I’m here to tell you that you don’t have to worry about your log home’s or log cabin’s value and I’m going to give you a list of seven good reasons to stop worrying. For other valuable log home tips, subscribe my feed.

woodland cabin

1. Log home is a dream
Some call it longing for times long gone or sentimentality, some call it the ultimate way of life, but they all have one thing in common - log home is a matter of heart and soul. Dreams are difficult to value in money, but we all know that they are worth a LOT. This means that log home dreams are highly valued by the people who live in them and therefore log homes and log cabins prices remain high.

Living in a dream home makes people cling to it. If everything is perfect, why change anything? However, if you are not yet living in your dream home, it just might be that during rough times, flipping down would be easier. No flipping down in log homes, we love and live them.

2. Log home stands among beauty
Lakeside, mountain top, prairie, riverside, woods, slope, resorts and some other beautiful locations are places where you find most of log homes. Suburban log home… nah, not really and this shows in the price of log homes and log cabins. Many log home lots cost more than our everyday single home in the midst of other similar houses.

mountaintop cabin

Mark Twain said along the lines that land is always a good investment because nobody’s making more of it. Make sure your log home stands in a special environment and value appreciation is guaranteed.

3. Log home residents are older

How many young families that you know live in log home? Not many, because log homes tend to be luxuriously designed by using unused space (now that’s a funny term), those cathedral ceilings or large foyers and what about those outrageously large fire places… Yes, log home is not a place for young family, which is fighting with the bills and commuting between school, daycare, work, hobbies etc. When would you have time to enjoy your home?

Log homes are for people who have time to enjoy environment, staying home and doing little chores, all part of the lifestyle, which comes along with a log home. There’s a big chance that these people have already stepped into retirement, there are no sudden changes in every day life (4th baby! We need a bigger home and we need it now!) and years of work life have brought enough to get by without working. So, as a result, these log home enthusiasts stay in their log home and have a ball while doing it. Not many log homes are coming to markets to be sold and market prices of log houses stay high.

4. Log home stores value
Log home is very special in the way it’s built. Builders have to solve many structural challenges while creating someone’s dream. Robust structure and thick walls set the log home for decades and while lesser homes get torn down, log homes get renovated and remodeled to suit the likings of different generations. When log homes age, they age like fine wines, bringing more meaning to the story of the house and to the people who live in it.

5. Log home is made of quality materials
It ain’t no way to dream without silk and satin sheets. Log homes are all about wood, stone and steel. No one is going to water down their dreams with vinyl, plastics or polyester. Another angle with materials is down right cold cash. Poor materials devalue home and increase upkeep costs over time, because cheap must be fixed more often. Also people who value quality know that there is price tag included, moreover they look what they get with their money not how much it costs.

6. Log home is unique
Just about every log home is built according somebody’s special plan. The plan might have been brooding up for years. Before building project starts, the planning book can contain clippings from magazines, textile samples, photos of real life log homes around the country, news stories, wood material samples, floorplan sketches, coffee stains… Log home is a labor of love.

People recognize love and dedication to unique details and in turn fall in love with the place. Sometimes it might be bit of a wait, but the right person is bound to find the right home and match is made to last. These perfect matches create so much value to the owners of log home that benefits easily outweigh monthly payments.

7. Log home builder loans are a pain to get

Because large part of log home crowds love to have the deluxe log home experience, they end up building the home from ground up. Unfortunately banks are not too trusting towards the combination of owner/builder and log home therefore loans are hard to come by. Luckily, today this means that log home owners are less likely to fall into the turmoil of financial crisis. Also it means that many log homes have been built with lot of elbow grease, which has helped to keep the building costs at check. Living in a home that was relatively cheap to build and sports high market value is a perfect combination.

Do you have a good point that wasn’t mentioned, please, help me and post a comment.

The best American log home manufacturer?

Friday, July 11th, 2008

Which company is the best American log home manufacturer? I’m playing with an idea of representing an American log home company here in Finland. I know this is tough market, because half of world’s biggest log home companies come from Finland. Still, I believe that American rustic log homes have a suitable and distinctive style, which is hard to imitate. Log cabin rental business is growing by leaps and bounds in Lapland and rental companies need specialties to compete efficiently.

American log homes have character
That’s true, say what you will, but American log homes are one of a kind, bit like American cars - big, bulky, powerful and cool. Unfortunately, American car manufacturers are in a bit of a trouble, markets cry for efficient cars and companies can’t deliver. Let’s hope the log home industry understands to jump the energy efficiency bandwagon and doesn’t just lull itself into thinking that people will buy those dream log homes no matter what. I’m all for dreams but if we can’t afford them, then we just have to change our dreams. Anyway, back to the topic.

Local competition in Lapland

log cabin home in Finnish Lapland

Now, here is a photo of competition. You will see this sort of new log homes and log cabins in ski resorts of Lapland. Good thing with this style is that it reads log home all over it. However, like most Finnish log homes, design is so Scandinavian that it starts to lack character. This kind of Scandinavian-styled log cabin will surely loose against rustic American log home. The victory prize is yet another happy family of overnight renters. So, any recommendations? Please, just type it down to comments.

Floating log cabins

Sunday, July 6th, 2008

For the longest time I thought that mobile log cabin is the most convenient of all log cabins. I tried to dig out info where to find them, which companies are making them, how to convert trailer into a trailer log siding home etc. No more! Now I want a floatable log cabin.

I just happened to surf to Floating Cabins site and found the product in all its ingenuity. Well, technically there is nothing special in floating log homes they just combine many good features that interest me. They are obviously floatable, because if they weren’t that site name would be Sunk Cabins dot com, eh? They are also movable so one could start a day by lakeside and end it at mountain top. Best of all, they are log homes, I guess, since the website doesn’t provide any technical information. Only thing left for me to do in this situation is to write to them and ask for details. I’ll see if I can get an interview from them.

Handcrafted or milled?

Sunday, July 6th, 2008

Question
Jamie wants to build a log home in Northern California and is considering between handcrafted from Canada or Swedish Cope milled log with a draw knife finish. Jamie asks about strengths and weaknesses of each.

Answer
Thank you for your question, Jamie. First I would like to approach this topic from general point of view and in the end give more detailed opinions. Your two choices tell that you value handcrafted style, maybe you are part of the “rustic people”. I suppose my answer doesn’t hit the mark completely, but I’m open for discussion. Let’s get going…

What matters the most with logs?

It is not your choice of handcrafted/milled approach but the choice of company, which is important. Dedicate your time to finding a dependable log home company, which is recommended by people you trust. Think about it from this point of view (sorry if I’m oversimplifying), which is better, tomato or onion pizza? Naturally this depends on one’s taste and the place where the pizza is made. And don’t get me even started with topic, which is better, log home or timber frame home… I always choose well-made home.

Handcrafted log homes

With handcrafted log homes you can often opt for turnkey project. In this case, people who make the log frame tend to be the ones who also erect the frame and build the home. As a result, you get a well-built log home. However, many companies just handcraft log frames and have nothing to do with the actual log home building. As a side note, you would be surprised how many perfectly good log frames and complete log home kits have been ruined by incompetent builders.

Handcrafters use large logs with lots of character, so their log storages tend to be bigger than with milled log home manufacturers’. In general, this means that handcrafted logs have had more time to dry naturally, hence less cracking.

Milled log homes
Milled log homes, however, are constantly rolled out from production line and in general companies forget their customers as soon as kits have been successfully transported to the customer. Time from order to delivery of a log home kit is significantly shorter than with handcrafted log homes. Price doesn’t differ that much, because those log processing machines eat a lot of capital. This almost brings the cost of milled logs to the level of handcrafted logs.

Milled logs have very much uniformed shape, which makes design and building processes easier. Production pace and machinery investments tend to mean that log home mills can’t afford large storages for drying logs naturally. Kiln-drying is the norm, because it makes stock management easier and production faster, i.e. logs can be purchased when needed and then quickly dried for manufacturing.

What about those logs then?
I try to stay positive here so I won’t focus on weaknesses, but if one is bit stronger then the other is…

STYLE: There are many handcrafting styles, so it is difficult to compare, since I don’t know the style you are after. Swedish Cope, milled and draw knife finished logs come just about as close to true handcrafting as possible. I would say there is not much difference here.

LOOK: They look the same from distance but up close you spot that there is a difference. However, if your guests doesn’t know much about log homes they are likely to think your home is handcrafted and with special dedication even, because logs are so alike.

DURABILITY: As long as you treat your logs and build with high foundation and long eaves, both logs withstand the test of time.

COST: Handcrafted logs will be more expensive

Anything else?
This is something that comes in mind, but for sure it is not the whole truth, there are many schools in our industry. As I said, I am open for discussion and opinions, I know log home and log cabin owners have lots of opinions, at least I do. So tell me, what do you think? Also don’t forget to subscribe to my RSS feed to stay updated.

Disclaimer - I must state that my answers are opinions only and can’t be used as a professional advice.

Ask anything

Saturday, July 5th, 2008

Anything about log homes and log cabins that is. I am going to start a post series in which I answer your questions. Let’s do it so that you write a question that you would like to be answered down to the comments part (just scroll down the page) of this post. I’ll answer your question AND continue to refine the answer if new developments appear. Furthermore I’ll dedicate one complete post for every answer and also list them under one LOOOoong (probably takes years) page.

The team
For this mission, I’m getting help from architects and construction designers who have been working with log homes and log cabins for years. Actually our combined experience in log home business goes way over 200 years. These people come mainly from Europe, especially those countries, which are traditionally strong in log home and cabin building: Scandinavia, Baltic States and Russia (yes, can you believe it, Russia is very big in log home building). But not to worry, there is also someone to consult in matters about chinking and other issues, which are especially important for readers in North America.

Ask away!
Now it is time to put all that experience working for you and all it takes is just the time to write the question here in the comments. Ask away and stay updated by subscribing my feed.

Log home product development

Friday, July 4th, 2008

I have written many a time about Luoman Log Homes (here and here). They came out to the market with a log mobile home and had great plans to take over the world and especially the North American market.

Like vrs. Love
I liked the TV ads, which they ran in relation to the mobile campaign and the product was functional. Unfortunately ”like” and ”functional” aren’t apparently deciding factors when people are making their mobile home purchasing decisions - try ”love” and ”beautiful” instead. What are your critical buying factors?

Failing to create a market

Looks like the pricing was a tad too high for this mobile home model and as they rolled it out as a product launch, they probably used reserved marketing budget before realizing any marked number of orders. It is difficult to innovate new products in log home industry.

Copycats in action
Think about it, isn’t it so that in any given style segment of log homes (rustic, modern, Scandinavian etc.) it is really hard to tell the difference between the manufacturers. Almost every day I come across the situation where customer comes and shows me the plans of some other log home manufacturer and asks to get a quotation of such a home. What do you think, can you distinguish between log home manufacturers by e.g. looking photos?

Collective development
It is virtually impossible to protect models, one can try, but then there are some slight changes in those final blueprints and hands are washed. This is just the way of the industry. But here we also find the secret of log home product development. Those tiny tweaks that we make to designs of other manufacturers, steadily inch the industry forward. We learn from others and with our fierce competition we collectively develop our product.

Lessons learned
What we can learn from Luoman Log Homes is that it can be costly to develop a brand new product category. One must have deep pockets to support the maturity of the segment and educating customers about new possibilities. I have no doubt that someday mobile log homes are a strong niche segment among log homes.

Subscribe to my feed to stay updated.

Finland log cabin rentals

Sunday, February 11th, 2007

Log cabin used to be a family affair in Finland. Everybody seemed to have that special log cabin somewhere on the countryside. Log cabins were self-built and maintained, big part of the fun being slate of chores needed to keep the cabin in shape. That has changed.

Nowadays the traditional approach on log cabins has stagnated and a new trend has overtaken the old way of spreading log homes to deep forests by lakes and rivers. Today the idea is to get a carefree vacation cabin that doesn’t need constant attention like log cabins used to need. Solution has been to focus on building new log cabins around skiing resorts. Around these resorts, cabins locate side by side, making it easy and profitable for service industry to take care of the cabins. Owners can forget maintenance and hit the slopes, go motor sledging, cross-country skiing etc.

levihusky

How this has changed the log cabin industry? Prices have rocketed. Skiing resorts are mostly in Finnish Lapland, which basically is galaxy far, far away, no matter from where you look at it. It is not possible to build and maintain the cabin anymore, because of the distance. Distance is also the reason, why these cabins would be empty most of the year. When we combine the high price of such resort log cabin home, the difficulty of visiting it, and the couple of weeks usage that any given log cabin has - we get log cabin rentals. More and more Finns rent their log cabins during the time they are not using cabins by themselves. The variety of log cabin rentals in Lapland, Finland is at all time high.

levivillage

All this is good news for travelers. When people visit skiing resorts in Finland they have much improved selection of accommodation, which in turn increases the volume of travelers. Finally increased traveler volume brings more possibilities for entrepreneurs, therefore services become more readily available. For now Lapland vacation log cabin sector is booming and there is slight bubble developing, but in the long term, prices will level off and Lapland’s tourism sector can enjoy steady flow of travelers.

levi

The right way to get a log home

Sunday, February 4th, 2007

I must disappoint you, because there is no specific and right way to get a log home or log cabin. However I try to demonstrate how to build a log home. I will show the process from the start to finish and explain the details and motivation. There will be pictures, video, articles and interviews that document the whole project from the idea to the finished log home.

I am able to do this, because it’s me who is going to build the log home. Time frame is staggering because I have reserved three years for the whole project, starting from the beginning of the year 2007. I don’t know how many of you will have the patience to follow the progress or the lack of it, but I publish the information here anyway.

The wrong way to get a log home

Saturday, February 3rd, 2007

I have noticed that many people start to chase their log home dream from the wrong side of the street. What these people do is that first they are mesmerized by some of those stunning pictures at log home magazines. The second thing they do is to start shuffling through some floor plans, because those log home magazines are all about floor plans and log home dreams.

Together those trends put people in situation where they have high hopes, possibly unrealistic budget expectations and tentative contacts with log home dealers about the price of building a log home. Inexperienced and inspired are two adjectives that make sales people think about money.

I am not saying that you shouldn’t be inspired, after all, burning desire and passion are often the last two resorts, which keep any project running while facing hardships. However, I would like you to decide between – are you a log home owner-buyer or are you a log home owner-builder?

If you envision yourself as a buyer then you don’t have to worry much, just be careful while choosing your realtor and follow normal home buying process. If you want to have the whole big log home dream of building the log home on your own land with your own hands, boy, are you in a heap of trouble…

Long gone are those days when it was possible to quickly build a half decent log home. Nowadays log homes incorporate modern utilities and technology and given the special nature of log construction – well - log homes are more difficult to build than normal timber frame or element houses. Prepare yourself! I’m going to write a series of articles that will get you started, but as you will see, it is a long road.

  • Log home photos

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