BusinessTN

With its distinctive V-shaped roof, rainwater collection system, bamboo floors, tankless water heater, Energy Star appliances and available solar panels and energy saving windows, Clayton Homes' new i-house resembles an ordinary mobile home about as much as an iPhone does a rotary dial telephone.

Faced with declining sales and a desire to reach an entirely new customer base, CEO Kevin Clayton saw an unparalleled opportunity with this innovative "green" product that stands the stereotype of a singlewide mobile home on its head.

Sales began in May, and the i-house is already living up to hopes that it will attract the attention of buyers who otherwise never would have considered purchasing a manufactured home.

"Without question, this has put us on the radar screen of many, many more homeowners," Clayton says.

Unexpectedly, the i-house is drawing the enthusiastic attention of potential customers in South America, Israel, Africa and China, where "green" housing has a strong foothold.

"We're quoting shipping units around the globe. [The visibility] is global," Clayton says.

That's a satisfying response to a product that is never expected to represent more than a tiny fraction of the company's sales. In the month following its introduction, five examples of the i-house were sold, and the company received "dozens and dozens" of deposits, says Chris Nicely, the vice president of marketing. Even so, Clayton Homes, which last year sold 31,708 homes, has the modest goal of selling just 1,000 i-houses in the first 18 months.

"This is never going to be a meaningful part of their sales, but it is an important statement for the company," says Matt Wiltshire, who tracks the manufactured housing industry for institutional investment banking company Avondale Partners in Nashville.(Avondale represents manufactured home builder Cavalier Homes in its pending sale to Clayton Homes.)

The i-house is an opportunity for Clayton Homes to reach young consumers who make a point of buying green products, he says. These non-traditional manufactured housing buyers may not think twice about paying a premium for the i-house's features.

The one-bedroom, 793-square-foot i-house has a base price of $74,900, according to the Clayton Homes Web site. The two-bedroom 1,023-square-foot version costs $93,300. Solar panels are extra.

The available Flex unit adds 268 square feet and a second bath for a base price of $26,600. Together, the main unit and the Flex unit resemble an "i" and its dot on top, although Clayton says the "i" stands for inspiration and intelligence, not just the layout of the units.

With an average cost of $92 to $120 per square foot, the i-house is far pricier than Clayton Homes' typical products, which Nicely says range from $30 to $70 per square foot.

But the i-house competes for customers who otherwise would buy a site-built home, not a manufactured home. In that competition, the price advantage belongs to the i-house, Clayton says.

"Any [site-built] home that is comparable is at least 50% more. Most are two times [more]," he says.

Attracting new customers can't happen too quickly for the manufactured housing industry, which has yet to recover from a decade-long decline. Sales industry-wide tumbled from their peak of 330,000 units in 1998-99 to just 81,889 last year and are expected to be down another 45% this year, Wiltshire says.

"Manufactured housing went through what happened in the traditional housing market, just years earlier," he says.

Clayton Homes is no exception, even though the Berkshire Hathaway subsidiary has well over a third of the manufactured housing market and is the nation's largest homebuilder.

"We're at the lowest level we've been since the 1950s," Nicely says. "We fight for every sale. The economy is worsening, and our customer is more prone to layoffs."

The company's sales slipped 3% in 2008 and will probably be down another 10% to 12% this year, he says.

To combat that trend, the company will soon introduce another green product. The e-house will incorporate the most popular features of the i-house, say Andy Hutsell and Wes Boyd, the architects who designed the i-house.

"We're getting buyers we would never have reached before. Their perception [of manufactured housing] is a single-wide, broken-down trailer. Now, they say, 'Wow, you guys are green,'" Hutsell says.

The company has not revealed the exact features of the e-house, but Nicely says it will be, as its name implies, energy efficient. It will be priced around $50 to $60 per square foot, between the i-house and Clayton Homes' core product.

Anything that strengthens Clayton Homes is good news for the economy of Blount County, where the company employs 1,400 people at its headquarters, says Chamber of Commerce President and CEO Fred Forester.

"They are on the cutting edge of new ideas," he says. "That can do nothing but strengthen the company."

The i-house, which is being built in Bean Station, Tenn., and four other states, brings together many of the individual green features that the industry is offering, says Thayer Long, executive vice president of the Manufactured Housing Institute, an industry trade group.

"The i-house is a step in many right directions," he says. "It's a great example of what the industry is embracing."

And it originated right here in Blount County.