The plant where Boise Cascade once built prefabricated houses in West Jordan is now where Starfire Industries builds power boats.

The facility in North Salt Lake where U.S. Home used to construct what the industry prefers to call manufactured or modular housing will soon become the home of Zero Corp., a metal container company based in California.Get the picture? Despite all the advantages that building houses in a controlled, factory environment seem to have, their track record is not great.

Richard Valgardson, owner of Valgardson Housing Systems Inc. (VHS) based in this Utah County city, knows all about the problems that put those two companies out of business: He researched them well before launching his own company in 1987.

Now in his fifth year, Valgardson is not getting rich, he concedes, but he's still going strong and notes that the company has made a profit, albeit a modest one, every year of its existence. VHS owns its eight-acre site east of I-15 and also its 88,000-square-foot facility.

The advantages of manufactured housing, both to the builder and the buyer, still exist, says Valgardson, despite the industry's checkered past.

"I studied this industry and saw many go under," he said. "The profit margins are so thin - if you get 4-6 percent you feel good."

Both Boise Cascade and U.S. Home got into the business during a real estate boom in the late 1970s and early 1980s, said Valgardson, and, with the benefit of hindsight, got too big too soon.

"Boise Cascade had seven huge factories west of the Mississippi," said Valgardson. "They got so big they had to build a dozen houses a month just to break even. Real estate is cyclical, and when the market slowed down, they just had too much overhead to deal with it. They had to cut back on the number of options and models they offered and it just didn't work."

Valgardson is determined not to make that mistake with VHS, adding that his company needs to build only six homes a month to break even. He keeps overhead as low as possible, maintains a relatively small staff - 75 during the current "slow season" - but has as many as 160 employees when orders warrant. Above all, he caters to his customers.

"Two stories, tri-levels, we build custom homes and we give people exactly what they want whether it's a studio, one, two or three-bedroom. I can take you to streets where we have homes and defy you to tell the manufactured house from the others."

Valgardson's plan seems to be working. His company has sold 120 homes in Nevada, 100 in California and smaller numbers in Colorado, Wyoming, Idaho, Arizona and, of course, Utah.

"California has been very hot for us, but that's cooled a bit," he said. "We are now seeing an upsurge in Colorado and Utah, which no longer have a big inventory of unsold homes."

Manufactured or "prefab" housing got a reputation in its early days as being of lesser quality than traditional "stick-built" houses constructed on site.Whether that was once true is debatable, but Valgardson argues persuasively that it certainly isn't true today, at least not in his plant.

For one thing, he says, all of his workers are skilled in a particular area of construction, and that's all they do. For another, quality control is strictly maintained with a single "pod" (a section of a home that will be assembled on site with the others) undergoing more than 300 separate inspections before being passed.

Also, he notes, a manufactured home has to be built better than its on-site counterpart simply to withstand the stress of transport (the pods are taken to the sites by truck.)

About 22 days are needed to build a house in the plant, said Valgardson, and then about three more weeks on site to finish it for a total of about seven weeks, including constructing basement stairs, "stitching" together the Sheetrock, hooking up plumbing and electricity and other work that can only be done on site. That compares, he said, with 13-15 weeks for an on-site builder and that means lower costs for the buyer.

All of the homes leave the factory with virtually everything in place, including cabinets, plumbing fixtures, carpeting and furnace. The average VHS home contains 1,400 square feet and costs about $60,000, not including transportation costs. Delivery to the site usually costs $3.50 per loaded mile per truck although delivery in Utah and Salt Lake counties will be done for a flat fee of $300. Setting the house on the foundation runs $1.25 to $1.50 per square foot depending on the difficulty of the job.

In addition to housing, VHS also constructs motels, fast food restaurants, multi-family units and even small chapels. On the day I visited the plant, two pods that would become Cajun Joe's fried chicken were heading out of the yard for Elko, Nev.

The company's largest order this year has been for the second phase of the Mountain View employee housing project in Snowmass Village, Colo., where a total of five buildings with 37 condominium units will be built in the VHS factory. VHS completed the first phase of eight buildings with 92 rental apartments in December.

Looking to expand markets, Valgardson said he has "put out feelers" for exporting VHS homes to Israel and the Soviet Union.