Friday, November 4, 2016

Modular Home Factories Can’t Find Enough Workers for Future Business

Eight years after the housing bust drove an estimated 40% of modular factory workers into new fields, factory owners  across the country are struggling to find workers at all levels of experience. Estimates run as high as 3,000 skilled and unskilled labor that will need filled by early 2017

The ratio of construction job openings to hiring, as measured by the Department of Labor, is at its highest level since 2007.

The impact is two-fold for the modular industry. Without enough workers in the factories, lead times to production are drawn out and residential modular builders are trailing demand for homes, dampening the overall economy.

And with labor costs rising, modular homebuilders are building more expensive homes to maintain their margins, which means they are abandoning the starter home market. That has left entry-level homes in tight supply, shutting out may would-be buyers at a time when mortgage rates are near historic lows.

There are still a lot of modular factories throughout the US building these entry-level homes but their margins are getting slimmer and look for some of them to close their doors in 2017.

At the site level, the labor shortage is raising modular home builders’ costs – and workers’ wages – and slowing down construction.

The average construction cost of building a single family home is 13.7% higher now than in 2007, even as the total costs of building and selling a house – a figure that includes such items as land costs, financing and marketing – are up just 2.9% over the same period, according to a survey by the National Association of Homebuilders.

The problem is accentuated by strong demand for newly constructed homes, with sales reaching a nine-year high in July.

Some modular home factories have said that they are having a hard time attracting workers, and they are often forced to give employees on-the-spot raises to prevent them from going to competitors. Carpenters and electricians are often listed as the most in-demand specialties.

High schools are focused on preparing students for college, ignoring those that may be better suited for vocational work. Students may be put off by construction’s reputation as a dangerous, cyclical field and what they perceive as an unacceptable occupation by their peers. Working with their hands is not what all this new technology encourages.

Nobody seems to have a good solution to this labor shortage problem. Large site tract builders are introducing programs to attract young people with training and guaranteed high wages but with 200,000 jobs needed in the site built industry, what chance does a single modular factory have in acquiring 20 new committed employees?

1 comment:

William aka "Little Bill" said...

Sounds like Anonymous is a little bitter about the owners of his factory. Let's hope that for Anonymous' sake, that his owners see this and understand how some members of their work force feels.