Monday, January 23, 2017

A Challenge has been Made to Our Industry about Net Zero

In response to the article about the increasing challenge of housing to meet the new energy codes, Ken Semler, President of Express Modular and a board member on both the MHBA and the BSC of the NAHB, sent over a comment that I feel is too good not to share with everyone.

He is issuing a challenge to the modular housing industry and I think it might just be one that you should really consider taking seriously.

Here is Ken’s challenge:

This is one area that I feel the modular construction industry can really stand out. In California, current requirements for a code compliant house means it will be Net-Zero by 2020. While our knee jerk reaction to hearing about more regulations is to push back I believe we should really think about this as an opportunity.

What building system is better suited than any other to take advantage of this? As an industry, if we collectively attack this, we will be the only way to effectively meet building code and provide a Net-Zero home in a systematic and automated way in the residential building industry. Steve Lefler has already done it. Harris Woodward is doing great things with High Performance modular construction in Maryland. We are already on the path!


Now think through the implications. As a modular home builder you are providing homes that have no energy bill. What could that save a home owner in a current "used" home? $150 - 800/mo? When you build a new home using modular construction now you don't have that bill any longer! You can either take that savings and put it into a nicer home with amenities you really want or pocket the savings. If you are an appraiser, how much more is a home worth that has no electric/energy bill? $20,000 more, $50,000 more, even $100,000 more. Think about how Net-Zero modular homes could revolutionize the building industry and put it head and shoulders above site built construction. There would be NO competition!

I would submit that there is no other more effective way to meet this upcoming California code than with modular construction. Instead of fighting it and buying time for competing construction methods to catch up, as an industry let's embrace it and be there in 2020. In 1961 it was impossible for a man to walk on the moon. Kennedy set the goal of doing it by the end of the decade and with much effort, in 1969 it happened. I am challenging the industry to standardize on Net-Zero modular home construction by 2020!


Factory GM said...

Ken, you know as well as anyone that the modular factories can't even agree on helping the MHBA with the marketing program that can help everyone. What makes you think they will ever agree to make Net Zero standard?
Another problem are real estate appraisers that use comps with non-Net Zero to arrive at a market value. A Ney Zero home that might cost $20,000 more to build saving the home owner $100.000 over 30 years means nothing to them. Just how does it compare with the tract house that has only minimum energy savings in it to pass the regulations.
Finally, which factory will be the first to go Net Zero as standard. Not mine. I want to sell homes not be the first one to go out of business over this.

Anonymous said...

A couple of comments

I think Ken is simply putting a big idea on the table for people to think about. Not sure about net zero, but branding modular as hyper-energy efficient is a great marketing strategy and seems very doable.

Why does this industry always feel like it has to move in lock step with other manufacturers? If someone or some company thinks something in this industry is worth pursuing, pursue it. It will succeed and fail on its own merits.

Lastly, I have interacted with roughly two dozen factory GM's in my career. I honestly believe they are the choke point of many of the problems in this industry. It is a group of individuals that consistently lacks business creativity and innovation.

Anonymous said...

I believe the industry can achieve net zero without much of a challenge but I question whether the consumer is ready to accept the cost of doing so?

But there more elements to achieving net zero than just talking about it.

In-factory processes make modular more energy efficient just in the manner in which we assemble the product. Historically we have achieved higher scoring blower door testing when the product has been HERS rated and assembled correctly on site. Infiltration being a big part of energy loss/consumption.

What I have seen is a cost barrier/resistance to more efficient insulation systems from the consumer than from the builder. Never mind the costs of add-ons like solar panels, which in spite of government subsidies, have not decreased in costs.

I do not see the industry being a barrier to this goal as much as I see the cost of other elements/ features required to achieve a Net Zero home and having the consumer accept the cost of these benefits . Of course there is the increasing code requirements which ultimately may force all home buyers to accept these costs, which personally I believe is inevitable, but right now that is a little ways down the road.

As a company we are expanding our available in plant technology to allow us to insulate/seal at higher levels with the idea of reducing the ultimate cost to the consumer by cutting out the middleman and doing this ourselves.

Ken Semler said...

I am glad to see the comments and input. I wish there was more! I am fortunate in that I have probably visited and reviewed over 50 modular factories around the country. There are many examples of factories that are doing parts of it but just not doing it all. For example, Homeway Homes in Deer Creek, IL is a great family owned company. They built a factory and started by deciding how they would build a great house that would be super energy efficient. They only build using 2x4 construction, even in the harsh mid-west climate. However, they use a closed cell spray foam that has structural value. By combining the use of structural spray foam with reduced cost of 2x4 construction they are creating an extremely tight thermal envelop at virtually no additional cost!

I also think we as builders sell this wrong. Harris Woodward has a great example in his high performance home presentation. Even if we are doing a home with a HERS 30 rating and the energy bill is going to go from $200/mo to $50/mo the customer is saving $150 per month. We added $75 to their house payment. If you told me that you would give me $150 for every $75 that I gave you I would give you $75 every month of every year to get $150 back. We just aren’t selling it right!

In the rest of the building industry the manufacturer leads in technology. As a builder I don't decide I want to build using a lighter fiber cement siding and then go to a factory with my spec and requirement to have them to do a one off run. The manufacturer evaluates the technologies and does some R&D to determine the best way to manufacture it and then advertises to make the market for their product. I am here to say that what I am suggesting isn't new development. All the ingredients for what I am proposing exist. I am just asking factories to step up and be a better chef. Mix the ingredients for their builder to make the products appeal to the customers. Then it is up to the builders to sell it. The presentations that Harris does at the Coach's boot-camps are a great place to learn how!

Can the MHBA or the NAHB-BSC create a work group or committee to jointly work on this? How to create it... How to market it... How to sell it? Sure. Where should the leadership come from? Factories and builders can do this on their own. However, we can make our industry stronger if we join together and create a strategy. Will it be easy? NO.

I hope the challenge gets some people thinking and that thinking leads to action!

Steve L said...

Ken is spot on for California.
Modular construction is less expensive and can be test drove and duplicated for different climate zones. In a factory testing can be done long before a site built builder can perform its HERS door and duct testing and make corrections. The site builder needs re-training of its subs to be compliant as the testing occurs during the inspection process.

Marketing proven energy efficient houses for the rest of the country will come from the modular builders becoming experts in their proven performance and success.

CA. Hers raters fail the majority of current code site built homes from their on site testing and make corrections.

Tom Hardiman said...

Gary, I'm glad you pulled Ken's comment out and made it a separate discussion as it certainly merits more conversation.

Anonymous said that the codes "may force homeowners in this direction but that's a little ways down the road." There's no "maybe" about it. As a few people have pointed out, CA is a few years out from net zero. When states lined up several years ago to accept federal money under American Recovery and Reinvestment Act, that money came with strings. The strings were for states to adopt more stringent energy codes and if they did not the USDOE would step in and mandate them!

"A few years down the road" is just around the corner. Don't wait til your in the turn to start exploring this.

MHBA is generally opposed to any new regulations, particularly if they only apply to our industry and not site builders. But given a level playing field, and a fair and consistent set of codes, rules, and regulations, modular outperforms site built 99 times out of 100.

I'm sure Gary has offered to do so as well, but any MHBA member that wants to highlight a "high performance" modular home with a case study, MHBA will gladly promote it.

Devin Perry, NAHB's Building Systems Councils said...

Net-Zero homes and energy efficiency in general were hot topics at the recently completed International Builders Show (IBS). Even the New American Home, a show-home built specifically for IBS 2018, was constructed to Net-Zero standards.

As the Building Systems Councils (BSC) and its members plan the 2017 Building Systems Housing Summit, we will certainly keep Net-Zero/modular homes in mind for education topics and roundtable discussions.

Also, just like Tom mentioned for MHBA, the council is happy to promote and feature any BSC member that produces a modular high performance home. That is something we would certainly like to share with the National Association of Home Builders 60,000+ builder members!

Harris - Finish Werks said...

Gary – great blog. Near and dear to my heart. Ken – thanks for blowing a loud air horn about the necessity of our industry to challenge itself. I’ve been annoying you guys for years about how important this issue is to our recovery.

If site building is the F-150 of our industry, then modular might be the Toyota Tundra… the higher quality underdog fighting for market share.

We have an opportunity to disrupt the market. Silicon Valley talks about “disruption” all the time, like Uber shattering the century-old taxicab model. Instead of playing defense all the time, explaining that we’re not a fancy mobile home, we should explain WHAT WE ARE. We are not just better built, we’re not just faster, we are HIGH PERFORMANCE:

- Zero Energy Ready (the standard vernacular as defined by Sam Rashkin at DOE)
- Add Solar PV (easy) and be Zero Energy
- Durability – thicker insulation and framing, better water management, no mold
- Comfort – even warmth/no cold spots, no drafting
- IAQ – breathe easy w/ controlled ventilation
- All the above has been done before – it’s really not that hard once one gets past the fear factor
- Example Home:
- Performance Spec:$2B+Energy+Star+$2B+DOE.pdf

- All the above is paid for with reduced energy bills against the increased mortgage payment*

* Tom (as a board member) and Devin (as BSC member): I propose a Go-To-Meeting and conference call where I can take attendees through my PowerPoint presentation. Tom, I agree – action has to come sooner than later, California code 2020 notwithstanding. Ken & I can fill a room, you already know we can talk. Plenty.

This is our chance to be disruptive!

Anonymous said...

I can appreciate the factory standpoint because they have to build to code nation wide. However, they don't necessarily have to build Net-Zero, just Zero-Energy Ready. Finish Werks has been tapping factories with off-the-shelf materials to build to our specs that achieve HERS 40 on average. This is easily offset by renewable energy resources that bring the home down to Net-Zero, or very close to.

I get that there are various climate zones throughout the U.S., but can't factories adjust to this? Let builders use science to achieve at least Zero-Energy Ready, because it's understood that building strictly Net-Zero nation-wide isn't economical for a factory.

I'm with Harris that finding a HERS Rater is essential in determining the performance factor of the home (custom or tract) for your area. Economies are here for everyone with modular.