Monday, October 30, 2017

Defining Modular Housing’s Future

It is no secret that the Modular Housing industry is resistant towards change. Many factors have influenced this reluctance including State and Federal Regulations, funding and costly technology.

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If there is a problem resisting change we first have to define it. In that way, we can dig in for solutions much more efficiently. In a nutshell, the main challenges for the construction sector are connected to the following points:

Defining the term Modular Housing

It used to be easy to explain the term Modular. It meant a home built in a factory on either a production line or cribbing, trucked to the customer’s jobsite, set with a crane and finished within 30 days. Those were the good old days of the ‘60’s, 70’s and even the 1980’s.

Then new building codes were put into place where the process of just being able to send a modular home to the production can sometimes take months of state plan reviews which are not required for site builders and add thousands of dollars to the price, where meeting ever-changing building codes at the local and state level, adapting to new energy regulations and even rising shipping costs can leave even the strongest and best run factories frustrated.

Today “Modular” is used by so many housing companies and their processes that nobody can clearly define the term. Manufactured Housing (HUD), flat pack kit homes, wall panel and truss manufacturers and even the Tiny House people use the term ‘modular’ with absolutely no regard to its beginnings.

Lack of innovation

No surprise here! What has been identified as one of the main pains in the modular housing industry is its unwillingness to guide its resources, both financial and time related, towards innovation. The need for adopting new techniques in construction is more apparent than ever. It would instantly boost the whole project management process and it would lead to the creation of a more skillful and productive labor force.


Innovation is coming at the industry from every direction. “Try this in your factory, it will save you time and money” and “Automation is the Future” or “Buy our new BIM system or you will be left behind” are just a couple of the things you hear today.

But let’s face facts. Building a home, any type of home is still fundamentally assembling sticks, steel and glass. How we do this hasn’t changed in a hundred years and asking an entire industry to innovate just for the sake of innovation can and will bring resistance.

Not enough well-trained workers

Economists tell us there will be a drop up to 20-25% in on-site construction workers within the next ten years. The fact that a considerable amount of people working on site haven’t received the proper training both on the currently used techniques and on the upcoming innovative technologies make things even worse.

Modular home construction should be poised to answer this call for workers. We have a safe environment for workers, a product that matches site built homes with more inspections and a production method no site builder can match.

A recent article from MoneyBox on this blog tried to show that throwing money at the labor shortage problem would cure it. Whether you believe that or not, there is a real cost increase coming if the modular housing industry wants to attract and train a new and improved work force.

The advent of disruptive technology within our industry could result in the attraction of younger and more competitive workforce. Will the industry be poised to take advantage of this or will we continue to do it like it’s always been done while losing market share as new tech modular companies begin eating away at our market share.

Construction is a traditional field and it will always be depend to certain extent on manual labor. This doesn’t mean, though, that there’s no room for new technologies to be introduced and become part of the project management process.

“Show me the Money”

Change in the way we operate our factories comes at a cost. Sometimes that cost has been easily absorbed but newer innovations and systems will not be cheap. Factories will soon be faced with the reality that in order to compete with the players about to enter the modular arena millions of dollars will need to be invested.


High Tech modular start-ups as well as foreign investment in new modular factories in the US are going to change people’s view of housing. Social media is being flooded with pictures of what the home of the future will look like. The new generations of home buyers will not only want high tech in their homes, they will demand it.

All this will change modular home construction over the next 10-20 years. The Eastern US, where true custom modular rules, will face the biggest challenge. How does an industry that thrives on building unique custom homes in factories adapt to new home buyers that are being fed a daily diet of mass produced homes that can be spat out of a factory cheaper and easier using automation and technology?

That is the problem facing the modular industry today. How does a staid industry like ours attract not only workers but huge amounts of cash from investors that think high tech and automation is the key? Some of these new companies, with no experience at all in building production housing, are being fed millions of dollars from investors like Google, Facebook and Amazon to build factories, hire labor for top dollar and still give the investors a return on their money.

It will be interesting to see how this plays out over the next 10 years.


Bill Hart said...

Like the Chinese say..May you live in interesting Times!

Anonymous said...

I agree with your assessment of what the future may be for todya's modular factories. Rarely do we get any type of investment money while all those new ideas get millions. I just understand why investors don't want anyhting to do with us.