Tuesday, August 7, 2018

China Ramps Up Shipping Modular Housing to the US

Quick! How can a 22 module 4 story building be built in China from light gauge steel, completely finished inside including furniture, put on a boat, shipped from Hong Kong across the Pacific Ocean, unloaded and transported to the job site and still come in less expensive than if it were built in America by a local modular company?

Turns out the transportation from the Chinese modular factory to the port of Hong Kong and the boat ride for each module to the US port at Oakland, CA costs less than the cost for a US trucking company to transport the units 6 miles from the US port at Oakland, CA to the jobsite at UC Berkeley.

Is the US modular industry living in a Pollyanna world? Just might be.

This new 22-unit project from local developer Panoramic Interests is the first in the nation to be constructed of prefabricated all-steel modular units made in China. Each module, which looks a little like sleekly designed shipping containers with picture windows on one end, is stacked on another like giant Legos.

What is even more interesting is factory OS, which can build just about the same type of unit and is only 25 miles from the jobsite, didn’t get the job. And people wonder why our government put tariffs on Chinese manufactured goods.

The modules are effectively ready-to-go 310-square-feet studio apartments with a bathroom, closets, a front entry area, and a main room with a kitchenette and sofa that converts to a queen-size bed. They come with flat-screen TVs and coffee makers.

If developers on the West Coast can buy quality modules for large projects from China faster and cheaper than from a US modular factory, look for the floodgates to open for modules also coming from Thailand and Japan.

And let’s not forget the East Coast where Poland will continue to expand its grip on commercial projects but also look for Germany, England and Sweden to begin shipping homes and projects our way.

And yet you can still count the number of new US modular factories opened in the last 2 years on your fingers.

Another interesting question. Are these offshore factories subjected to the same anti-modular discrimination and complicated review processes as US modular factories?

I don’t know the answer to this one but it would be interesting to learn more.


Tom Hardiman said...

Gary, this is a hot, hot, hot topic right now. We don't have enough US based modular manufacturers that are ready, willing and/or able to meet the present demand. Its not so much that we can't build it, its that most factories are currently busy serving existing clients and its quite a big risk to turn your back on them to take on a new client that will likely demand much of your plant's capacity.

That said, it is abundantly clear that this modular thing is not a fad and is being embraced to a greater extent. Developers want projects delivered faster without sacrificing quality and there is just not enough "traditional" labor available. If US modular companies can't or won't take the work, it will continue to be imported.

Jens Erneholt said...

Same issue in Sweden too...but after seeing these modules after a couple of years I do understand why they were so cheap. I’m not saying all Chinese modules lacking in quality ...but these did.

John Bartram said...

Baffles me too.. A Hilton hotel was built in Hull, UK about 12 months ago, all modules built and shipped in from China when there must be at least 6 modular manufacturers within a 10 mile radius of the site

Anonymous said...

I spent many , many years with a family trucking company and these numbers have me sitting totally dumbfounded....transportation from Chinese factory to port of hong kong , boat charges and transportation to destination is LESS THAN the trucking company charges....now my question...can it be determined what part was actual trucking company charges and what part was actually permits and flag car charges...these numbers just don't make sense...

Steve L said...

China subsidizes its finished home products to gain a foothold in a under served market willing to lose $ short term to be a top 5 player 5 years later.

Remember there is a shortage of contractors in the site built industry

Their game plan follows the tractor industry
Look to the tractor industry KOMATSU first gain a foothold by shipping items open a factory in Wisconsin where the product is a market leader.

Nick Polit said...

I would like to have someone comment on the inspection process. Modular factories for commercial buildings have state inspections done at the factory. How do these modules incorporate the inspection process?

Anonymous said...

In these times, state programs are not viewed as important. Mass and PA are examples where the programs are not staffed and the programs simply issue labels.
The foreign plants I know of, do employ third party agencies to provide some oversight. But without accountability, their inspections are soft.

Kent R. Pipes said...

To reach the east coast they would have to go through the Panama Canal. To be legal in NJ they would have to be inspected and licensed like any other modular company. Huge 284-8893.

Paul Bonaccorsi said...

Its got nothing to do with either cheap labour or transportation. They finance the project its that simple and i know of at least 2 major global hotel chains that actively promote it to their franchisees.. They have done around 10 projects in the UK including the one in Hull that John Bartram mentioned as well as projects in Glasgow, Bristol Airport, Aberdeen Airport, Manchester and London. It means the developer does not need involvement from a Bank for lending. The Chinese manufacturer basically holds a security over the building until the finance is paid back which from what i have seen is a 20 year term. They have also used this model extensively in Australia.