Tuesday, September 25, 2018

Will European Style Modular Housing find a Home in the US?

Nobody has a crystal ball about the future of the modular housing industry in the US but there are some signs that modular is going to become a lot bigger part of housing and commercial construction than ever.

Typical buildings produced by Lindbäcks Bygg

Recently I’ve been hearing a lot of talk about how the US should adopt the German, Polish, British and Swedish modular mentality. It might work but probably not as well as you might think.

The reason the European modular industry is growing so rapidly is consistency in design and production. Customization and individuality are generally not in their modular factory’s tool box.

Modular housing in Europe means cranking out hundreds of the same modules, loaded onto trucks and set in neighborhoods where one living unit looks like the next.

Sweden is a world leader in prefabricated building where as much as 84 percent of Swedish detached homes, apartments and condos have modular elements, compared with about 15 percent in Japan and 4 percent in the U.S. Modular home-builders in Sweden have pioneered off-site construction and have figured out how to make it successful on a scale that few other places can match.

When Sweden’s government makes codes and regulations for modular housing it is effective for the entire country and every manufacturer follows them.

Lindbäcks Bygg is Sweden’s premier modular home manufacturer. Its assembly lines have revolutionized the notoriously slow-moving construction industry in its home country, with enormous potential to translate that success abroad. 

It's new factory produces more than 25,000 square feet of turnkey housing per week which is the equivalent of 30 average size New York City apartments a week each looking just like the other.

Taking a closer look at the US modular housing market reveals a couple of unique situations that affect how, where and when modular homes can be built.

Each country in Europe is comparable to one of the states in the US in size and demographics. People in Iowa live, work and play differently than people in California or Massachusetts. People in England live. work and play differently than people in Poland.

Along with those differences comes each state’s codes and rules regulating the modular housing industry. A modular home built in Pennsylvania for the Vermont market needs to meet different standards for New York. Some states have modular housing regulations overseen by the same department that oversees amusement rides.

A few states in the Midwest are so lax in home construction that requiring a building permit can actually happen after the home is set but in Maryland and New York the process of just getting modular plans approved and stamped by their modular housing commission could takes months.

California will soon be requiring all new homes to be Net Zero while a couple of their neighboring states don’t even have it on their radar. Connecticut imposes tight travel restrictions on when and how many modules can be shipped through their state each day. New Jersey’s tourist areas go as far as not allowing modules to travel in some areas during the height of tourist season.

The list goes on and on. Even though the states agree to use the IRC code for modular housing, they can’t agree on which version to use and local code offices can ‘add’ restrictions to IRC regs making it even harder to build a modular home.

For example, until recently Maryland required all modular homes shipped into the state to be sprinkled but let each county decide if site built houses would be required to add it. Deliveries into Maryland dropped 95%. Today all houses are required to have fire sprinklers and modular is once again making a slight comeback.

People in the US still seem to equate modular with their HUD siblings forcing legally allowed modular housing out of some towns by making laws specifically excluding them.

Then we have America’s desire to design and build their own unique home. People in the urban parts of cities can’t really do that. Their choices of domicile are limited to tract housing or homogenized apartment living. However moving into open space areas means individually rules the day.

Selling the US on European style housing will happen and then and only then will modular become the dominant way to build it.

The real questions are “Who will build these new automated factories?” and “Will custom home factories continue to play a major role in modular?”


Tom Hardiman said...

Gary, you hit on many of the differences that make simply "adopting" the European model a challenge here in the states. The geography, population density, and number of factories serving a smaller area are big differences.

Also, I think much of the European and Asian modular markets grew out of their manufacturing sector whereas our industry is growing out of the construction sector. They learned from their manufacturing base/perspective and applied to modular construction (Toyota is one of the largest modular home builders in Japan).

I don't think we need fully automated factories but we do need to do a better job of making our process more "industrialized," with a focus on efficiency, waste reduction, and SOME degree of standardization.

Stefan Lindbäck said...

Hi Gary, long time no see....

Thanks for keeping the eyes open over the pond. We need input to grow and be better.
Just a clarification; the products we deliver does NOT look the same as the one before, at all. Every project and apartment is unique. Customization is our USP. BUT what we repeat is that we use the same tecnical platform each time we spend money or time. Very important. We don't want smart people in the business walking around thinking: -We want unique housing, not the European same same"

As for the codes, every municipality in Sweden (290) have their own autonomi, and their own way of interpret the national building code, eventhough they are not allowed to. Taste that one when you build a production fascility for 2400 homes per year aiming for that market.

To tom Hardiman, we begun as a builder in 1924. Had to develop new ways to find customers outside our region and found out that off-site building was the key.
Now our main market is 900 km away and still growing. We learn from the best and steals good ideas with pride, today we are looked upon from automotive industry who wants new inspiration to move forward, just as we did at their factories five years ago.

All the best Gary and keep on coaching!

Your friend // Stefan Lindbäck, CEO Lindbäcks Bygg

Coach said...

Stefan, I have been taken to task a couple of times since this article ran. The impression the US market gets from the media covering housing there is that it is either unique single family homes or repetitive housing.

Maybe I should visit a factory over there. Any suggestions!

Stefan Lindbäck said...

Gary, You are very welcome, any time. A standing invitation is on my desk with your name. Just give me a call.

jason webster said...

Stefan, Thank You for chiming in on this conversation. I have a lot of respect and admiration for what your company has accomplished. Congrats.

Gary, I think that the Europeans are on the right path. They have become Building Companies, building and selling their own products. Each company has developed their brand and their process. And a client can choose to use them, or look to someone else. Each company is continually forced to innovate their products and processes to give more people more of what they want. Someone in a top office is always advancing and improving the product. This is VERY different from what the current US Manufacturer does. The US Manufacturer spends their day managing and selling to the Builder (not the Client). They spend their day chasing the demands of the one-off project. They engineer one-off moment frames. They buy a one-off kitchen faucet. They are following the builder (and their questionable tastes). They are not leading nor advancing THEIR Product.

I think the Europeans are right. And I think Unity Homes in the US is on the right path. Each has created their own product. Each sells said product direct to the Client (end user). Each is a Starbucks, and not a can of Folgers on the grocery store shelf. I think that, my friends, is the way forward.

Jason Webster
Huntington Homes, Inc