Friday, November 30, 2018

Innovation versus Improvement in Custom Modular Housing Industry

Oh No! Not another conference about innovation in construction. It seems like everybody that can produce a Powerpoint presentation is speaking about how they can help the building industry be more innovative and disruptive. Each of them knows what is best for your struggling business.

Innovation means doing or creating something that is new (expensive) in order to grow, keep up with competition, or be groundbreaking construction industry leaders.

Yes, there are some innovative ideas that look very good and even some factories beginning to implement these sometimes disruptive ideas but only time will tell if they will be successful.

One of the first things all those building industry speakers want you to know about is a huge market for affordable housing in the US. They bring out statistics showing how big this market is now and what they believe are its future needs.

They talk about innovative ways to build product to relieve this backlog of housing. They even offer to work with businesses that want to open modular or prefab factories to build affordable housing and there is a boatload of investors waiting to jump into this arena who have no idea of what is needed to accomplish it.

Modular construction is the new buzzword for solving this problem.

However one part of the construction doesn’t need innovation as much as it needs improvement….the custom modular housing industry.

Improvement, or process improvement, refers to looking at how something is done – the steps, roles, and materials used – and making it more effective and efficient and that is what is needed in the current modular housing industry.

This smaller part of the modular industry, the custom modular home factory, can’t be innovative like those industry speakers say they should. In fact, Innovation could actually kill the custom modular home market.

Custom modular industry can be found throughout the US but the largest concentration of factories producing these custom homes is found in the Mid-Atlantic and New England regions of the country.

photo courtesy of Westchester Modular Homes

They produce some of the most beautiful modular homes in the world. Their builders know that they can order just about anything the customer wants and at least one of these factories can usually produce it. That’s just the name of the game in custom modular.

Recently modular home builders have contacted me about problems they are encountering with their factories. Things like delays getting homes on the production schedule, climbing transportation costs, poor quality control, out of control service costs, labor and subcontractor shortages, increased government regulations and even the use of the term “modular” itself.

Innovation may not help any of these areas in custom modular production but ‘improvement’ can.

Instead of custom modular factories and their builders looking for that next big innovation that will solve all their problems, maybe we should be looking at what needs improved in our processes.

First, improvements are a lot less money intensive and secondly, somewhere somebody has probably found a way to improve one or more of these areas and you just need to find out who.

ATTENTION BUILDERS: Not every custom home factory has a huge backlog. There are factories that are running at near capacity that have already “improved” their scheduling and production allowing them to be more efficient.

Transportation costs climbing for everyone but there are small improvements out there of even this area.

Poor quality control in the factory and increasing service and repair costs are open to massive amounts of improvements. Efficiency and quality can go hand in hand in modular housing. It used to be there but for some reason it has gone a little off the track for our industry lately. Again, there are factories with low callbacks and few service problems. We should all share these improvements. This is something that cannot be cured by expensive innovation but it can be eradicated by using good old common sense and sitting down and figuring it out together like our industry used to do.

As for those overwhelming government regulations, we have the Modular Home Builders Association (MHBA) on our side. For some reason the MHBA loves to dive into new government regulations affecting our industry and working with each individual state code office to find ways to streamline the process. If you haven’t join the MHBA yet, you should do it today.

Maybe custom modular home factories need to dust off the old “Suggestion Box”, sit down with their production, engineering people and sales staff and begin actually listening to the people that design, order products, build the homes and service them after the sale.

These are the people with their hands touching the homes the factory builds and if anyone really knows where the problems are, they do.

Remember, most Innovation is expensive and unproven while Improvement is affordable and quicker to implement.

If your factory is ready to look into making improvements and would like some help implementing the information gathering process, drop me a line at


Foehl's Design Services said...

one way to help further advance the custom modular home, is for alot of some, to start thinking more outside the proverbial box... ive been doing modular designs for 25 yrs now, and most production geared modular builders wont even give a custom building the time of day, because it slows the line down.... it wasnt until i went out own my own as a designer, that ive been fortunate enough to work with those builders who are willing to think outside the box....from prefab panel sections to boxes shipped with no roof, and the roof section delivered seperately.... unheard of because, its too much site work, or the shipping and crane times are to expensive, it will never sell..., i mean we all know that building modular isnt always the least expensive method, so the selling point is the time frame it takes to get your return on investment, and get into a fixed loan...thats where the money savings is for the customer , not in the crane time, or shipping costs.

just as a building has to be versital, so does the manufacturer...., but maybe i may be totally wrong in my thinking, but ive been part of enough site-to-modular converted buildings and with the help of some awesome team members have turned them into modular successes....

Keith Simpson said...

74 yrs old and trying to retire!! I’m still passionate about obtaining value for money for the public purse and am consequently promoting good quality training and volumetric housing.
Agree with that Gary一it's all talk and no action! Is everyone afraid to make a decision???

Karel Bietje said...

Well said coach! Modular is not an innovative product it's been around for many years. We can make huge strides in the industry just by fixing our business model and implementing more efficient ways around what we currently doing. Guys like @gritvirtual are doing amazing stuff in the sofware sector. We already have automated prefabrication factories. We can do drone surveying and volvo launched their fully autonomous site fleet. We do not need innovation we need implementation!

Harris - Finish Werks said...

Gary, it’s a dance. To each his own in our free US of A, in a general kind of way:

DO NOTHING--------------IMPROVE-------------INNOVATE
No Risk-----------------Avg Risk------------High Risk
Old-think----------Better PA Manus-------Entekra/Blu Homes
Family Only----------Family/Investors-------Investors
Slow Death--------------Survive-------------Win/Lose BIG
Residential only------Res & Commercial------Commercial

The mod factories that dip into more “sophisticated” commercial will be driven by free-market forces to innovate. They have no choice – sink or swim (with the sharks). Those that rely on residential only better be damned comfortable with what they do, and not try to be something they're not. Note that old-school/class still builds success.

Generally speaking, our housing industry needs major improving. Maybe not enterprise-wide BIM, or cloud-based Virtual Reality model home shopping. But we need to automate our production lines because we can make more with less, and because we can more successfully employ generation(s) better prepared to data-enter CNC instructions than to pick up an air-nailer. Yes, facts suck. Deal with it, now.

It would also help if we modeled the move toward online (cloud*) order processing like Amazon does (and, well, everybody else) for a $9 blender. I mean really... why is our industry hellbent on hand-written revisions to plans on $200,000 home orders? Can I get a WTF? I’ve incurred losses on at least two hundred $9 blenders on every home I’ve ever ordered because the process sucks.

* I apologize for the "cloud" reference to anyone that tried to build on the east coast in 2018. Gary will forward free goulashes to anyone with a coupon. Due Respect to fellow builders on the West Coast and South in need of any rainfall at all. I wish you some of ours.

No matter how you slice it and dice it, the gov't is not going to help our labor probs and regulatory burdens go away. There was a time in the middle of the last century when such "socialistic" tendencies were unbelievably productive (eg. NASA first Man on the Moon, labor laws employed many, University innovations & Patents). The Europeans and East Asians will eat our lunch because their private industry and govt work together. PLEASE don’t inject political-think or international finance here - this is Econ 101.

Until we get our shit together, boot straps and all, I'll take FOUR any day. I just don't have the stomach (or the cash) for FIVE.