Wednesday, March 20, 2019

Secrets of the West and East Coast Modular Factories

Trying to convert a site builder, developer or investor to modular construction used to be one of the most frustrating things a factory ever encountered. Being told "no" over and over or having your phone calls stopped by the gatekeeper and generally being ignored is slowly becoming a thing of the past.

Almost every single conference, seminar, podcast and webinar talking about construction has modular and prefab as the answer to housing’s future. Government Housing Agencies especially in Europe are pushing their modular industries to increase production.

New modular factories are being opened all over Europe to meet the demand with some projecting 2,000 or more units a year. Modular and Prefab housing factories in Some Asian modular factories are running at or near capacity 24/7, 365 days a year.

But the US seems to lagging behind a little. The only new modular factories opened or planned recently are West of the Mississippi River where investors are eager to partner with just about anyone that knows how to spell “modular”. The jury is still out how many of these super-funded new ventures will survive if we have more than just a mild downturn.

Investors and activists that know little or nothing about modular and prefab make huge headlines when they fail. Check out what happened to Brad Pitt after Hurricane Katrina in New Orleans.

The West Coast is a desert when it comes to true modular home builders. It’s not that contractors don’t want to become modular home builders, it’s simply that there aren’t very many residential modular home factories to choose from. Most manufactured homes are sold by dealer networks and few if any even offer true modular homes.

What the West Coast does have are big investors bringing modular and prefab factories on line to serve huge developers and government agencies. Katerra and factory OS would not successful if they decided to abandon those big developers and began trying to build a builder network in California, Oregon and Washington.

Entreka sells most of their FIOSS branded prefab walls, floors and trusses to major tract developers and would face a tough future if they turned away from that market and courted the small custom home market selling builders 2 or 3 homes a year.

However the East Coast has been doing just that for decades. Small and regional home builders are the bread and butter of most New England and Mid-Atlantic modular home factories.

But there is still a reluctance to go modular from many site builders. The East Coast factories have some of the best modular sales reps in the business and after trying to convert builders to modular for 5 decades the reluctance by site builders to convert to modular is still there.

Most site builders are unaware of the way modular homes are built in a factory. When they build a house in the dirt, they work from the outside in. Modular homes are built from the inside out giving them superior fit and finish, a better insulation system and ease of wiring and plumbing. Most site builders are not aware of the this real benefit. This is where a factory tour is important.

We're all reluctant to change. Trying to hit them over the head with why modular is so great might make them even more reluctant to that change. If East Coast modular factories have been fighting this for decades, trying to flip West Coast builders to modular is going to be downright brutal.

Site builders will point to their homes and say they doubt a factory home could ever measure up to the quality they build into every home. They are probably right about their quality but those same things are inherently built into modular homes.

Prospecting, converting a site builder to modular and getting that first order is a long process. If anyone tells you it’s not, they have not been in the industry for very long.

And this, my friends, is why custom modular housing has been, is now and will be a really tough concept to bring to the builders and factories West of the Mississippi and even on the East Coast.

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