Wednesday, April 17, 2019

What if the Impossible Became Possible for the Modular Housing Industry

The mountain of information about modular housing is staggering with most of it coming forward in the last 3 years when builders, developers, consultants, social media and investors suddenly discovered our 150 year old industry.

Modular hotels have begun sprouting up like daffodils in the Spring. Colleges have built dormitories, public and affordable housing developers have all begun building modular projects and cities are now looking at modular construction to speed up housing for the homeless with modular construction starting to lead the way.

What is beginning to be a puzzlement is the lack of new single family modular home builders coming into our industry. But is it really so hard to understand why?

When you closely at what types of modular projects are being started you will find large and small corporations are spearheading the movement. They are hiring talented young engineers and designers with high tech knowledge who really enjoy working on huge projects.

Automated factories running on the newest software and building panels on automated machinery used to assemble volumetric modules in the factory are already starting operations in the West. Many more are planned for all regions of the country.

For those factories that are embracing commercial modular construction for their large projects it is totally logical that they will soon begin expanding everywhere as labor, both skilled and unskilled, becomes harder to find and they choose to become more vertically integrated.

There is however one type of modular construction that is not experiencing the same meteoric rise and that is the single family modular home factory. It is being curtailed in growth by two forces.

First are those factories that build both modular and HUD manufactured homes. Natural disasters and easier and better lending for manufactured is having those dual factories concentrate more on HUD homes than IRC modular homes.

HUD manufactured homes, also known as single and double wides, has grown lately and their looks and features are rivaling many IRC single family houses. The HUD homes don’t face the challenges their IRC modular siblings face when it comes to state and local approvals, leadtimes and set to occupancy.

The IRC modular side has been encouraging their builders to sell more homes and that has led to much more custom and ‘pushing the envelope’ plans coming into the factories. State and local code offices are doing their best to approve them quickly but some of the details of the submitted plans are so unusual that it slows the entire process sometimes to a snail’s pace.

And this brings us to the impossible part. The modular housing industry has never enjoyed many builders with multiple locations selling IRC homes. In fact some of the modular factories that once had their own network of sales offices are now relocating their retail sales back to the factory itself.

It would appear that any type of regional or national modular home builder will never be able to have sales offices in strategic locations ever again. With the skilled labor no longer an ‘off the shelf’ item for multi-location modular home builders it means any dream of opening more than two locations will be almost impossible.

The only solution to major growth for our industry is if a national franchise would appear on the scene with buying power unseen in our industry, training in abundance for the franchisee and a service and consulting network to help in all types of situations.

If this were to become a reality, that franchise should become very popular not only for existing modular home builders but also for site builders wanting to move into modular and ‘new to modular’ builders entering our industry for the first time.

Look at how many franchise retail stores are in your town and how long they’ve been in business. You might have a 7-11, a Subway and one or more automotive dealers. They are all franchised.

So why not put it to work for the modular housing industry? It would be a shame if someone like IKEA or Toyota did it first.

Gary Fleisher (the Modcoach) is a housing veteran and editor/writer of Modular Home Build blog for many years.

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