Tuesday, December 10, 2019

Developers Begin Looking at Entering Modular Manufacturing

There is a growing trend of developers wanting to use modular construction to shorten their build-out times but with only a finite number of modular factories in the US, many are starting to build their own factory.

We are seeing this happening in the West, especially in CA and CO where the need for multi-story affordable housing is increasing rapidly but there are few modular factories to handle this snowball of demand.

2019 has seen several new modular factories opening West of the Rockies and many more planned for 2020, all geared up to supply the affordable housing market and most of them are being built by developers for their own projects.

In the East where there are more modular factories, that demand is currently being met but with Google, Amazon and Microsoft moving large segments of their management and research facilities to the Metro DC and northern VA area, demand for affordable housing there will soon increase manyfold.

Those established East Coast factories that for decades relied mostly on single family home builders have been shifting some or most of their production to projects of 20 modules and larger. However this creates a secondary problem many of those factories feared might happen and in fact it is starting.

The problem is inconsistent production. When these factories were building mostly homes and townhouse projects, keeping the line filled was not a major problem but projects are anything but consistent. If a 100 module project is put on the production line today and takes 6 weeks to complete, it means no single family home can be produced because of the tight schedule required by the developer of the project.

That single family home goes to the end of the production schedule where hopefully it and all the other homes that have been ordered will be completed before the next 60 module project, requiring another 4 weeks of production time.

In the winter, many factories look for projects to keep the line full as few modular home builders in the North want their homes delivered. That’s great in theory but all it takes is one of those projects to be delayed a month or more and you can just throw all your best laid plans out the window.

You have nothing to build for an entire month and when the project once again is scheduled for the production, tying up 4-6 weeks, all those new homes builders who ordered their Spring starts need to have them on the line. But the factory promised another developer they would start their project and so it goes, on and on. Feast or famine.

Developers in the Western US are doing something about this problem by taking things into their own hands. It won’t be too much longer until East Coast developers say “Enough” and begin buying their own factory or building one.

Gary Fleisher is a housing veteran, editor/writer of Modular Home Builder blog and industry speaker/consultant. Contact modcoach@gmail.com


Audree Grubesic said...

It’s funny that you are writing this article because many individuals I have spoken with in modular construction are building their own factories. Like Rise Modular and several others in Colorado. They are the forward thinkers of this industry and it’s exciting to see this progression of new business.

Jcarter@themodcoah.com said...

Well actually you guys are on to something I helped Rise get off the ground. They are not in Colorado , they are in Owatonna MN serving the MN market.
I currently have 1 factory being built now In Colorado thefarmatbv.com and one one Texas Tatum TeK then in St Louis and then off to Florida all these factories I am working on will be developer backed factories. Ohio is up and running now in Cincinnati . slate-homes.com
Gary as an old operator from the hey day of residential you know exactly why we need these factories that are backed by real developers that can feed these plants consistently.
Design + Manufacture + construct. Is the new factory model to solve affordable housing.
Jason Carter

Steve L said...

In Napa, CA

Least cost way for residential factory prodcution to avoid inclement weather

An idea worth exploring. Just in time local factory specific to the subdivision project, hire folks while grading in the factory for prefab prodcution, deliver on a flat bed and close the factory when prodcution of the assembly is finished.

Unknown said...

Just set a 4 box model with panelized breeze way for a new plant in Clio sc,that will be only doing apartments, very state of art assembly equipment.