Monday, January 25, 2021

Housing Starts to Increase by 7% in 2021. Can Modular do Better?

Today, more than ever, America needs more and better homes.  And off-site construction is literally tailor-made to provide solutions for builders struggling to meet the demand.



By Scott Stroud, Program Director, MhCRM.com


The Dodge Report projects that single-family residential construction will grow by 7% in the next 12 months, fueled by continued low-interest rates, a pandemic-driven need for safer environments, and the realization that working from home is here to stay.  In addition, the website Linchpin lists modular construction as the #1 Trend in construction methodology in the coming year.


These factors indicate that a window of opportunity is opened for the modular industry.  Off-site residential construction still comprises a woefully small percentage of the new home market, even with all the proven advantages to the builder and the buyer.  We have been handed a golden opportunity to not just keep up with the trend, but to grab a greater share of the market.


The questions are, then, will we as an industry rise to the opportunities that are being handed to us?  What will it take to not only keep up with the building industry but begin grabbing a greater share of the market? Here are three things to consider:


Unified Message – Who We Are



I set up Google alerts for myself to let me know whenever there is an article published about our industry.  In order to get a complete report, I have to set alerts for multiple terms – modular; panelized; factory-built; volumetric; prefab, etc.  We know that these describe the nuances of the various methods of construction, and these might make sense to us, but all these different terminologies can create confusion with the general public as well as for builders.  


If we can ‘pick a lane’, that is, decide what name best describes our industry and start using that to promote a unified message, imagine how much mileage we could get! Europe has developed the term Modern Methods of Construction (MMC) as the industry label.   “Off-site Construction” might be the most encompassing term, and I’m hearing that more and more, but “Modular” may be the most recognized by the general public.   If the goal is to grow our market share by attracting attention to the benefits our methods offer, then unifying our marketing message will achieve spectacular results.


Massive Education & Recruitment 




Whatever the home building industry knows about Off-Site Construction, it isn’t enough.  If it were, then our industry would be 4 times its current size!  Builders need to be educated as to the benefits of moving away from building onsite and the issues involved – labor, waste, time, staging, loss and theft of materials, etc.  


Developers need to learn how streamlined the assembly process is and how it lessens the impact on the community (one builder described his first modular set as a “surgical insertion”).  Zoning authorities, architectural review committees, and appraisers need to be educated on how in this case different does equal better in tangible terms – an upgraded value of the home and of the community.  And off-site construction should be on the agenda of every construction class and every trade school, including those sponsored by the NAHB. 


How will we create these educational tools and get them into the hands of those that need them?  By working together, sharing our victories and challenges, strengthening our inter-industry communications through collaborations, and building on each other’s successes.  Blogs such as this one, social media groups like LinkedIn’s Modular and Manufactured Home Building, and websites such as LearnMH.com. can and should become resources that both attract and educate new home professionals.


Frictionless Business Processes



Growing often means getting out of our own way; creating processes and systems that streamline basic business functions and that free up our time and attention, letting us focus on the more important things.  That can mean assembling the right team, making sure that each team member is in the right position, and delegating or outsourcing key tasks.  


Growing your business also requires utilizing the right tools and technology to create more frictionless workflows to increase our capacity.  Lead generation and website management can be outsourced to marketing companies specializing in attracting new home buyers and that helps you realize a 200% - 300% better ROI on your marketing spend by generating more sales for less money.  Sales processes must be closely monitored with the use of an automated contact management program.  Estimates should be carefully calculated and prices based on an expected profit margin, not just on costs.  Construction and service management software can increase profits, reduce delays and help increase your capacity.


Is this the dawn of the ‘golden age’ of offsite residential construction?  That largely depends on the choices you make in your own organization and our willingness and ability to coalesce as an industry.  If we can get it right, then yes – this can be the year that our industry begins to play a more meaningful role in the new home market.



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