Monday, February 8, 2021

Modular Housing Factories Face More Problems Than Just a Skilled Labor Shortage

The good news for the modular housing industry is every factory in the US is working at near capacity and in some instances, factory lead times for delivery are being pushed to late 2021.


The labor shortage is usually the number one reason modular factory management says is making the lead times so long. But looking a little further down on the list brings to light some other reasons why the modular industry can’t keep up with demand.


From Georgia to Pennsylvania, many modular factory workers are making more money staying home than they would if they came to work. Unemployment plus the stimulus checks are such that they don't feel the need to go to work. Especially since they know the job will be there when they finally decide to return to work.


I was recently told by a modular production line supervisor that he was bringing home almost $600 a week before COVID-19 but once his state’s Governor shut down the factory he was receiving $1,000 a week, through unemployment benefits and stimulus checks. 


He returned to work but many other workers remained at home. When a factory is forced to maintain the production line with fewer workers, management is forced to ask the others to pick up the slack. That’s when tempers can flare resulting in arguments and screaming matches. 


In most places, manufacturers are hiring low skilled employees just to fill the gaps. It is also not uncommon for people to just not show up for work. 


One large modular home factory had 30 people not show up for work one day and when the supervisors asked the ones that did show up to pitch in at different areas, several others got angry and walked out. 


Demand is high and production is low, tempers flare and it’s not uncommon for builders to get verbally abusive with the factory overextended lead times. They promised their customers a finished home and now have to tell them their home will be delayed a couple of months and by the way, the price just went up.


The majority of facilities are starving for quality labor and in most cases any type of labor. Backlogs are incredibly long and production at a fraction of what it was before COVID-19. Some workers are opting to not work because they can still draw a relief check while staying home even though they are needed at the facility to work.


Another dynamic is that raw materials are going up across the board. Fiberglass insulation producers are actually putting manufacturers on allocation.


It will get very interesting when production increases as laborers are added but the factory’s suppliers can’t fill the factory’s orders. 


In other words, we can supply at current levels but not at double that level. And the level we are supplying today isn’t really the factory’s true capacity, it’s only the capacity a smaller workforce can produce.


I’ve visited a few plants that had multiple lines operating before COVID-19 that now only have one line operational due to lack of product and labor.


Modular is truly the only way to meet the needs of custom and affordable housing in the US but until we figure out how to fill the needs of the production lines and get adequate materials to build the modules, housing overall will continue lagging demand.


Gary Fleisher, the Modcoach, writes Modcoach News and Modular Home Coach blogs as well as the best site for off-site consultants, Modcoach Connects


Contact Gary at modcoach@gmail.com


No comments: