Friday, July 21, 2017

The Great OSB VS. PLYWOOD Debate and the Future of Modular Housing

An article by Ken Semler, Express Modular


Did you know that today, OSB dominates the construction industry for sheathing in new homes? Except for a few states in the northeast, its use far exceeds that of plywood for the construction of side walls, sub-floors, and roofs. It wasn’t always that way. OSB, when it first hit the market, was viewed as a cheap and inferior product. It took years to achieve its position of superior quality and market acceptance by quality builders throughout the country.


The path of the modular home industry appears to be very similar to that of OSB.

OSB: A LITTLE HISTORY

OSB, short for Oriented Strand Board, was first patented in 1965 and hit the market commercially in the 1970’s. It is manufactured from cross-oriented layers of thin, rectangular wooden strips compressed and bonded together with wax and synthetic resin adhesives. The adhesives are extremely resistant to moisture.
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OSB, when it was invented, held great promise for the construction industry. It was cheaper than plywood and because of the way it is made, it has great mechanical properties making it particularly suitable for load-bearing applications in construction. The only problem was it needed time to mature as a product. When you unloaded it from your truck in the 1980’s, you needed gloves. The edges were prone to splintering. As it developed into the 1990’s, and with better binders and adhesives becoming available, OSB became even more resistant to moisture. And today, splintering is practically none existent.

Particle board is different from OSB. However, because the two are similar they are easy to get confused. Particle board is wood and adhesives but the wood portion is typically saw dust. It is cheaper and used in economical construction projects. Up until recently it has still struggled with moisture issues. While OSB became a superior product, it suffered initially because of consumers, and even builders, confusing OSB with the lower quality particle board products.

OSB VS PLYWOOD DEBATE

When OSB hit the market, some builders embraced it. It was a more cost effective product that had the required structural properties and allowed builders to provide a home at a better value. However, home owners thought it was cheap. OSB struggled to gain market share initially as it worked to improve quality and usability. Plywood, which is more expensive, also has its own issues with outdoor construction and the cycles of wet and dry as building on site exposed floors and roofs to multiple periods of rain and/or snow before it could be covered.


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In 1990, OSB production was pegged at 7.6 billion square feet. By 2005, that figure had grown to 25.0 billion square feet. OSB had to gain market acceptance, and through improved building technology, its quality equaled or exceeded that of plywood. All of this at a much lower cost. And because OSB can be manufactured from lesser-quality trees and with less glue than plywood, it is just a better environmental option.

Currently, OSB represents 66% of total North American structural panel production. While it got a rocky start, OSB has proven its worth on multiple fronts making it the dominant sheathing product for roofs, floors, and walls. While there are those that still use plywood, the extra costs just aren’t justified when a structurally superior product is available at a lower cost.

OSB, MARRIOTT, AND MODULAR HOMES

So, what was the turning point that brought OSB to its current market dominance? It turns out that during the 1980’s and early 1990’s contractors building multifamily homes started using it more and more. After all, there wasn’t a homeowner involved with misconceptions about its strength and value. It was a better structural product that just made sense to use. Its popularity and use exploded with multi-family buildings such as duplexes, quad-plexes, condos and apartments. Once OSB won the battle of market presence in multi-family construction, it then quickly gained the market dominance it enjoys today across the residential construction industry.

In 2016 Marriott Corporation, one of the largest hotel operators and franchisors in the world, decided to make the move to use modular construction for its hotels. Marriott can build up to 100 hotels in any given year. There is just no way to keep up that pace with today’s construction labor shortage. This is especially true if you are trying to build cost effectively and maintain a tight schedule. In the hotel industry especially, Marriott needs to have hotels finished, open and ready for booking rooms quickly. With the Marriott decision to use modular construction it can now deliver high quality hotels at a lower cost. And it does it in about ½ the time-frame it used to take.

Modular construction has been used to build homes for years. A modular home isn’t exposed to the elements during its construction. Over the last several years creativity in modular homes has exploded. You can build practically any home style or design you want and do it very cost effectively. When you factor in the structural superiority of modular construction when building a home, with a process that creates less waste and is more energy efficient, modular homes just make more sense!

THE DESTINY OF MODULAR HOMES

Modular homes have been around for many years. During that time the modular construction method has matured into a superior way to construct a home. Just like with OSB, there have been some stumbling blocks along the way. Early on, the basic rectangular boxes were viewed as cheap alternatives to site built construction. A big hurdle has been the confusion of homeowners, and even professionals such as real estate agents and inspectors, in knowing and understanding the difference between a modular home and a mobile/manufactured home.

After starting construction on several hotels using modular construction last year, Marriott is now showing many potential home buyers that stay in their rooms what a luxury hotel brand can create by exploiting the modular process. Perhaps modular homes have reached the turning point. In the next 10 years, modular homes could be the primary way a majority of homes are built in the U.S.

ABOUT THE AUTHOR: KEN SEMLER

Hi, I am Ken Semler the founder of Express Modular. I am passionate about this industry, our company, and the products we provide. Modern modular construction provides the ability to deliver healthy, safe, and energy efficient living spaces. I am a licensed builder/contractor in almost every state and believe that modular homes are the best way to provide virtually unlimited design flexibility at the greatest value.

Thursday, July 20, 2017

Modular Home Destroyed When Crane Tips Over

A modular home under construction in Oak Bluffs on Martha’s Vineyard was mostly destroyed Wednesday when a crane tipped over.
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Town police, fire, EMS and building inspector responded to the scene at Madison avenue on East Chop.

Oak Bluffs fire chief John Rose said the crane was attempting to set the modular home on a foundation when things went awry. “The load was up a little high. The crane began to tilt backwards and then went all the way over,” the fire chief said. No one was hurt in the incident, he said.

The crane came to rest with its cab towering high in the air. The modular units were heavily damaged.

“One module fell into the basement,” Chief Rose said. “The other module on the front half was destroyed by the crane, and the back half was split in half.”

The crane is owne by Baxter Crane of West Yarmouth. Reached by telephone Wednesday, company spokesman Kerry Ames said the next step is to send a representative to the Island to assess damage. She declined to identify the operator.

July Job Listings from Robert Sage Careers

Robert Sage Careers just sent over a big list of job openings in the modular and manufactured housing and commercial industries.

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Modular/Project Manager/SW

Modular/Estimator/SW

Modular/Major Projects Sales/SW

Modular/HUD/Production Manager/South

Modular/Production Manager/West

Modular/Design Engineering Manager/West

Modular/Project Manager/West

Modular/Design Manager/North East

Modular/Purchasing Asst./SW

Modular/Major Projects Sales/North East

Modular/Project Coordinator/North West

Modular/Sales/Midwest

Modular/Business Development/SW

Modular/Sales/South East

Modular/Project Manager/South East

Contact them at Robertsagecareers.com for more information and to apply for one of these jobs.

Wednesday, July 19, 2017

American Modular Systems Installs First Gen7 Two-Story School in LA

American Modular Systems (AMS) installed the first-of-its kind, two-story prefabricated building at Educare Los Angeles at Long Beach on the Clara Barton Elementary School campus in Long Beach on Saturday, July 15th.

The final eight modules of the 31,483-foot state-of-the-art campus were craned into place just a month and a half after the project's groundbreaking. The new Educare school will serve low-income children in the Long Beach Unified School District with a full-day, year-round early learning program that helps prevent the achievement gap between children in poverty and their middle-income peers long before they enter kindergarten.

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"We're proud to have Educare Los Angeles at Long Beach as our first Gen7 two-Story campus," said Tony Sarich, VP of Operations for AMS and Gen7 Schools. "We introduced our Gen7 Two-Story solution last fall and were able to design, build and install a custom modular campus in less than five months—something that wouldn't have been possible with conventional construction."

The innovative campus design includes a two-story administration building with 25' high ceilings and three single-story classroom buildings. The single-story buildings can accommodate 200 students in 16 open-concept classrooms that are bright, quiet and healthy, with abundant natural light, premium acoustics and fresh, clean air providing an inspired and positive learning environment for young children.

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Through a collaborative design process, AMS was able to modularize the building design to deliver the same high-end concept faster and at a significantly lower cost than conventional construction. Designed to be flexible, adaptable and sustainable, the buildings are fully customized to meet the school's unique program needs. Once complete, the prefabricated campus will be indistinguishable from conventional construction.

District Architect, Brian Dougherty, said, the challenge at Educare Los Angeles at Long Beach was to meet very high design expectations while maintaining strict budget control on an occupied campus.  

"Partnering early in the process with the District and AMS enabled us to optimize budget, schedule and design utilizing the Gen7 approach," Dougherty said. "The modular construction delivery has significantly shortened the disruption of construction activity onsite while providing a legacy environment for the children and community."  

Designed to exceed California's Green Building and Energy Code standards, Gen7 buildings are solar-ready, engineered to support future photovoltaic panels. The two-story administration building was test-set at the AMS factory to ensure a perfect alignment, and then dissembled for shipping. Delivered 90% complete, the building will be finished onsite, with the elevator, staircase and overhangs installed in early August.

American Modular Systems (www.americanmodular.com) is one of the nation's leading modular manufacturers, designing and building quality commercial and educational facilities since 1983. Gen7 classrooms (www.gen7schools.com) empower communities to create healthy, energy-efficient learning environments that will benefit students and educators for generations to come.

Tuesday, July 18, 2017

A Referral Secret for Modular Home Builders

Marketing your modular home business usually involves taking out an ad in a newspaper, making improvements to your website and telling everyone you meet throughout the day what you can build for them.

Some of you have begun to use social media to market your homes with more builders doing it every day. This is a great way to market your company. Pictures of modules being delivered and set, photos of finished homes and even videos and ‘live’ feeds are being posted, especially on Facebook.

But if you want to step it up one notch and start getting more referral from your current customers, you may want to try using this secret marketing tool.

We all like to brag about our accomplishments and things we buy but after a while it becomes irritating to others.

“Did you see my new BMW?” or “You should see the huge ring I bought my wife” can only be told so often before it goes from informing your friends to outright bragging and one upmanship.

So how do you get your customer to tell all their friends, relatives and co-workers that they are building a new home without saying it so often that your company becomes associated with their ugly bragging?

Here is the secret of turning their bragging into a powerful referral.

Step One: take pictures of the customer’s new home just like you always do. Maybe of the modules arriving and being set.

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Step Two: make sure you take pictures of your customer and their family standing in front of their home. Take at least 3 or 4 of the family at different stages of the process; watching the modules arriving, watching the crane set and at least 2 of them standing in front of the weathertight house.

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Step Three: Post the pictures on Facebook with the customer’s first names. Always ask permission to use their last name as some won’t want it.

Step Four: Email your customer when you post it and tell them they look great standing in front of their new home.

Now the most amazing thing will happen. Your customers will tell everyone they know that their ‘builder’ posted pictures of their new home and how much they like working with you. You will be their hero.

The views and comments of that post will surprise you. Referrals without any extra effort on your part.

One extra step, make a comment on the FB post AFTER several of their friends make comments to reinforce just how great it is to have them for customers.

It’s their time to bask in the limelight without bragging.

People love compliments and putting their pictures on Facebook will go a long way to bringing in referrals.

Westchester Homes Announces Next Meet & Greet for Builders

Attention Builders in New England and East Coast: Sign up today for Westchester Homes' next Meet & Greet. For more information, CLICK HERE


Monday, July 17, 2017

5 Reasons You Can't Miss the Building Systems Housing Summit!

Come to the premier event for the systems community, the 2017 Building Systems Housing Summit! You won't want to miss this opportunity to get exclusive education on topics that matter to you, and network with your peers in the off-site construction community. Here are the top takeaways from attendees at the 2016 conference, and why you can't afford to miss it this year!
 
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Unmatched networking with the nation's leading building systems professionals and the opportunity to meet with industry peers to grow your business.
Gain in-depth knowledge on the latest industry trends for a variety of off-site construction techniques, a detailed economic forecast and exclusive education sessions curated just for you.

Opportunity to engage national building systems leaders in important discussions on key industry issues.
Hear about emerging trends as you engage with a diverse cross-section of leading industry suppliers.
Celebrate with your peers at the BSC Jerry Rouleau Awards for Excellence in Home Design Luncheon, see systems-building in action on the Housing Factory Tour, and have a blast at The Bash!

Join Modcoach at one of the events!

Enhance the success of your business at the Building Systems Housing Summit in sweet Hershey, PA this October 8-10. Register early and save!

A Modular Statistic We Hide

For years after the housing recession of 2008 the modular home building industry was stagnant. Then homebuilding began an upturn and houses once again began flowing off the production lines at factories across the US.

Economists, city planners, housing experts, Architects and the media began telling everyone that modular and prefab was the future of not only homebuilding but hotels, hospitals, affordable housing, ADU’s, highrise apartments and even housing for the homeless.



Many wood based modular factories added commercial structures to their lineup and projects started sprouting up all across the US. Marriott Hotels discovered the cost and time savings of modular. Hospitals and assisted living facilities are now following their lead. Hundreds of projects are on the books for modular factories.

Modular hasn’t been this strong in quite some time. Of course there are those pesky problems that keep popping up like the skilled labor shortage, transportation restrictions and over zealous code officials but all things considered, it ain’t too bad!


However, there is one part of our industry that gets almost no attention and will not see any improvement in the near future and that is the “New to Modular” home builder.

I did a very stealth survey over the past couple of years asking factories from North to South, East to West and all points in between how many new builders they brought into their company and if they had a training program.

The results make me wonder if there will be a modular home builder anywhere in the country in 20 years.

I found only two factories that offer any training program when a builder joins them and not one that has an active “New to Modular” acquisition program. Let me make this clear. Having an advertisement asking a builder to visit your factory is NOT a recruitment program. Acquiring a builder from a competitor doesn’t count as an acquisition, it simply moves the same number of new homes around to another factory.

Asking factories how many ‘new’ builders they brought in over the past two years yielded about 4 per factory with most factories telling me that none of them are buying today. Zero for Four! Not a good statistic. Not at all!

Some factory owners told me they do not accept “New to Modular” builders simply because of that statistic and that don’t want to invest in a training program. They prefer to ‘acquire’ builders from their competitors.

A couple of factories have a training program but it revolves around how to work with the factory and who the builder should be talking with about different parts of the project. Very little or no training on how to become a successful modular home builder.

Since 2014 there have probably been less than 10 successful “New to Modular” builders joining the ranks of modular builders across the entire US. NOTE: a manufactured home dealer taking on modular homes does not count as a new builder and neither does a developer filling a community with homes or townhouses as they usually hire Project Managers familiar with modular construction.

Why aren’t people looking to become modular home builders? It’s not like becoming a site builder where you should work your way up the ladder before building your first home for a customer. No, an executive let go from a big corporation with a nice severance package really only has to know the fundamentals of construction to become successful as a modular home builder. 80% of the work is done by the modular home factory, the delivery and set crew, the excavation and foundation people and all that is left is the finish work which can be easily subbed out.

That executive probably knows marketing and possibly sales and I’m sure has taken accounting courses in college and might have had many people working under them at their last job. They know how to take charge. They like structure.

Lots of these recently laid off executives with big severance packages look to franchising to meet their needs for structure and training, neither of which is available in the modular housing industry.

Please don’t get me wrong. America’s modular housing industry is great. We produce some of the most energy and cost efficient modular homes in the world. Our degree of customization is unmatched anywhere. Our production workers are the best. Our factories are working at or near capacity trying to keep up with the new demands from the commercial side of our industry.

Our only downfall is a lack of acquisition and training to attract “New to Modular” people that don’t even know we exist when they begin looking at either changing careers or moving out of ‘site building”.  

Now let us take a look at Jim and Jane Smith, a young couple where one of them was laid off from their corporate job and they decided to look at franchising a Dairy Queen in their town. After inquiring and learning that a Berkshire Hathaway’s Dairy Queen (same people that own Clayton Homes) was appropriate for the town, they decided to jump in.

Neither of them had ever worked in a fast food or any type of service business so this would be a totally new experience.

The first thing they learned was the franchise fee for a Dairy Queen restaurant is $25,000 to $35,000. The total estimated investment ranges from $382,000 to $1.8 million, with liquid cash available of $400,000. A 4-5% royalty fee on gross monthly receipts is paid to the company.

The next part required Jim and Jane to go through an extensive training program.

There are currently four required components to initial training:
  1. The Management Training Readiness Assessment (MTRA)
  2. SERVSAFE certification
  3. The American Dairy Queen Corporation’s training program (three phases): Phase 1, Product and Equipment Training; Phase 2, Systems & Management Training; Phase 3, People, PRIDE and Profit Training.
  4. A cake decorating and certification course
The franchise’s designated manager and two assistant managers are required attendees for the first 3 components. Only one person is required to attend a cake decorating certification course. Prior to attending the franchiser's training program, the required attendees must pass the MTRA, which is administered at a location designated by the franchiser. The MTRA measures leadership, customer service, decision-making, prioritizing and business math, and may be modified by the franchiser at any time. The franchise’s controlling owner (as defined in the franchise agreement) must, at the franchisee’s expense, attend all meetings the franchiser holds or sponsors in their area or region including all DMA or other marketing area meetings, and all meetings relating to new products or product preparation procedures, new DQ system programs, new operational procedures or programs, training, restaurant management, financial management, sales or sales promotion, or similar topics.

Here are the required expenses before the doors are opened for the first time:
  • Initial franchise Fee $35,000-$35,000
  • ALTA Survey $0-$5,000
  • Initial Training Fees and Costs $1,125-$11,825
  • Travel And Living Expenses for Training Programs $23,000-$38,500
  • Building Construction and Leasehold Improvements $550,000-$900,000
  • Construction Consultation Services $0-$7,500
  • Building Plans, Design Intent Plans and Architectural Seal $15,000-$45,000
  • Equipment (Including Signs and Point-of-Sale Systems) $390,000-$530,000
  • Training Inventory $5,000-$15,700
  • Opening Inventory $8,300-$38,900
  • Utility Deposits, Business Licenses and Government Charges $4,000-$17,000
  • Attorney's Fees $1,000-$8,000
  • Additional Funds (3 Months) $51,000-$198,000

ESTIMATED TOTAL $1,083,525-$1,850,425


But Here Is The Bottom Line:

The average Dairy Queen Franchisee makes $70,000 a year!

Now let’s look at what Jim and Jane could have made if they had chosen to go with a modular home factory that offered a training program.

The average small builder makes $86,000 a year.

Even if a factory charged Jim and Jane a whopping $50,000 for training and assistance on marketing, selling and building their first modular home, they would have made an average of $16,000 more without all the hassle, fees and red tape of being a Franchisee of a major company like Dairy Queen, 7-11, Taco Bell or Jiify Lube.

Why doesn’t this happen in our industry?

Share your thoughts either pro or con.