Simplex Open House

Monday, January 2, 2017

Home Building’s “Elephant in the Room”

I’m always on the lookout for articles that relate to our industry and recently I came across this one written by George Casey highlighting the shortage of labor in the housing industry keeping us from fulfilling the need for new homes and multifamily housing.

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This is the first of two articles he has written and I would like to share both with you. The first article sets the tone for his observations and the second further explains what can be done to help.

What is interesting however is the second article where he seems to go off the track when talking about modular construction. Take a few moments and read both articles. They are quite interesting and thought provoking.

HOME BUILDING'S 'ELEPHANT IN THE ROOM'
Without innovation, today's home building business models risk extinction ... a manifesto from operations guru George Casey.

Over the past several weeks, I have had the opportunity to attend a variety of fall industry conferences: the Urban Land Institute (ULI) fall meeting in Dallas, a Vistage Construction Network CEO Roundtable in Boston, and John Burns’ Fall Homebuilding Conference in New York.

The latter was held the day after Election Day about two blocks from the New York Hilton. An interesting time to be in New York, to say the least.

I enjoy the mix of the conferences, because of the variety of viewpoints they provide.

ULI gave the industry view from home builder, master planned community developer, financing and technology perspectives. Big picture and long-view stuff with a national and international perspective. The Vistage Network CEO Roundtable involved construction and construction service CEOs from New England and covered both commercial and residential, but Northeast focused. John Burn’s conference was expansive and deep on home building, residential community development, finance, and demographics on a national basis.

As I processed all of the information, a recurring theme kept coming back, kind of like that “It’s a Small World After All” song from Disney World. Once you get it in your head, it never leaves.

The theme was that many of the major players in the industry are not fully recognizing and attacking one of the core challenges for the industry: the inability to generate enough housing supply to meet the current and even-greater-tomorrow demand that is on the way. The focus of many in the industry is actually on yesterday problems and solutions.

An inability or unwillingness to see the issues that are new and with us today and which lack focus or solution seems to be a blind spot for many leaders.

CLICK HERE to read the original article.


The second article and the one that I found a little off center, he gives four examples of how modular construction could save our industry. Each one is OK.


But when he holds up Blu Homes and Unity Homes as examples of how our industry should work and tells everyone “They are great current prototypes to understand and study” I say ‘hold up there George.’

Here is the second article:

THE ELEPHANT IN THE ROOM 2.0
Here's home-building operations guru George Casey's take on how tech-driven automation will drive into site-built home building sooner than later.

There are four logical routes to meaningful scale in a short period that I can see that could impact the business in a reasonable future timeframe.

One is for the current large-scale home builders, who own the customer-facing part of the industry right now, to either deeply partner with or acquire the existing major and minor modular and/or manufactured home builders and then drive automation to a Lindback-type scale, so that the labor to capital asset balance tilts more to the capital asset side, permitting higher levels of production without the skilled labor constraint.

The second is for the reverse to happen. The large-scale modular and manufactured home businesses either deeply partner with or acquire home builders to attain the customer-facing elements of the business and then invest in the automation to drive even higher scale.

The third is for one of the existing smaller prototype companies to perfect their product and process and then either create more production capability and front-end capability or acquire it by purchasing existing builders and/or factories to drive scale faster.

The fourth is for an out of country player who is familiar with this integrated process to come in and establish a beach-head by acquiring or deeply partnering with existing builders and factories to drive the scale.

I am not smart enough to know which of these might be the actual path, but all of them are possible. Who will have the vision, leadership, capital, and execution capability will be the deciding factor.

CLICK HERE to read his second article

1 comment:

Anonymous said...

Until and unless factories can adjust for more automation to increase production (Europe; China; Japan ) relying less on traditional framing and assembly ( the norm in most plants particularly the shotgun plants ) modular will not be the answer.

It seems that our manufactured brethren are capable of greater mass production than most modular facilities.

Of course, consumer acceptance that modular homes are identical to the national home builders and the NAHB help change the perception we can imagine and dream