Tuesday, June 13, 2017

Get Ready for the Next Wave of Modular Construction

In an earlier article I asked what it would take for US modular housing to become 10% of the US new home starts. One of the comments I received stated new modular factories would follow demand.

But what if I told you that the Chinese, Japanese and Swedes are building factories ahead of demand and then marketing modular’s benefits.

A recent study on the global uptake of modular/prefabricated housing has found that Sweden beats the world hands down.

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Swedish Modular Home

About 84% of detached houses in Sweden use modular/prefabricated timber elements, while in developed economies such as the US, Australia and the UK, no more than 5% of permanent housing has any significant prefabrication.

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Netherlands Modular Home

Countries in mainland Europe such as Germany and the Netherlands are pursuing the technique more seriously.

In Germany 9% of new residential building permits are for modular/prefabricated buildings, while in the Netherlands it accounts for 20% of all new housing.

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Japanese Modular Home

Japan is another world leader. There, up to 15% of new detached/semi-detached houses are modular.

A UK housing association has signed a landmark $3.2 Billion joint venture with a Chinese state-owned construction company to build 25,000 modular homes over the next five years.

As part of the deal, which has the support of the Government, CNBM will build six factories in the UK, creating 1,000 new jobs.

Government statistics suggest that the UK needs a million new homes by 2020, but last year just 142,890 homes were built, below the 200,000-a-year target.

Modular homes can be constructed off-site and then transported to their final location, resulting in a quicker and cheaper building process. At the moment, around 15,000 homes are constructed this way in the UK each year.

If the initial stage of production is successful, the new factories could produce 25,000 homes each year, more than all the IRC modular homes in the US.

Volvo XC90 

Volvo, the Swedish car maker, limped along as one of Ford’s pet European brands between 1999 and 2010. Then the Dearborn, Mich.-based company sold it to China’s Geely Holding Group and now, following an intense period of internal reinvention, Volvo is on a roll.

It’s popping out critically acclaimed new products, growing sales and even set to open a brand-new car plant ahead of demand next year – in America.

Almost without exception all of these foreign modular or prefab are automated producing homes that fit basic patterns. And just like the auto industry, customization part of these homes will focus on upgrades in energy, style and smart technology rather than custom home design.

The logical place for foreign factories to begin building modular homes would be in one of three areas that currently build a lot of non-custom homes; the Midwest, the Southeast and the Southwest. The East Coast/New England market is dominated by custom modular design while the West Coast might actually be a good place to start production if the foreign company used the same marketing strategy that Toyota did when they introduced the Prius to the US, selling a lifestyle that helps save the planet instead of selling just another car.

2 comments:

Devin Perry, NAHB's Building Systems Councils said...

Want to learn more about the modular home industry in overseas? The Building Systems Councils is hosting a webcast in December with Lindb├Ącks’, one of Sweden’s largest producers of modular homes. The webcast will focus on Lindb├Ącks new fully automated modular housing plant. For more details follow the link.

http://nahbnow.com/2017/06/grow-your-business-with-the-building-systems-councils-webcast-series/

Anonymous said...

Our cousins (Manufactured) own this mass produced simple personalized not customized market in the Southeast meeting the needs and budgets of the buying households. Most modular plants are focusing comparisons to site custom builds versus marketing modular value $$ lifetime versus our cousins.