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.

4 comments:

Brad Willem said...

Great analogy, but..... If you are looking at commercial use, Marriott is using this technology for getting it's products to market faster, which means butts in their beds sooner and beginning the ROI cycle much earlier, which is a great way to get a project to profitability faster. I'm a bit out of my lane in the commercial industry but I still have to assume the hard cost of the project is higher. Again, that is ok if in the long term the additional costs are over come with the revenue stream over an increased/earlier time frame.

Where the analogy breaks down, through the lens of a site builder (one who believes Mod is the future and would love to figure out to how make it work for the masses), is that OSB had a monetary value to the builder which in turn can either pocketed or lower the cost of their homes from the onset. A lot of objections can be overcome when there are dollar savings involved, right, wrong or indifferent. There is no doubt there are some advantages for the average home buyer for modular, but there are several disadvantages as well that currently are not translating to the average buyer and that's mainly cost. Its too expensive, at least in the Midwest, right now for mods to compete with site built on a cost basis and that's the number 1 driver for most homeowners. There are of course some benefits for single family site builders to use Mods to get a job done sooner, but the return on additional costs are not there and this is a value most customers would not be willing to spend more to have. In the end builders can recognize the intrinsic value of quicker build times, possibly better structure, lower overhead but all of those appear to be over taken by additional costs and limited design options, with out even mentioning the regulatory issues of mods in city/suburban areas, but all of these don't translate to a better cost per square foot home for the buyer/end user.

There are a lot of posts and articles about the industry needs more builders and or more factory capacity to grow, or greater efficiency and/or structure with Mods which may be true but really the industry needs home buyers to see the value. Believe me, if there is a market the builders and factories will come, but the value needs to be palpable for the average Joe and Jane home buyer. There has been some success with the "cool" factor but that's a niche market at best. The best thing the Modular Industry can do right now to take some market share from Site Builders is leverage the Millennial Generation and their acceptance of smaller urban style homes, which is a weak spot for site builders as they are not the most efficient to build on site.

Again, take with huge grain of salt, just a site builder with opinions here.....

Ken Semler said...

Brad, I think it may come down to regional variations in home costs, and in the Midwest with shipping distances. In the more crowded northeast and mid-Atlantic the numbers for modular are still favorable over site built. In the higher cost of living areas, the savings can still be significant. On the west coast, the same favorable variables exist, however the production modular factories are just far and few between... for now.

On top of the cost savings there is a savings of time. From the builder perspective, once you get the modular process down (which is a different from site building) the difference is huge. As a modular builder, I just can't believe people still build homes outside anymore. Too many hands in the pot and too many variables that I don't have control of but that I am responsible for. In any case, there are still locations that aren't reachable with large modular sections. But in situations you have other building systems options such as panelized construction. Overall, I think true, on site construction with everything being done onsite will continue to be reduced over time. How long that takes is what's up for debate.

Anonymous said...

I still prefer plywood over OSB any day. In high moisture/humidity environments like the southeastern and gulf coasts and Florida, there is no question which is better. But when all you offer is OSB I guess you have to try to sell it as better because it is "newer", "engineered", "less costly", "accepted by code" but that doesn't make it better.

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