For more than 50 years there have been numerous studies of the modular housing industry and the conclusions reached by all of them is that our industry is very fragmented and over regulated.
Today we hear about all the wonderful things modular and off-site construction is doing to meet the demand for affordable and custom housing but the underlying problems from 50 years ago are still the same ones we are facing today.
Fragmentation within our industry was first noted in the 1975 study by Field and Rivkin. They simply mentioned it as a problem and it is still a major one.
There are five major fragmented modular housing regions in the US.
The West Coast has a few true custom modular home factories but the demand for their homes is relatively small compared to the modular factories that are producing cookie cutter affordable multistory apartments and housing for the disadvantaged. All the new technology you hear about at the big off-site conferences and seminars is almost exclusively directed to the West Coast type of modular construction.
When the media trumpets the virtues of modular construction it is mostly about the money flowing into the West Coast market to build ‘state of the art’ factories to feed the West Coast housing monster.
The Midwest and the Southeast are where most of the houses, both modular and manufactured (HUD), are produced and shipped. There are a few custom modular home factories located in these regions but the vast majority are producing either HUD and/or Hudular type modular homes.
The Southwest region is dominated by HUD manufacturers. Enough about them.
The MidAtlantic and New England states see the widest variety of modular housing. There are HUD factories in these states along with a couple of ‘plan book’ type modular factories and a good number of true custom modular home factories.
Fragmentation becomes obvious when you look at the top two associations serving the modular housing industry, the Modular Home Builders Association and the NAHB’s Building System Council.
Both would love to serve the entire country with their services but in reality neither has been able to reach very far beyond the East Coast states. The reason is quite simple. Not only are the individual regions of the country different in their approach to modular, they don’t have much common ground to discuss when they actually try.
It’s like trying to teach a pig to sing, nobody knows how to do and nobody really cares to do it. The different regions see no need to try to understand what the others are doing.
Every study done about modular housing since 1975 has cited fragmentation as a big reason for there being no nationwide modular home company with factories in almost every state.
HUD on the other hand has the “FOUR C’s”, Clayton, Champion, Cavco and Commodore and when HUD (manufactured homes) conventions and meetings take place anywhere in the US these four and dozens of other HUD factory brands show up as the problems they face are universal.
There really isn’t much that can be done to improve our industry’s situation. Remember that singing pig?
Over regulation of the modular industry has also been with us long before that 1975 study and it appears to be getting worse.
Looking at a site built home, even if it uses panelized walls, trusses and floor panels, finds that giving the plans for to the local or city code and plan regulators is all that is needed. These code and planning people have been trained to look at a set of site and/or off-site plans, mark them for defects and send them back to the builder or developer, wait for the corrections and then approve them.
Each local jurisdiction must follow their State’s latest code regulations and cannot reduce them on their own but they can add more regulations and make the state’s approved regulations tougher for their locality.
However when it comes to modular housing things take a turn for the worse. Apparently many state governments don’t think the local code and planning people are smart enough to figure out a set of modular home plans and have added layers of bureaucracy to the process.
First the states said that modular houses built in a factory need to have their plans approved before it can go to the production line and since the factory ships to many different states there has to be an independent third party inspection service that can review each individual plan no matter where it will be shipped. These third party inspection services were already doing plan review and approval stamping for HUD so they were the logical choice to review and give approval stamps to modular housing.
Or so it would seem. However the government thinking is that third party inspection services and local code enforcement aren’t quite up to the task of reviewing a six sided volumetric module and installed “Manufactured or Industrial Housing” departments to make sure those less competent third party and local people actually knew how to review a modular home plan.
Today we find many states not only requiring a third party to sign off on the plans prior to it going into production they also require a couple of “good old boy” state regulators to review the plans again and return every one of them to the factory to correct a missed code number or some minuscule item.
Is this being done to help build a better modular home? Probably not but if they don’t find problems with every single plan sent to them the state may wonder why they required an entire department to review them in the first place.
These state reviewers follow the old rule of “Nobody has ever built a perfect house” and will hold up your plans until you do what we say.
This is not Modcoach saying they do this; it’s every factory person I’ve ever met, most third party inspectors, every builder and it has also been mentioned in every study of modular housing since 1975.
Can you imagine what would happen if all of sudden factory engineers and third party inspectors could submit their plans to the trained staff at the local code and planning departments just like their site built siblings?
You would see a huge increase in the number of modular homes being sold by local builders, factories expanding their production and a much smoother pathway to building a customer’s new home.
These aren’t the only things all those studies found that have been impeding modular housing's growth.
Rising transportation costs, poor information flow within our industry, an adversarial problem between factories and builders, the competitive nature within our industry and market resistance are just a few more areas that are hindering our industry’s growth.
Can these impediments be overcome? They have been a constant for the past 50 years and I see no reason to believe there will be many solutions within the next 50 years.
