Monday, January 25, 2021

Major Japanese Electronics Company Enters Prefab Housing Arena

Lots of formally non-construction companies, both large and small, have begun entering the modular and panelized housing industries for the past decade. 



Toyota, IKEA and other big names have been operating in our industry for quite some time but over the past few years investment companies and large manufacturers operating non-construction companies have jumped into the fray with mixed results.


Now Panasonic, better known for electronics than construction has finished its first New Zealand home. External walls, roof panels and truss materials are from Panasonic's factory in Japan.


Panasonic Homes shipped the prefab components to New Zealand to fabricate a three-bedroom prototype, the first of many it will produce with one of New Zealand's largest house-builders, Mike Greer Homes, doing the land prep and finish.

The company entered the New Zealand housing market in 2018 when the government's KiwiBuild program encouraged foreign companies to look at NZ for housing.

Gary Fleisher, the Modcoach, writes Modcoach News and Modular Home Coach blogs as well as the best site for off-site consultants, Modcoach Connects


Contact Gary at modcoach@gmail.com






Saturday, January 23, 2021

"FOB" Problem Areas to Avoid in Modular Construction

The initials “FOB” stand for either "free on board" or "freight on board." Either way, it has the same definition. When using the term in the modular home industry, buyers and sellers attach FOB to the beginning of a location to show the point at which the modules change hands from seller to buyer.




Sounds rather straightforward but those 3 little letters can spell big problems in some cases. Taking a deeper look into where the problems can happen and who is responsible for the grey area between the factory door and the acceptance by the builder reveals a murky mess for builders and their customers.

Starting at the factory, a module is loaded onto a carrier, pulled into the factory’s storage yard where it awaits delivery to the builder’s jobsite. This is a very small part of the journey but can set the stage for major problems.

When you drive past a modular home factory there are usually 10-50 modules in their yard waiting for delivery, perhaps more in the summer months. They don’t set there long as most are prepaid by the builder prior to leaving the yard. Occasionally you will find a builder that can’t take their home because of mud or snow at the jobsite. How long can a module set in the yard shrink wrapped? You would think time shouldn’t matter since it’s wrapped.

However, a module setting in the factory’s yard is subject to all sorts of extreme weather. Everything in the module has been produced in a climate-safe environment, wrapped and sent to the yard where rain and driving wind could create tears in the wrap letting water seep into it causing either damage that goes unnoticed for months before showing up as black mold or in some cases, drywall damage that must be repaired as soon as it is detected.


Problem area number One.
Who is responsible for inspecting and repairing this type of damage while the unit sets in the factory yard. The factory completed the module and placed it in the yard awaiting the truck to deliver it to the builder. Is it still the factory’s responsibility to make those repairs or the builder who has already paid the factory?

Some factories put that responsibility on the builder (FOB, the factory door) but most factories make the repairs before shipping it or preauthorize the repairs upon the house being set (FOB, the factory gate).

Problem Area Number Two.
Shipping is the next step in the chain of custody for the module. Many factories have their own trucks and carriers delivering the modules while others hire outside transport companies. This simple act of choosing who delivers the module changes the FOB location.

If the factory delivers the module themselves and something happens to the module in transit such as major drywall cracks caused by extremely rough road conditions, scrapping the exterior walls on a tree, wall, etc and the worse possible situation where the module is destroyed in an accident, you would hope FOB location would move with the factory trucks. A few factories that own their own trucks and deliver the modules actually have their trucking company under another corporation for liability purposes. Now FOB is back to either the factory door or the factory gate just the same as if the module was transported by a third party.

As a builder, you need to learn exactly who is responsible in case unforeseen problems occur while on the road to your jobsite.

And let’s not forget barges which are used to get the modules to island jobsites.

Problem Area Number Three.
Assuming the module arrives as pristine as it left the factory, the next cog in the delivery wheel only has to move the module about 40 feet. The crane company can make or break a good set.

Pick points are usually determined by both the crane operator and the set crew. A two-point pick on a long heavy module containing the kitchen and a master bath could easily cause inordinate amounts of stress on joists, walls, windows, doors and ceilings. Being at a jobsite and hearing a cracking noise while the module is being put into place makes everyone jumpy. Most of the time when the module is put into place everything looks fine upon inspection but be aware, that loud popping noise broke something. As the builder, make sure every module is being picked up by the correct number of lines and at the proper locations.

Crane companies carry insurance for visible damage to the module and usually take care of notifying their insurance carrier quickly but many crane operators don’t report a loud cracking noise to their company when there is no noticeable damage. Once you sign off on the crane set, you, the builder, are now ‘on the hook’ for any damage they caused.

Set crews are the professionals that guide the crane operator while setting the home or multistory building. After the set is complete, they quickly “weather in” the building so the elements like snow or rain can’t get inside the house envelope.

Problem Area Number Four.
Over the years I have found three types of set crews. Independent, factory and ‘pick up’.

Professional set crews will give you a complete scope of work to be done at your jobsite based on how much work you, the builder, want them to complete. They are fully insured and in some cases bonded. The people they hire are skilled in their tasks and want to do a really good job for the builder so they get to set the builder’s next house and the next house and so on.

The next next set crew is from the factory. Some factories will give the builder a quote to set and even finish the home. This might be a good option as the factory people would seem to want to make sure everything is perfect when they hand over the house after the set and even more so if they were contracted to finish it and hand over the key at the end. With this method, does FOB move with the factory set crew to either the completed set or the completed home finish?

Finally there is the Pick Up crew. These set crews are usually people that have worked for a large professional crew where they learned the skills necessary to set and/or finish the house. The work can be on par with the full time set crews but there can be real problem(s).

First, the pick up crew will always lowball the job making it an attractive alternative to the price from the established set crews. When they lowball they are probably leaving out one or more things the builder will come to regret.

Some of the things left out of the contract proposal are insufficient liability insurance, following proper OSHA regulations and limited scope of work.

The lack of proper or sufficient insurance is a big one. Before a builder hires a set crew, get their latest insurance policy info. It takes less than a day for them to obtain that from their insurance carrier. They may want to show you a binder from 6 months ago when they were still paying their premiums. Don’t accept it.

And let’s not forget OSHA, the big gorilla hiding in the jungle. One fall from a roof with a trip to the hospital will send that gorilla coming to your jobsite where not only the set crew will be fined but if they are found in violation of OSHA safety regs, but you, the builder, can find yourself paying out thousands of dollars.

Does your set crew have the safety equipment for installing the roof system and shingling? If they don’t bring the proper safety equipment, will you force them to return and get it incurring huge crane costs and an upset home owner who took the day off work to watch the magic happen or will you allow them to continue? What a loaded question!

The last problem area are the independent subcontractors you bring onto the job to do the finish work. Contracting with them without a thorough vetting process can lead to lost time, patience and money. Read  The Pitfalls of Hiring Uninsured Subcontractors for more about this subject.

Figuring out just when FOB ends and the builder’s responsibility takes over is a fluid event. If you and your factory haven’t discussed this before, I really hope you do it soon as modular home building does not look like it will slow down over the winter months.

Gary Fleisher, the Modcoach, writes Modcoach News and Modular Home Coach blogs as well as the best site for off-site consultants, Modcoach Connects

Contact Gary at modcoach@gmail.com

Thursday, January 21, 2021

The Modular Housing Industry Loses a True Gentleman and Leader

David Johnson, a veteran of the modular housing industry in the East passed away this week. I was honored to have known him. 

He enjoyed modular housing and could regale you with stories of his many modular experiences.

David E Johnson

David E. Johnson, 57, of Milton, PA, passed away on Monday, Jan. 18, 2021 at Evangelical Community Hospital.

He was born on Feb. 25, 1963 in Muncy, a son of the late Dale C. Johnson Sr. and Rose Ann Danley Statts, and stepson of the late Vern Statts. His wife of nearly 40 years, Diane Temple Johnson, survives him.

He enjoyed deer hunting, gardening, cooking and rooting for his lifelong NFL team, the New Orleans Saints. He loved his dog, Titan, and his five dachshunds. A devoted husband and proud and loving father, he especially enjoyed spending time with his family.

He was a U.S. Army veteran, serving in South Carolina and Alaska.

He spent 35 years in the modular home-building industry, most recently as a sales director at Impresa Modular. 

"We regret to announce that David Johnson passed away on Monday, January 18, 2021. He was a veteran with over 35 years in the modular industry. He came to Impresa Modular and used his passion for the industry to move from Sales Consultant to the Director of Residential Sales."

"He had a mentoring soul and used his years of experience to support and grow everyone on the team around him. He is going to be greatly missed. The industry has lost a true professional." 

- Ken Semler, Founder & President, Impresa Modular

His modular housing career began in 1992 at Muncy Homes. He later worked at All-American Homes of NC and Ohio, Crest Homes, Excel Homes and Ritz-Craft.

He also enjoyed working part-time as a Realtor.

In addition to his wife, Diane, and mother, Rose Ann, David is survived by two sons, Wesley A. (Carly) Johnson of Wooster, Ohio, and C. Christopher (Misty) Johnson of Zanesville, Ohio; three grandchildren, Trenton Johnson, Daimon Johnson, and Stella Fiscus; two sisters, Donna Keller of Jacksonville, N.C., and Lori (Larry Herr) Statts of Muncy; a brother, Dale (Sonya) Johnson Jr. of Hughesville; and three stepbrothers, Kenny, Ronnie and Jim Statts.

In addition to his father and stepfather, he is predeceased by a brother, Terry Statts.

Per the family’s wishes, private funeral services will be held for immediate family only due to COVID-19.

Due to David’s unexpected passing, if you would like to help the family with funeral expenses, please make a donation in memory of David Johnson to McCarty-Thomas Funeral Home, 557 E. Water St., Hughesville, PA 17737.

Expressions of sympathy may be sent to the family at www.mccartythomas.com.

Wednesday, January 20, 2021

Interest Rates Already On the Rise in 2021

A lot of costs are rising in the construction industry. Lumber, building materials, roofing, transportation and now interest rates. 

As the calendar flipped to 2021, it didn’t take long for the rise in mortgage rates. Just two weeks into the new year, Freddie Mac reported that mortgage rates climbed 14 basis points to 2.79%, a dramatic contrast to 2020, a year in which mortgage rates set record lows 16 times.

Economists across the housing industry believe the era of extreme low rates could be coming to a close, but the transition might be a slow burn.

Freddie Mac’s quarterly forecast estimates that the average 30-year fixed-rate mortgage will be 2.9% in 2021 and 3.2% in 2022. However, the factors that will drive mortgage rate movements are still up for debate.

CLICK HERE to read the entire Housing Wire article

Opening the Door to Ordinances Allowing Tiny Houses in Residential Neighborhoods

With new home prices on the rise and more people not being able to afford them, one city in Florida decided to step up to the plate and allow tiny houses on permanent foundations to be set in select residential neighborhood zoning areas.

Typical of what a tiny house in Florida should look like

The city of Milton in Northwest Florida now allows for downsized versions of traditional houses on permanent foundations that are as small as 300 square feet, on lots as small as 3,500 square feet.

Tiny homes are permitted in the City’s R-U (rural) and R-3 (high density) zoning districts. The ordinance came to fruition following discussions among the City Council, City Housing Work Group committee, and City staff, which illustrated a need for alternative housing options for individuals and families unable to afford the market rate of Milton’s current housing stock.

The ordinance holds tiny homes to the same design IRC standards as any other single-family home in the City, the only difference being their reduced size. Storage units or other unconventional structures that may be used as tiny homes in other places, including tiny homes on wheels, are not allowed under this ordinance in Milton. Tiny home lots and subdivisions are required to be landscaped just like any other residence, and the subdivisions will have common areas and recreational amenities for residents to enjoy.”

This is good news for some new homeowners looking to own their own home in a normally unaffordable area. 

The downsides are the restrictions on Tiny Houses on Wheels and storage shed housing that is becoming popular on the West Coast. Both good things.

My Guess: Look for a new modular factory to pop up building IRC tiny (small) homes for Milton and what will most certainly be the first of many cities in Florida.

Gary Fleisher, the Modcoach, writes Modcoach News and Modular Home Coach blogs as well as the best site for off-site consultants, Modcoach Connects

Contact Gary at modcoach@gmail.com

Sunday, January 17, 2021

Two Major Impediments Facing Modular Housing

Numerous studies of the modular housing industry have been conducted over the years and the conclusions reached by most 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 has always been a major problem. 

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 both HUD and 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, but they also don’t have much common ground to discuss when they actually try.

The different regions see no need to try to understand what the others are doing.

Almost every study about modular housing 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, especially when "modular" means so many different types of construction.

Over-regulation of the modular industry has also been with us for a long time and it appears to be getting worse.

Looking at a site-built home, even if it uses panelized walls, trusses and floor panels, find that giving the plans for to the local or city code and plan regulators is all that is needed. The codes 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 stamped by a state-approved third party service before it can go to the production line and since these third party inspection services were already doing plan review and approval stamping for HUD, they were the logical choice to review and give approval stamps to modular housing. HUD plans are not subject to state regulatory approval.

Or so it would seem. However, many state governments don't think 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 instead of the state code review department 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. 

A few more areas that have historically hindered our industry’s growth are 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. 

Can these impediments be overcome? Maybe.

Gary Fleisher, the Modcoach, writes the Modcoach News and Modular Home Coach and the best site for off-site consultants, Modcoach Connects


Contact Gary at modcoach@gmail.com

Saturday, January 16, 2021

Is This Really How You Want Your New Home Built?

The other day I drove through a new development by a national tract home builder who was advertising homes "Starting at $225,000". 


Six homes were under construction and since it had just stopped raining, four of them were exposed to the elements with water dammed up on the subfloor, all the walls were drenched, I-Joists laying warped on the wet stones, plywood soaked and lumber in the mud. 

How is that better than a modular home that is delivered as an 80% completed six-sided module? Put 4 modules together in less than a day and you have a secured two-story home with a weather-tight roof.

Explain to me again why site-built housing is better. 

Take your time, I'll give you the 4 months needed to finish your on-site home. In the meantime, I'll be living in my new custom modular home for the past 3 months.

Gary Fleisher, the Modcoach, writes Modcoach News and Modular Home Coach blogs as well as the best site for off-site consultants, Modcoach Connects


Contact Gary at modcoach@gmail.com

Friday, January 15, 2021

What Happens When Demand for Modular Construction Outstrips Supply?

Off-Site commercial and residential construction is red hot today. Hotels, new homes, dormitories, affordable housing and homeless shelters are in high demand by builders and developers. But what happens when demand for modular outstrips supply?


That’s a good question. 


To learn the answer, let's start with a look outside the US where modular factories are sprouting like mushrooms in England, Europe, Asia and even Canada. News of modular construction can be found everywhere and the public's perception of modular is very positive.










The US modular industry, both commercial and residential, however, do a very poor job of marketing. No national campaigns by any factory. The reason for this is modular is regional but marketing today is instantly national thanks to the Internet. Many factories don’t even answer email requests for information if it’s outside their delivery area.


Let’s talk capacity.


There are three types of commercial modular factories in the US, full-time commercial factories, single-family residential modular factories capable of building 40-100 module projects and the newest type of modular factory, the vertically integrated developer. 


Today there is a huge demand for single-family modular homes, especially on the East Coast where custom is the norm. But the same factories that build these time-consuming custom homes are also scheduling large multi-module commercial jobs into their factory.


The average US factory can only build 8-15 modules a week but there are a couple that can build more than that. Many are faced with having to make tough decisions about taking on a major commercial project which could tie up their single production line for 6-8 weeks and push back residential orders 2 months or turn down the commercial and hope their single-family production will keep the factory running at full steam. 


Or do they simply build the commercial work only during the off-peak months of Winter? Oh, to be a fly on the wall of Board Meetings!


Capacity doesn’t seem to be as much of a problem in other parts of the world. Because the British government is actively promoting modular, Hull, England north of London on the North Sea has become a huge hub for modular production and continues growing.


In the US we have seen a couple of new modular factories open in the West but not much activity to build a new factory on the East Coast. It seems several of the newest modular factories are designed exclusively for large projects including affordable housing, build to rent and developers building strictly their own projects.


I know of two proposed modular factories that began as an idea to build single-family residential housing but quickly realized the low hanging fruit was the project side of the business where they didn’t have to establish a builder network. Instead, they only have to work with a couple of developers.


Codes and Regulations


And finally, let’s look at how codes and regulations impact modular production in the US. Many states in the US have very “easy to meet codes” for building houses. They follow older IRC models and local and state housing regulations that are well written and enforced fairly. 


Many other states like the ones on the East and West Coasts and a few of the Northern Central states make getting a modular home through the preproduction review process so hard that many modular home builders have a picture of the head of their state’s Housing Agency on the wall and use it for a dartboard. 


If a state has vetted a third party inspection service to review and provide the “stamp” for a modular plan prior to production, why then do those plans need to be completely reviewed again at the state level by understaffed and overworked plan reviewers?


This has been known to add months to some plan reviews.


Then the plan goes to the local code enforcement department where some inspectors don’t know the difference between a modular home and a manufactured home and neither do the people in the towns and neighborhoods where the homeowner wants to build their new home. Witness the many planning commission meetings where people protest a modular home coming into their neighborhood and waving signs with “Not in my Neighborhood”


I have personally been the subject of one of those meetings and it’s not fun.


So what happens when the media promotes modular construction to the point of popular acceptance, driving demand higher and higher and there are no plans to run more shifts and few new factories are in the planning stages? It can’t all be blamed on a labor shortage.


Gary Fleisher, the Modcoach, writes Modcoach News and Modular Home Coach blogs as well as the best site for off-site consultants, Modcoach Connects

Contact Gary at modcoach@gmail.com