Monday, May 4, 2020

Innovations in Modular Construction Not For Everyone

The 2008 housing recession ended with many East Coast modular home factories closed forever along with scores of independent new home builders, both site and modular. There were no buyers looking for new custom homes.


Then in 2012 Hurricane Sandy hit the East Coast of the United States destroying or damaging 650,000 homes. At the time, that was equivalent to the entire number of new homes built that year. The modular home factories in the East ramped up production to meet the needs of modular homes to replace those lost to the storm.


Experienced modular home builders in the East that had survived the 2008 crisis began taking orders for new homes and small multiplex townhouses. Along the actual coastlines, many builders were taking orders for luxury modular homes in addition to standard planbook type homes. The industry was regaining its rigor.

But all good things come to an end and in 2016 the factories and their builders saw things heading back to more normal levels and one of the biggest modular home builders, IBS corporation, filed bankruptcy. This cast a dark cloud over the entire East Coast modular housing industry and several well established modular home builders closed their doors.

However, a white knight in the form of Champion Homes stepped in and took over IBS’ closed factories and began rebuilding the Excel brand back into its once proud heritage.


2016 not only saw new house starts drop for the East Coast modular home factories, it ushered in a new type of modular buyer, Marriott Hotels. Hotels, once the exclusive domain for the commercial site developer, began looking at Marriott’s success with modular and wanted in on this type of work.

Several large East Coast modular factories, especially Excel, began building hotels on the same lines that produce custom single family modular homes. These large factories could successfully do this because of the efficiencies of their production lines. Some could turn out a 30-60 module order in just a couple of weeks.

When they found themselves with more and more hotels wanting to go modular than they could build, the hotel developers started looking off shore, mostly to Poland’s Polcom. Other hotel chains started turning to modular to speed up the building process and every part of the country had modular factories wanting to join in. Guerdon, Silver Creek, Champion, MBSP and others began turning out larger and larger projects.

Now that hotels were possible, these factories and many new ones started looking at dormitories, hospitals and apartment housing.

About this time an old term “affordable housing” came back into vogue. California didn’t have enough affordable housing, then Washington and Oregon followed by cities in the South and East Coast.

This is when another term began to appear in modular construction, “Innovation”. Every industry strives for innovation. Every industry needs innovation. Including the modular industry.

But modular’s “innovation” was different. Conferences began popping up across the country touting the benefits of modular construction to developers and institutions. Entire days were spent at seminars discussing the options and innovations in affordable housing.

Conferences were being held just to talk about automation, distribution, new processes and advanced computer technology for the modular industry. People paid thousands of dollars to attend them and walked away excited about the future of modular construction.

The dark side of these conferences was that they excluded one very important part of the modular industry, the single family home.

Recently the modular industry has been lumped together with any and all offsite construction techniques including panelized, concrete, printed, SIP and even HUD. This blending is becoming a totally new type of construction industry.

Now the COVID-19 crisis has given rise to yet another opportunity for the growing number of modular factories that have never built a single family custom home and probably never will. Enter the Modular Mobilization Coalition, whose goal is to bring together dozens of modular factories across the US to answer the nation’s need for emergency hospital modules for the COVID-19 crisis.

It appears that it will continue to grow larger after the crisis as it will then become the place for affordable housing projects in every region along with other large projects that used to be done on-site.


Again, all this innovation in modular construction leaves no room for the single family custom home. The HUD industry is beginning to add a new line of homes to their factory and dealer owned sales centers called the CrossMod, a direct competitor to the standard planbook modular home offered by the old guard modular home factories. Custom modular single family homes are still big business, especially on the East Coast where the vast majority of modular home builders are located. These builders do business the way new home buyers have always expected. They meet with prospective buyers to go over custom plans, quotes and work directly with the modular factory to build and deliver the perfect house for their customers.

While new modular factories are popping all over the place with automated production lines, robotics, BIM, VR and AR technology all designed to build modules cheaper, faster and easier, this same high tech simply can’t be adapted to build a custom modular home.

Innovations in modular construction are costly and the only way to make a profit using these new technologies is to produce large projects, not single family homes.

When you see this new technology at work, you will begin to see why custom ceilings, kitchens, baths and other details that change with every new module going onto the production isn’t making these new Hi Tech modular factories any money.


The craftsmanship that can be found in what many call the “Old Guard” of modular is lost to these innovation rich new factories.

Custom modular home builders across the United States are looking at these new factories knowing they will not benefit from any of their new processes and innovations.

Instead there will be a revival of “Old Guard” factories that are designed just for the custom home builder. Boomers will continue to want custom homes as will Millennials that are living in “affordable” housing but want the American Dream of building their personally designed home.

There are three distinct types of custom modular home builders ready to meet the needs of the custom home buyer. First is the factory that sells, builds, delivers, sets and finishes their customer’s custom modular home. Huntington Homes, Homeway Homes and Homes by Keystone are just a few of this type.

Secondly there are the traditional custom modular home builders working within a select area and having a sales office. Builders like The Home Store, Advantage Homes and many others dominate this market.

And finally the newest addition to the custom modular home arena, the Internet based builders like Impresa Modular and their Impresa Modular Franchise network.

All three types are building true modular homes for discerning new home buyers.

There is a definite absence of “Old Guard” factories and modular custom home builders from those “latest and greatest” conferences showcasing innovations in our industry simply because these conferences have nothing to offer the craftsman building custom modular homes.

This segment of the total housing is small, probably less than 3% but it is strong, resilient and much needed by new home buyers with the wherewithal to buy true IRC custom modular homes.

Gary Fleisher is a housing veteran, editor/writer of Modular Home Builder blog and industry speaker/consultant.

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