Friday, November 13, 2020

Modular Construction Industry Needs to Answer These Urgent Wake-Up Calls!

With demand for all types of modular construction from single family residences to huge affordable housing projects, it looks like all sunshine and rainbows for everyone involved.

However all those good things happening today are already seeing urgent wake-up calls and red flags popping up and everyone is so busy trying to meet the current demand they aren't reacting to the warnings as they should.

I have been in the construction industry for over 35 years and writing my blogs for the last 14. In all those years I’ve seen many ups and downs in construction with scores of businesses forced to close shop one and reopen again when the next upturn happened. It is simply the nature of construction.

But this current situation is a cyclical bubble that isn’t going to burst but rather slowly implode from recent outside pressure that must be stopped by the very industry it’s hurting.

The total realization that it's time to “Wake-Up and Answer the Damn Phone” came just a short time ago when I received an email from a large East Coast modular home builder putting into words exactly what I knew our industry needed to hear.

His email clearly outlines the problems just one modular home builder is having with the industry in general. Here’s just part of his email:

Modular is just not quicker any longer. Time frame to get quotes, black lines aka sales drawings and forget about sealed plans. Cost of modular is through the roof. Takes 3 to 6 months to get a permit in my state. I cannot get a permit in October and be told my factory that they are sold out till March. Clients won't wait and can't. 

The backlog at these plants is nuts. Surcharges are out of control. I received a quote last month from a factory that the surcharge on the order actually exceeded the cost of the entire lumber drop as quoted stick built. Pardon the expression but truck and "f" is what this industry has come to. 

There is zero customer service and actual service on product is non existent. I was exclusively modular for decades and we are moving our business in another direction. We will not turn our back on the industry as there is a need for modular in our marketplace but we will no longer push people to modular construction. We have started to rebrand ourselves. It's quite sad that this industry has pushed a modular builder to stick framing. This is exactly why the industry has minimal success converting site built guys to modular. I wish I made the move sooner.

Looking back on articles I have written in just the past year I discovered that I missed a lot of opportunities to make the industry’s red flags a priority. That ends with this article!

I am going to begin pointing out the problem areas modular construction is facing and surprisingly very few are actually caused by the industry. A couple of big ones maybe, but most of the problems are being stuffed down the modular industry’s throat by outside forces bent on either trying to help or wanting to see us fail.

Soon I will be writing more detailed articles about the following Wake-Up Calls and Red Flags:

  • Rising labor costs and lack of skilled laborers for production is becoming harder to overlook.
  • The huge influx of investment money pouring into new modular projects and factories by investors who have little or no knowledge of modular construction’s unique business model.
  • New modular factories being built by developers who are relying more on West Coast Techies with idealistic goals than actual veterans that already know the industry.
  • Rising costs hurt all construction but it’s especially painful for the modular industry.
  • Delivering those modules to the job site in a necessity that is in need of government deregulation. 
  • Every day someone wants the modular industry to upgrade the way we build homes regardless of cost or proven results. 
  • Personal industry networking conferences have been replaced by impersonal Zoom meetings and on-line videos.
  • Modular factories built exclusively for large projects can quickly lose their momentum and fail if even one of those large projects scheduled to go to the line cancels, delays delivery or worse, runs out of money while the project is in production and there is nothing else ready to go into production.

Add in rising material costs and delayed product deliveries to the factory, service problems, a dwindling builder base, lack of training for new builders, lack of professional set crews, etc, and you will soon wonder why the modular construction industry still fights for survival.

The answer has always been, is now and will continue to be into the future, “Modular Construction is the Best Way to Build” but we need to get honest with ourselves and begin working together as an industry should and begin actually answering those wake-up calls.

There are only two national modular associations working to address some of these red flags, MBI for commercial modular and MHBA for residential modular. If you haven’t joined the one that fits your business model, what the hell is holding you back? You need to get into survival mode now.

Modcoach Note to the Industry:

If you would like to comment on any of the topics above, email me at modcoach@gmail.com or modcoach@modcoachconnects.com. I will use your thoughts as part of the appropriate article but will NOT mention your name or business!

Gary Fleisher, the Modcoach, publishes Modcoach News and Modular Home Coach blogs for the modular industry professional.

1 comment:

  1. Coach, if you can somehow get to builders, factories and regulators to begin working toward the common goal of making modular great again, I'm going to nominate your for POTUS. "Make Modular Great Again"

    ReplyDelete