Wednesday, May 26, 2021

Modular Housing Factories Just Can’t Catch a Break

Modular home factories, their builders, and developers continue to experience the challenges of the COVID-19 aftermath on their businesses. Shortages of building materials, labor, and rising prices are just the tip of the iceberg.


Looking for stats of how it is impacting Modular factories isn’t easy but I’ve been talking with factory owners that say we still have a long way to go to even get back to a “New Normal” in our industry.


Product Shortages

Over 80% of the factories are experiencing moderate to severe product shortages. Along with lumber and drywall shortages, now kitchen and bath cabinetry is arriving after the module on the production line passes that stage.


Adding to the factory’s supply problems are shortages of connectors, screws, plumbing fixtures, and just about anything made from plastic. I’m told windows are joining the shortage arena.


40% of modular factories believe material shortages are a severe consequence of COVID-19. The rest have various opinions ranging from tariffs to price gouging.


Labor Shortages

I haven’t heard a single modular factory I called say they have a full staff. Some have closed one of their production lines to try to meet the number of production people available. One factory in the East told me they need 30 more production people just to keep up with demand from their builders and developers.


Another factory owner said he is offering a $20 an hour starting pay and a $1,000 bonus and 5 vacation days at the end of 90 days. Told me he was only able to hire two and one of them quit after 2 days because he had to get up at 6:00 AM to be at work at 7:00!


Production Schedules

Over 70% of modular factories are struggling to meet schedule requirements, especially imposed on them by developers.


Modules are being put to the line by some factories knowing full well they will not have some of the finish materials needed and are shipping them to the yard to await those materials to be installed there.


The modular factories are trying everything to help meet their builder’s timetable.


Sign Up to receive the Modcoach News newsletter twice a week


Turning Down Projects

About 40% of the factories I talked with over the past 2 months are saying they have turned down projects for developers. Many factories have reached the point where their production schedule is out so far they refuse to do any quoting. A few will, however, work with those developers and even allocate tentative slot space on the production line far into 2022 if the developer can wait that long.


Worried About Staying Open

Half of the modular factories I talked with are concerned that even with this tremendous business flowing into their factory, they may not keep the doors open for a short period of time in order to simply allow them to replenish their materials inventory so they don’t have to finish the modules in the yard.


Two factory owners told me that they are simply not making any profit because of rising costs, no labor, and product shortages and might be forced to close if this situation continues into the end of the year. I’m sure others share their pain but haven’t spoken openly about it yet.



Gary Fleisher
is the Managing Director and contributor to the Modcoach Network and its affiliated blogs.

2 comments:

  1. What about the retailers? When the factories raise their prices, its typically via an email. When we have to raise the prices to our clients, we have to talk to the client directly. Then we get to get yelled at, cussed at, threatened and a 1 star review.

    I do sympathize with the factories trying to maintain a profit, scrambling for building materials and fighting labor issues, but they certainly are not the only victim (including the actual retail client) in these mess.

    ReplyDelete
  2. I can assure you that modular factories are only trying to breakeven and weather the storm. Builders / Developers / Retailers need factories to stay in business. What's plan "B" if Factory "A" shuts down? It's a bad situation for all of us involved.

    ReplyDelete