If construction labor falls short of meeting the requirements of a recovering housing market, will builders turn to alternative means, such as using more components manufactured in factories, to get their houses built on schedule?
So far, most builders haven’t had to make that decision, as the availability of subcontractors remains relatively sufficient in most markets to get the jobs done. But it would also probably take a pretty severe manpower shortage to get the majority of builders and their framers to shift toward, say, wall panels and away from traditional—and less-expensive—stick-built construction, say pro dealers whose operations include component manufacturing services.
That’s not to say that some builders aren’t making that move. A few weeks ago, National Public Radio aired a story about Mid-Atlantic Builders of Rockville, Md., which has reduced its construction cycle time by “weeks” by relying on 84 Components, the manufacturing division of the national pro dealer 84 Lumber, to provide and install wall panels, trusses, and windows.
“Demand is obviously increasing in most of the market spaces where we have plants,” says Mike McCrobie, vice president of installed sales for 84 Components, which has four plants in Maryland, Pennsylvania, North Carolina, and Tennessee. “And from a labor and materials aspect, builders are going to have to find ways to efficiently build their homes. If panelization is not already a [builder’s] company mission, then the labor market will dictate it.”
It’s worth noting, though, that 84 Components once operated 23 plants. And McCrobie tells Builder that many builders still resist components in their construction processes primarily because of price. 84 Components has no plans to expand its manufacturing footprint, and when asked whether he expects pro dealers that have mothballed their manufacturing services to restart them as housing markets return, McCrobie responds “that’s the million-dollar question. Pro dealers need to have the right plan before the get back in, and I think it will be slower this time around.”
In Massachusetts, Reliable Truss & Components, the manufacturing division of National Lumber, has $750,000 of components built and waiting for job sites to be ready for construction. Tim Collins, Reliable’s general manager, says his company’s latest “niche” is rafter packages precut with birdsmouth joints. “It’s saving the framers so much money [in terms of time and labor] that they’re giving customers credit to buy them through us.”
But Collins isn’t seeing a lot of framers who are willing to shift toward wall panels, and the mitigating factor is the upfront costs. “What it really comes down to is education,” says Collins, who explains that most home buyers and framers “still don’t understand” that components allow houses to be built quicker, produce less waste, and require fewer returns of unused products to suppliers.
Burton Lumber in Salt Lake City has had “steady demand” for roof trusses over the past several years, says its truss plant manager Teryl Hammer. Floor trusses, on the other hand, “have become more of a specialized option for builders and contractors that are looking for a wider free span between bearing points. But the house has to be designed for that” span, he adds, to account for where stairs are positioned.
Burton Lumber stopped producing wall panels in 2008 when the recession hit. But even before then demand for those panels was “hit or miss,” says Hammer. While some builders may have preferred wall panels, their framers often balked because, explains Hammer, the panels would lower the framers’ overall costs and, therefore, cut into their profit margins.
Denver-based Pro Build operates 31 component plants nationwide. Ron Williams, its vice president of component manufacturing and installed sales, has seen a “gradual uptick” in component orders over the past six months. Texas and New Jersey continue to be two of Pro Build’s stronger markets for wall panels.
But component demand still comes mostly from Pro Build’s existing customers, which are primarily production builders. And Williams isn’t seeing a big rush toward what he calls “componentization” of construction, nor has he seen any conversions lately of components from stick-built framing.
Williams thinks a lot of framers continue to “rationalize” the stick-built option because that’s what they believe customers want, especially at a time when inventory of for-sale new homes is thin and builders require more move-in ready product. But Williams also notes that Pro Build’s component customers “have figured out” that components not only make construction go quicker, but also result in a better-quality house. “In fact, it’s probably cheaper overall” than stick-built framing, he contends.
Components in general are more commonly found in commercial projects; Collins says Reliable has seen more commercial contractors shifting to components than have residential contractors.
Jon Davis, an industry consultant and columnist, says more multifamily builders are favoring components in their construction, too. He suggests that pro dealers that don’t offer components are inevitably sacrificing business in the multifamily sector. But Williams says Pro Build—which supplies smaller commercial projects and whose plants are each capable of pumping out $100,000 of components per day—stays away from multifamily because its “sheer volume” would take away production from Pro Build’s “core customer,” the production builder.
John Caulfield is senior editor for Builder magazine