Modular Builder IBS Quickly Manufacturing National Network

  • Leading the Charge

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    John Caulfield/Builder

    IBS’s corporate team is led by (from right) by Steve Scheinkman, its president and COO; Rob Ebbets, its senior vp of marketing; and Jack Gizienski, its senior vp of operations. They say the key to their company’s success is and will be the strength of its local factory’s management.

  • From Start to Finish

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    John Caulfield/Builder

    Mod-U-Kraf’s 168,000-square-foot factory in Rocky Mount, Va., includes 18 work stations, including this one where one of the plant’s 72 hourly employees kicks up drywall dust as he cuts openings for doors and windows into a prefabricated wall.

  • A Strong Foundation

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    John Caulfield/Builder

    Modular construction starts with the assembly of a solid or open-joist floor. “We don’t move the floor until it’s square,” says Jack Giezinski, who is currently running Mod-U-Kraf for Innovative Building Systems.

  • Filling the Gaps.

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    John Caulfield/Builder

    A worker at the Rocky Mount plant applies drywall tape to interior walls and ceiling. IBS’s factories have the capacity to virtually complete a module’s interiors if the builder requests that service.

  • Checking for Leaks.

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    John Caulfield/Builder

    Water and gas lines are pressure-tested before appliances and fixtures get installed and the module is shipped to a jobsite. Electrical wiring goes through the same testing regimen.

  • Diversified Production.

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    John Caulfield/Builder

    A worker at the Rocky Mount plant nails siding onto a module that will become an office building. Supplying commercial projects has become a growth opportunity for IBS.

  • Apply Within.

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    John Caulfield/Builder

    A worker spray-paints a module’s interior walls.

  • Ready to Go.

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    John Caulfield/Builder

    A finished bathroom that’s between two bedrooms in one of 42 modules that will comprise IBS’s first passive dormitory, which it’s building for Emory & Henry College in Virginia.

  • Air Tight.

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    John Caulfield/Builder

    IBS applies rubber-coated oriented strand board to its exterior walls to reduce air infiltration into its modules, which are like “giant bubbles” when they’re completed, quips Gizienski.

  • Heavy Lifting.

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    John Caulfield/Builder

    Once a module is completed, it is stored outside the factory, usually for a few weeks. When the module is ready to be shipped, it’s moved and hoisted onto a flatbed by this mobile crane.

  • Show and Tell

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    John Caulfield/Builder

    Down the road from Mod-U-Kraf’s factory in Virginia is its sales office complex, which includes three models and a design center. Pictured is a 2,084-square-foot Craftsman-style, Energy Star-rated home with three bedrooms and 2½ baths.

  • Customized Cucina.

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    John Caulfield/Builder

    A kitchen inside one of its model homes. IBS offers customers a range of choices for cabinets, flooring and appliances.

  • All the Comforts.

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    John Caulfield/Builder

    A fully furnished bedroom inside Mod-U-Kraf’s Craftsman-style model. The ceiling fan is one of the options made available to buyers.

  • Educational Tour.

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    The design center includes a detailed layout of each model and explains the benefits of modular construction and design. This is the only showroom among those connected to IBS’s five factories that’s open to the public.

  • Take Your Pick.

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    John Caulfield/Builder

    Customers visiting the design center are presented with options for doors, exteriors, roofing, siding, and faucets. IBS is in the process of redoing the brochures for its 88 house plans.

  • On-Campus Housing

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    John Caulfield/Builder

    Mod-U-Kraf supplied the modules—complete with exterior brick work—for a dormitory at Ferrum College in Virginia. Company officials say this building demonstrates how modular construction can be customized to fit into any setting.

In its quest to become a national modular home manufacturer and distributor, Innovative Building Systems (IBS) is currently in discussions to acquire a competitor and is scouting locations in the Northeast, where it would like to eventually open its sixth factory.

The private equity firm H.I.G. Capital formed IBS after it acquired Camp Hill, Pa.–based Excel Homes in May 2010 and, 10 months later, Elkhart, Ind.–based All American Group. IBS continues to market its product under those brand names, as well as Mod-U-Kraf Homes, the Rocky Mount, Va.–based operation that was owned by All American.

In an interview with Builder last week, IBS’s brain trust—its president and COO Steve Scheinkman; executive vice president of operations Jack Gizienski, who is currently running Mod-U-Kraf; and Robb Ebbets, its executive vice president of marketing and information systems—emphasized H.I.G.’s long-term commitment to expanding this business. The team also stressed the importance of hiring the best local managers and giving them the responsibility and independence to operate their plants.

In particular, the role of the factories’ general managers now includes oversight over each facility’s sales team, as well as greater profit and performance accountability. “We put management teams in place who know what they’re doing, and we don’t dictate corporately,” says Scheinkman, whom H.I.G. installed after it acquired Excel.

Last year, Excel’s and All American’s factories in Pennsylvania, Virginia, Iowa, Indiana, and Colorado shipped modules for 865 homes, which ranked third behind Clayton Homes and Champion Home Builders, according to Hallahan Associates, the Baltimore-based market research firm that tracks the modular housing industry. However, in 2011 only 12,200 homes in total were started with factory-made modules, or less than 2% of the total number of homes started in the U.S. last year.

IBS was profitable last year, and its sales jumped 50% in the first quarter of 2012, which Scheinkman attributes in large measure to Ebbets’ efforts rebuilding and expanding the company’s sales team. The trio is convinced that business dynamics—such as the shortage of skilled field labor and rising materials prices—are moving in a direction that favors modular as a viable construction option. But getting more builders and contractors to see that won’t happen on its own. “We can’t sit around and wait for volume to pick up,” says Scheinkman. “So we are actively talking with stick builders and explaining what modular is and can do, so that we aren’t seen as a competitor but a facilitator.”

He points specifically to a 300-plus-unit apartment complex that IBS recently supplied to a New York builder for which this was its first modular project.

The more builders it can convince of the efficacy of modular construction, the sooner IBS will be able to increase its market penetration to justify opening more factories. And the angle it’s using to woo builders is that modular can “uncomplicate” their lives, explains Ebbets. For example, marketing has never been builders’ strong suit, and that goes double for smaller custom builders. IBS has a separate marketing group that can help builders develop a complete marketing campaign, upgrade their websites, and so forth. The goal is to accommodate builders to meet their local business niche.

IBS is also listening to builders about how it can improve its products and logistics. Gizienski notes that its factories now mount doors at one of the “mate walls” (where modules are joined), and have become more flexible about how they ship loose materials to jobsites. Indeed, IBS’s factories are capable of elaborate customization and doing as much finishing work as a builder requests, what Gizienski and Ebbets call “adding the jewelry.”

The company is in the process of revamping its sales brochures and re-evaluating its house plans and elevations. Scheinkman insists that IBS “isn’t trying to sell to everyone.” But while single-family construction continues to be its primary focus, IBS has supplied commercial projects such as schools and office buildings. When Builder visited its factory in Rocky Mount last week, it was working on a 42-module, two-story dormitory for Emory & Henry College in Virginia that will be its first passive dorm. Scheinkman says the company intends to take passive modular national.

In the meantime, IBS is working on improving the efficiencies of its plants and builders’ job sites by reducing waste at each. It is also devoted to keeping its network of builders in business. (At different times, that network numbers between 500 and 1,000, says Ebbets.) “We want and need a strong industry,” says Scheinkman, but with the implication that the modular manufacturing sector would benefit from further consolidation. When that happens “we will get the capacity we need to gain share and profitability.” Scheinkman says he’s seen this transformation in other industries, “and when it happens, it happens fast.”

John Caulfield is senior editor for Builder magazine.

Learn more about markets featured in this article: Baltimore, MD.