We've stirred up, we think, a healthy new debate on a fundamental change at work in home building.
We say the change is "at work" because we know--at least in this country--the solution remains elusive. But it doesn't mean the change is not going to happen, nor that the right people, the smartest, most enterprising people are not working on the solutions as we speak.
The change has to do with a role that automation plays in the complex process of building--or manufacturing--a home, and a new-home neighborhood.
Industries of all stripes that have adapted automation have gone on to achieving productivity, quality, and efficiency levels that have generated entirely new generations of profitability for their principle players.
Home building and automation have a star-crossed, pocked history, and one that has caused almost permanent skepticism among truly experienced, truly dedicated home builders who are also good businessmen.
We've been exposing a raw nerve in the conversation lately, because, amid the recent past, present, and, likely, foreseeable future in home building operations, labor capacity and labor productivity are going to weigh increasingly heavily against builders being able to construct homes--for-sale, for-rent, attached, detached--for costs that produce solid, predictable margins.
Too, land use costs, regulatory burden, local fees, expensive delays in approvals, and other lot acquisition and development expenses are unlikely--whatever the national policy agenda says or does--to decrease over time.
This further pressures builders' ability to build and deliver homes at prices many would-be home buyers could swing. As interest rates climb, as they're going to do, monthly payment capabilities become, for many, a carrot just out of reach.
Very smart people figure that automation--specifically automation that could be achieved off-site in factories, where assemblies, integrated components, even Lego-style modular pieces are built to high-degrees of precision by, increasingly, robotic tools--must play a part in builders solving for the cost and price consequences of both labor capacity constraint constraints and the expense-burden of bringing land online for residential development.
Equally smart people have seen and heard about automation's promise for decades, and conclude that all the talk about it is just that, talk. Since the post-World War II era, business models for factory-built homes have mostly defined the lowest baselines of quality and code compliance, and mostly miss the mark when it comes to local code in many locales.
Despite progress in off-site home construction business and operations models, most home builders view what happens in those factories as an entirely different kind of business, with entirely different kinds of outcomes.
Still, the economics, the relentless advance of technologies, use of data, precision engineering, robotics, materials science, integrative engineering, computer aided design, building information modeling, etc., and the ongoing un-served and under-served market for homes beg us to imagine a breakthrough will come. Not to mention that in some countries, like Sweden and The Netherlands, those breakthroughs are not the future. They're the present.
We've been talking for more than a couple of years about how computer-aided technologies are ripe to bring factory-fabrication and assembly of home sections and systems into a new era. That's admittedly "desk speculations." We're also working now on finishing up a special report profile for our February issue on how Maryville, Tennessee-based Clayton Homes--whose history is firmly based in off-site manufacturing of double-wide style prefabricated homes--is working to transform both what it builds and how it builds by acquiring highly-respected site-built, stick builders in a number of markets.
We're believers change is upon us, and this year and next, and the one after that will surface breakthrough technologies that will challenge site-built models to their core. By 2020, site-built will be different.
Recently, our friend, operations guru, and home building veteran columnist George Casey has surfaced a compelling business case for and vision of how modular construction and automation need to play a role in home building's legacy practices getting out of the way of progress.
In two provocative pieces, here and here, George looks at the "200-year-old industry unimpeded by progress" as necessarily ready and ripe for technological and automation platforms as solutions for chronic labor and skills shortages, and unmanageable costs.
Comments to George's piece reflect the spectrum of our readership. Some buy in to signs that transformation toward automation technologies are out there. Others look at what's come down in technology, and they gut-check what they've seen over the years, and they can't fathom how what could happen in a factory will ever replace the quality, the code compliance, the nimbleness, the variability of a home that one gets with skilled builders on a job site.
Are there not specific structures and particular processes that happen as a rule in stick-building and on job sites that are irreplicable, not possible in factories? Despite the ability to control for straight lines, temperature, moisture, and lighting inside, aren't there fundamental deep-trade practices that can only happen on the home site? Builder Mike Carol calls talk of any widescale move to modular, factory-assembled construction practices "desk speculation." He writes:
First you have the limitations of the building code--easier to meet code with stick built. And it's cheaper because you have a lot less engineering. With panels and trusses you have to engineer everything and waste a lot of blocking and bracing material to make the modular stuff meet the engineering requirements. Look at hip roof trusses, you burn up a truckload of lumber filling in everywhere. Where you have offsets on the front walls for aesthetics, stick framing just cuts around them. Trusses require triple and quad girder trusses and huge lvl beams because they all have to bear on the same line. And storm damage experts and inspectors will tell you, trees go right through a truss roof, not so with real rafters. Modular requires more lumber because the perimeters where the panels join need extra lumber, just like modular houses will have ceiling joists and then floor joists above them, wasting lumber. Shortages of good framers force the use of panels and trusses, which can be assembled by lesser carpenters. Large corp. builders could grow a force of good framers if they didn't insist on cutting pay to the quick so that they continually lose the quality workers.
Mike Carol's experience speaks to the view of many builders, good builders, and addresses two issues--1. what can and can't happen in a factory, and 2. what home building companies should do to improve their access to skilled labor (pay them better).
We asked Tedd Benson, founder of Walpole, N.H.-based Bensonwood and Unity Homes to add his comments to the commentary, and we believe they're worth calling to note. Tedd's pedigree is as a timberframe builder, with deeply artisanal and ancestral values built into each home. His remarks, in a sense, reframe the debate because they focus on where human skills remain necessary to homes that people love to live in, even as technological capabilities run their rapid course of improvement and transformation. Tedd writes:
Modular and panelized methods (off-site fabrication) can also enhance quality and can be done in such an efficient and quality-oriented way that the benefits can significantly outweigh the problems. Historically, many American modular builders drifted to the bottom of the market, and got stuck there. For reasons I don't understand, the modular industry has tended to be extremely slow to adopt technologies and processes that would enhance efficiency and quality. Instead, they essentially just took the tools and methods of on-site construction indoors, eschewing the benefit of being in a controlled environment and exacerbating the deficiencies of being away from the site. Under those circumstances, something had to give, and it ended up being quality. It doesn't have to be that way. It was always just a choice. For decades, the Swedes have built nearly all their very-highest-quality homes by optimizing the benefits of off-site fabrication, using state-of-the-art technology, applying manufacturing efficiency, AND using highly trained and skilled workers; not compromising, optimizing. The same is true of many homebuilders in Germany and other European countries who are using off-site manufacturing to improve quality, not diminish it.
It's also true with us. Having learned more from our timberframe experience and European colleagues than the American typical off-site methods, we think the recipe for good homebuilding is technology + manufacturing efficiency + skilled professionals & tradespeople + dynamic work culture. The secret again is optimizing instead of compromising; therefore, finding every way possible to improve building quality while also reducing cost. There are now many off-site fabrication companies on that path, and more coming. There's no doubt that industry will be altered by the impact as we define a new era of off-site fabrication in homebuilding. We will see increasing numbers of good "prefab" (we call it Montage) companies deploying that recipe to create buildings that consistent bring: highest quality, compressed time, and competitive cost.
If that's seen as a threat to the industry, that's unfortunate. The important thing is that it's seen as a promise our industry should be making to the American public: You deserve a home of much better standard quality than code minimums, one that is worthy of your hard-earned dollars, and one that enhances the quality of your lives. Nothing should be off the table as we, as an aligned industry (not infighting and competing), attempt to deliver on such a promise.
Optimizing, not compromising. That's a different debate altogether. This is not about eliminating human skill and talent. It's about improving human skill's capacity to make homes better, and make them more accessible to more people.
