US offsite advocates used to point to the UK as a shining example of how modular and industrialized building could help solve a growing housing crisis. But that country’s offsite industry is now in turmoil — littered with failures that include Jans Offsite Solutions, Connect Modular, TopHat, ModPods International, Ilke Homes, Caledonian, L&G, and others. What went wrong? And what can we learn from the demise of these companies?
At the core of these failures is a widespread misconception that building homes in automated factories would, by itself, solve the housing crisis. Many of these companies made the mistake of taking conventional business strategies and stapling them onto an unconventional method of building.
They relied on large capital injections, centralized production models and government housing targets — without first transforming the broader housing system, which favors site builds. They tried to be disruptive innovators while still obeying yesterday’s rules.
You can’t mass-produce homes when planning departments are stuck in the past. You can’t optimize factory output when local councils approve units one postcode at a time. And you can’t revolutionize construction using metrics pulled from site-based spreadsheets.
For instance, TopHat raised hundreds of millions in funding and boasted celebrity endorsements. But it had more than £50 million in losses by 2023 and shuttered in 2024. It had been forced to deal with long planning delays, unclear approval pathways for modular and a supply chain geared towards traditional builds.
Financial giant L&G poured years of resources into a flagship modular factory, only to abandon the project in 2023 after sustained losses and poor scalability. If an industry titan can’t make it work, what hope is there for startups without war chests?
Most of these failed ventures had smart people and smart technology. What they lacked was the mindset shift needed to succeed in a new manufacturing paradigm.
Factory-built housing isn’t traditional construction under a roof; it’s industrialized production requiring Lean workflows, integrated digital systems and end-to-end synchronization between design, compliance, supply chain and delivery. You can’t expect a CNC machine to fix a broken permitting process, or a production manager with a site-building background to think like a manufacturing engineer.
Yet many offsite startups did exactly that. They prioritized volume over systems, marketing over training and scale over sustainability. They threw money at the problem without first discarding the obsolete ideas holding back real change.
This isn’t just a British problem; it’s a cautionary tale for any country pinning its hopes on modular construction to fix housing shortfalls. Modular can do that job, but not if it’s forced to follow the same path that broke the old system.
In the US, similar early warning signs are already flashing. Venture-backed startups touting grand factory builds have begun to falter. Government pilot programs can take years to break ground because of zoning delays. And traditional builders dipping their toes into modular frequently retreat after finding it’s not “profitable enough” — which is another way of saying, “we didn’t adapt our systems to make it work.”
Offsite won’t realize its potential for affordable housing until leaders shed their old skins. Cities, developers and modular firms need to co-develop streamlined approval models for offsite units. Homes need to be engineered for factory efficiency from the ground up. Factories need managers with factory-floor experience. Municipal inspectors, lenders and permitting officers need to be educated on what modular is and isn’t. Until these shifts happen, more companies will follow the path of the ones mentioned above.
This industry doesn’t lack technology. It lacks the courage to abandon comfortable, familiar thinking. As management consultant Peter Drucker once warned, the greatest danger isn’t change — it’s refusing to change how we think. If we keep dragging old habits into new opportunities, we’ll keep getting the same results: bankruptcies, missed housing targets and broken promises.
If we want offsite construction to be the future, we need to stop thinking like it’s the past.
