Thursday, February 13, 2025
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HomeEditor's NoteAbout Offsite’s “Resilience”

About Offsite’s “Resilience”

I recently asked subscribers to my blog, ModularHomeSource.com, a question: How did your offsite factory perform in 2024? The responses were instructive.

Closed the doors forever – 28.8%

Met our primary goals – 22.7%

Exceeded expectations – 21.2%

Had a small profit – 18.2%

Lost money – 9.1%

It is certainly sobering that nearly one-third of respondents report shuttering their operations in 2024. These closures varied in scale and scope — from small startups that failed to gain traction in competitive markets to older facilities that couldn’t adapt to changing demands.

The culprits also varied and include financial overreach (some adopted expensive automation without a clear ROI), labor shortages, regulatory challenges (delays in approvals and inspections) and the difficulty or cost of procuring certain materials, which made it hard to meet deadlines or budgets.

On the positive side, nearly 44% of respondents met or exceeded their goals. What can we learn from them? They claim to have profited in four key areas.

Product specialization. Factories that carved out a product niche — whether ADUs, luxury modular homes, or eco-friendly components — saw strong demand. One respondent noted, “Focusing on sustainable materials gave us a competitive edge.”

Embracing efficiency. Streamlined production lines, AI-driven predictive maintenance and Lean manufacturing allowed some factories to cut costs without sacrificing quality.

Industry partnerships. Successful factories partnered with developers, architects and financial institutions to secure steady project pipelines and minimize risk.

Right-sized technologies. Factories that invested in Building Information Modeling (BIM) and IoT (Internet of Things) solutions improved coordination and reduced errors. “The upfront cost of new software was intimidating, but the efficiency gains paid off by mid-year,” said one respondent.

The percentage of respondents who reported small profits (18.2%) or losses (9.1%) reflects the balancing act many operators face. Some had managed to secure contracts, but rising costs had left them with thin margins.

The survey responses also highlighted key differences between modular and other offsite facilities. Modular operations, known for their precision and repeatability, fared better overall than panelized or hybrid factories. Modular’s ability to deliver turnkey solutions for housing and commercial projects gave it an edge in a market hungry for speed and reliability.

On the other hand, non-modular facilities, while versatile, often struggled to position themselves as indispensable. A producer of wall panels or roof trusses, for instance, depends heavily for its success on partnerships with developers or modular builders.

What can managers of offsite factories learn from this mixed bag of outcomes? I see four big takeaways:

Be flexible. Factories need to be able to adapt to changing demands, whether it’s embracing new materials, adjusting production scales, or pivoting to new market segments.

Innovate within a plan. While innovation drives progress, factories should carefully assess the ROI of cutting-edge technologies. Not every factory needs robotics, but every factory needs a plan for growth.

Collaborate to survive. Close working relationships with developers, architects and local governments can help factories weather economic downturns.

Value your people. Factories that treat employees as assets rather than costs tend to see long-term benefits. For instance, training programs can mitigate the skilled labor shortage and improve morale.

In summary, the stark divide between thriving factories and those that shuttered underscores the challenges and opportunities in this industry. Looking ahead, success won’t come from doing what’s always been done. Instead, it will emerge from innovation tempered by strategy, partnerships built on trust and a commitment to excellence at every level of the factory floor.

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