Systems Building With Concrete

A conversation with industry veteran Michael Weber

• Weber says that insulated concrete offers better quality and lower monthly energy bills than standard wood-frame construction. And, that it only takes seven years for the energy savings to pay for any extra construction costs.
• Concrete makes it easier for a builder to meet code requirements for high winds and wildfire resistance. In fact, Weber predicts that insurance companies will soon require it in some areas.
• The capital needed to open a new plant remains a challenge to this system’s growth. However, manufacturers don’t necessarily need the latest, most expensive equipment to be profitable.

What are the current and future states of systems-built concrete homes? And what promise does this building method hold for residential builders? To find out, Offsite Builder spoke with longtime concrete advocate Michael Weber.

Weber has been in the concrete industry since he was a high schooler working summers in his family’s business. He was Director of Residential at the Portland Cement Association for seven years and is currently active in NAHB’s Systems Building Councils, as well as other groups.

As of June 2023, Weber is Chief Operating Officer of NileBuilt, a company that builds production homes using a concrete material with a hyper-insulating core.

The following interview has been edited for clarity.

Q: What’s holding residential builders back from switching to concrete construction?

MW: The construction industry as a whole is slow to change and, at the end of the day, is largely driven by price. Big production builders are often publicly traded, so they maximize profits for stockholders — sometimes sacrificing the quality of their finished homes.

That’s short-term thinking. The truth is that concrete actually offers better quality at a lower long-term cost.

When I was at the Portland Cement Association, we did research on homes constructed with insulated concrete forms (ICFs), which are made with [rigid foam] insulation and stay in place after being filled with concrete. After approximately seven years, you’ve offset any additional cost in the ICF building system with energy savings and possible insurance premium reductions.

In fact, in Florida, ICFs are typically more cost effective than wood structures because they meet the robust building codes for hurricanes and other high-wind events. [Meeting the code with] wood framing can be more expensive.

Q: Is using concrete more cost-effective for multifamily and commercial projects, and less so for single-family home builders?

MW: That depends on which part of the country someone is building in. We’re finding growth [in the use of concrete] in states where there are high-wind events or the potential for wildfires, which is causing insurance companies to push back. Insurance companies will not continue to fund the rebuilding of structures that blow down or burn down because they’re constructed time and again with combustible products.

I think you will start seeing a shift in the next decade, or sooner, to where you will have to offer reduced risks for insurance companies. [This is a win for] concrete, which is non-combustible and can stand up to high wind loads.

Q: Are there other advantages?

MW: As competition keeps growing, builders are always looking for ways to stay competitive. That’s why modular has been gaining market share. That’s also why concrete building systems have been gaining share, especially during times of a tight labor market.

Precast concrete [building assemblies] are built in a controlled environment with electrical conduit or plumbing already cast into the walls. The electrician doesn’t have to run conduit and the plumber doesn’t have to run plumbing lines. With a cast-in-place concrete or precast wall system the insulation is also already in place, so you don’t need an insulation contractor.

Q: How do you sell homeowners on a systems-built concrete home if the initial price is higher?

MW: The construction industry typically puts things out to bid. The lowest bid usually gets the job, although the lowest bidder is not always the best choice.

In the case of a homeowner being involved in the decision, that happens when they are looking at a more energy-efficient and disaster-resistant home. Homeowners should factor their monthly energy savings into the cost equation. The builder should show homeowners that their energy costs are going to be significantly less per month.

Financial institutions are starting to support more energy-efficient and disaster-resistant homes by looking at the total cost of ownership. They’re able offer higher loan values for someone to finance a more expensive home if they can lower their monthly payments through energy and insurance savings.

Q: Do you think there needs to be government regulations or education for lenders to consider the total cost of ownership?

MW: Education, yes. Government, no. I’m not a big fan of the government jumping in on some of this because it gets political and doesn’t always go well.

But providing banks with the ability to offer preferred rates to homes with added insulation or non-combustible materials is a big part of the equation. A fair appraisal for a disaster-resistant, energy-efficient house that saves homeowners money each month [should be higher].

Q: What are the barriers to growth for systems building?

One is a reluctance to change. The construction industry is resistant to doing things differently. But I think that’s going away to a certain degree, because everybody is now more aware of what their opportunities are, thanks to the information readily available from manufacturers, or on the internet.

Another is financing. A lot of companies and investment fund managers have funded the building of new [modular and panel] plants and some major plants have gone out of business. One of the biggest hurdles is the capital cost of the equipment and the ability to offset the cost by continually staying in full production. [The plant has to stay productive] even during downtimes, because there are payments that must be made on that capital expenditure.

There are also material price fluctuations. Buying in bulk helps [mitigate those fluctuations], but no one has a crystal ball that tells them when to buy and when not to buy. When the price of lumber skyrocketed to record highs, a lot of people were not ready for it and their businesses suffered. Now, many builders have changed their contracts [to include] product escalation clauses.

Q: Why is concrete often looked at as a non-sustainable product?

MW: It’s reported that way, but if you look at the entire life cycle of the concrete product it’s actually more sustainable because it’s more energy efficient. The HVAC equipment (air conditioner and furnace) runs less. There’s less air leakage than with a wood-framed home. And concrete’s thermal mass can maintain the ambient temperature inside a home much longer.

In fact, the Portland Cement Association, which represents cement manufacturers, is ultimately looking to be net zero in their latest roadmap of the future. [For more info go to www.GreenerCement.com.]

There’s also the issue of CO2 off gassing, which comes from the process of running limestone through a cement kiln during the manufacturing process. The cement industry has made huge improvements to that process just in the last two years where they’re now using Portland Type IL cement, which basically reduces the amount of limestone that runs through the kiln by 15%.

Concrete homes have grown in market share because they are disaster resistant and energy efficient. Most people are not aware that over 12% of the above-grade walls for single-family detached homes in the US are made with cement-based concrete building systems, whether it’s concrete masonry, precast, removable form systems, or insulated concrete forms. They’re all part of that mix for a more sustainable, disaster-resistant structure.

Q: What resources are available to help builders make the switch?

MW: One thing a builder needs to do is to determine which subcontractors are available to help with the transition to building wall systems with concrete. Another is looking at what concrete system a manufacturer provides. They all have training programs readily available to support a builder’s transition away from wood.

In addition, national or international industry trade associations representing the various systems — the Insulating Concrete Forms Manufacturers Association; Precast Concrete Institute; National Concrete Masonry Association; National Ready Mixed Concrete Association and Concrete Foundations Association to name a few all have training programs.

There are lots of resources available for those looking to make the transition.

Q: What about the money piece and the investment in factories?

MW: That’s always going to be a challenge. But if somebody’s got the money to help keep their CapEx [capital expenditure] costs down, they’re going to be in a much better position to weather the peaks and valleys of the building marketplace.

Q: What do you see as the prospects for systems building going forward?

MW: [Finding] labor is always going to be tough, but that’s an advantage for systems builders. As for equipment, even though the equipment manufacturers and the robotic manufacturers are really pushing, investing in the most expensive technology might not be the best way to go.

You don’t necessarily need the latest equipment. Always keep in mind that a payment will have to go out the door every month to cover the cost of that equipment. If the market tanks, which it has done in the past, you still have that monthly payment.

This interview was conducted by Stacey Freed for Offsite Builder.