If you’re a reader of this magazine, you understand that offsite construction has a growing role to play in the built environment. Whether for commercial structures, multifamily projects, or single-family homes, you see it as the future. The question is how to make that future a reality.
Part of the answer is for offsite factories to have a smart mix of repeat customers; most of them aren’t there yet.
Customers can be rated by volume and consistency. Factories in the Northeast primarily serve the small custom homebuilder, meaning the average builder member of the National Association of Home Builders who completes just six homes per year. They offer the factory regular orders, but at low volume.
What does that mean? Let’s do the math. The average volumetric modular factory can produce four to six modules per day and the average home needs three modules. The factory will have roughly 240 annual manufacturing days, after accounting for holidays and maintenance downtime. Multiplying 240 days times three modules per day equals an annual capacity of about 720 modules. If the factory’s average builder customer builds six of those three-module homes, the factory needs 40 builders to absorb its production capacity. That’s a lot of builders over a lot of states that the factory needs to supply and support. The logistics and overhead become expensive and unwieldy.
The other end of the scale is more common in the western US, where many factories have pursued builders and developers of multifamily projects and hotels. These customers offer large, one-off projects. Getting one can guarantee months of factory production, but a cancelled or delayed project can leave a catastrophic gaping hole in the factory production line.
But what if, rather than pursuing the extremes, a factory could sell single-family homes to four or six developers that each build 40 to 50 units per year? What would that mean to the factory? The answer is that it would mean less variation, less customer management overhead, a more stable production output and better scheduling.
Those developers would be a far cry from the average small custom builder in terms of sophistication. They would know their products and customers, and would know how to sell. They would also provide more consistent orders than the hotel developer.
Perhaps the perfect solution for an offsite factory would be a mixture of developer types. Imagine a Mason Jar that you fill with marbles (multifamily projects). Next, you add sand (single-family homes) to fill the empty spaces between the marbles. The result is a completely filled production line. With four to six single-family developers and one or two multifamily developers, a factory could have 100% of its production capacity accounted for.
How does that happen? It goes back to industry marketing and sales. How do we convince our customers that we, as an industry, need to adopt offsite construction and to partner with a factory? How do we arouse their curiosity so that instead of us searching for them, they are searching for us? It’s not only how we market our industry, but also being smart about whom we are marketing it to.
If we want to scale offsite construction, that can only happen when we sell hundreds of modules at a time, not a couple, and when we can maintain those sales over months and years. Let’s scale offsite construction!
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