In a matter of hours, the Liv- Connected modular home can be assembled.
Many different products are used in the construction of homes. Products moving through the supply chain have to arrive at the job site At a time when transportation costs are rising, multiple modes of transportation are required.
Since January 2020, long distance truck transportation has gone up more than 30%, water transportation has increased 21%, and the arrangement of freight and cargo has increased 50%.
It can be hard to build new homes at a time when there is a need for more supply.
The Liv- Connected home can fit on the back of a truck.
The role transportation plays in offsite projects is much bigger than it is in on-site projects. Ken Semler is the president and CEO of West Virginia-based Impresa Modular and is one of the biggest advocates for modular construction, but he doesn't think the building process has taken off.
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He said that the reason the industry hasn't grown fast is because he has all the department of transportation rules in his head.
Getting modules to the site isn't the only transportation issue for offsite. The modules need to be put in place by cranes. Semler's new factory is taking a long time because of supply chain issues.
In addition to that, he says that another consideration is the type and quantity of carriers that will be used, and sometimes those carriers have to store the modules, which might be occupied for just a matter of hours or for many weeks.
Set crews are hard to come by and crane cost has gone up more than 30%. A unique set of tools is required for setting. There aren't enough of them. There is a shortage of people to drive trucks. When I set a house, it was a miracle. The crew, modules and crane need to show up at the same time. It is getting more difficult. It is harder for site builders.
The company raised $13 million for the new facility. There is a fleet of carriers that cost anywhere from $12,000 to $125,000 each. He said that factories that own and operate set crews will invest in the best carriers to get the jobs done quicker and to move on to the next project faster.
Semler said that it would take a million dollars to get your carriers if you were delivering all your own homes. They have to sit out in the field for a long time. It is also a big capital expense.
Terra Verde is a real estate developer with a focus on providing workforce housing solutions in Arkansas. His development team is building a centralized factory to serve several areas of the state, which will allow the company to leverage the benefits of offsite construction.
The factory is currently in the design stage and is expected to cost between $10 and 15 million and will be able to produce up to 1,500 boxes a year. For the company's workforce housing product, two boxes connect to create one home, so the factory should be able to produce 500 to 750 houses per year, with a projected full payback on the construction cost of the factory investment in just three to five years.
Terra Verde is able to achieve these results because the model his team has developed uses a limited amount of variations for the workforce, built to rent homes, with the same two or three units repeated throughout an entire neighborhood. The team should be able to beat the costs of on-site construction if they use this scale.
He will use the lower cost of labor in Arkansas to complete the boxes up to 85% before they are sent to the job site. The total costs of transportation will add up to 4.5% of the total building costs.
The speed is the main reason we are working towards full offsite construction. The sooner it is finished, the quicker it can be rented or sold. We should make up 4% to 5% of transportation costs using the factory model because of the quicker turn, less waste and higher quality. There is a 25 to 50% increase in the number of units completed to certificate of Occupancy from doing it offsite instead of on site. There are no weather conditions to deal with offsite, crews can work when it's raining or snowing, and you can have several shifts.
The offsite home products that are currently being shipped around the country are almost completely assembled. A lot of empty space is being shipped and paid for at sky high prices.
Jordan has a plan to change the dynamics of the architecture industry. The group's new, flat-packed home design eliminates the need for wide loads so that more of the house can fit on a truck, making it easier to build and ship.
Joseph Wheeler, a professor of architecture at Virginia Tech School of Architecture and Design, who has been entrenched in modular construction practices around the world, collaborated with the firm partners to come up with a design that can be flat packed.
The schematic shows how the home will be broken down into components.
He said that the components were carefully designed to break down and be reassembled in a simple way. In order to accommodate simple connections between components, we worked very hard to coordinate with our team.
Because of this innovative design, larger than 500 square feet can be broken down to fit on one truck and shipped anywhere in the country at regular shipping rates, then it can be assembled in a matter of hours.
This is a huge advantage when it comes to disasters or market rate sites. Only some of the homes are flat packed. The brain of the unit and the electrical and plumbing can be found in others. We're not shipping space.
The firm claims that empty space is the root of modular's high failure rate. Shipping across Japan and the UK isn't nearly as far away as it is in the US.
20 homes can be produced per week at the Liv- Connected factory. There are two choices when the home arrives. If the home will be used for disaster relief, the house will be placed on top of a beam foundation. Even though the elements have been packed, the points of entry and plumbing would already be in place for a permanent installation.
The firm's Conexus home starts at $150,000 and is 500 square feet. The process of adding a bedroom with the modular foundation can be done online for between $30,000 and $40,000.
One of the features that we love is that you can start with a one-bedroom, and you can add on and expand at a later time. It can be similar to a car purchase. The buyer can choose the exterior finishes and build the model that they want to build. Modular manufacturers get stuck with endless customization.
Liv-Connected formed a partnership with a group called Tiny Estates that will keep the factory busy in the future, which is exciting for Norbeck.
During boom periods and bust periods, there has been a limit on the number of doors that can be opened. There is interest in Tiny Estates that have homes starting at $90,000. The monthly mortgage is less than rent, but you are still building equity. It is possible to bring the price down. We have a good set up compared to other companies.
The home factory and the homes were created by architects so there was more focus on creating an aesthetically pleasing design that is focused on improving health outcomes.
We have a better ability to detail as architects. From a health standpoint, our homes have more insulation, better water proof, and don't have water penetration issues, which are all very meaningful. Slip/fall detection, night lighting, and technology to move cabinets up and down are some of the things that can be done. Updating catalogs to integrate more technology is our long-term goal.
The vice president of design management at JPI Companies speaks to the various factors that go into weighing whether one of his projects will move forward as offsite or on-site construction.
The lower labor cost in Texas is one of the factors. Since looking at modular pre-pandemic, modular may be worth a revisit.
All of it adds up to be a matter of supply chain economics according to the CEO of a California-based modular builder.
He went from Silicon Valley to modular because of the complicated logistics. Getting the right thing to the right place at the right time is what the supply chain is about. It is a good idea to think about cost to serve when you are thinking about what you can do. The cost of labor to turn raw materials into finished product and then the cost of labor to install are all variables that affect the cost of a project. The problem is that only one aspect of the equation is left out.
He used an example from his time at Apple.
He pointed out that the iPhone started with one factory and grew to seven factories around the world during his 11 years at Apple. Even if you don't have automation or equipment, there is still a lot of commitment in a factory.
The location of your factory depends on four factors: where customers are located, the cost of logistics from factory to customer, and the shipping destination. The owner has to coordinate global networks of suppliers to be aligned for the same goal, and at the same time to be responsive, Agile, and flexible, all in order to scale.
The company has been able to deliver more than 600 modules in less than two years. The company was able to figure out how to separate transportation from the challenge.
He said that you should be asking what is the lowest cost to deliver because you silo the challenge. Modular back is held back by the fact that we are looking at things in silos that don't work together It doesn't make sense to me if you just solve for logistical problems and don't solve labor or reverse it.
Because of the size of the modules, it is difficult and expensive to ship and therefore there is a geographical limitation around the manufacturing facility. It makes sense to have a factory near where the home needs to be delivered.
There is a mod that uses standard shipping and doesn't need permit fees. We have shipped from southern California to New England. If it was an oversized load, it would cost $250,000 so it wouldn't be economical. This is the story I have been telling for a while.
Modular companies are advised to vertically integrate. The growth mindset is enforced by vertical integration.
He said that it means to focus on the unmet needs of the customer. The end customer is the homeowner and we are trying to solve their problems. This industry is broken by that. The problem of the end customer is solved by Apple, they don't tell them to pick up the phone in China.
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