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If Labor Shortages Persist, Will Builders Seek Construction Alternatives?
John Caulfield / BUILDER / February 6, 2013
Advanced framing, panelization, and modular manufacturing could gain ground.
Kevin Flaherty didn’t have his hopes up. The director of marketing for the modular manufacturer Champion Enterprises, Flaherty expected modest turnouts for the series of seminars on modular construction his company participated in during the International Builders’ Show last month, the first one of which was scheduled right after the keynote address by former Disney Co. honcho Michael Eisner.
To Flaherty’s surprise, that session was standing-room only. And its turnout signaled to Flaherty that more builders who are staring at the prospect of field-labor shortages are at least thinking about whether hooking up with a module supplier might make financial and practical sense under current employment and market conditions.
“We think [shortages] are really going to hit the fan in 2014,” if projections about buyer demand and housing starts come to pass, says Flaherty. “So builders need to be ready for it.”
Neither Troy, Mich.–based Champion nor other producers are kidding themselves that modular construction is suddenly going to break out of its 3% niche of total annual housing starts. But in markets where labor is already expensive, modular might attract some otherwise resistant builders and contractors looking for ways to sustain their production schedules by using sources that can deliver factory-built houses that are 70% or more completed before they are lowered onto jobsite foundations.
“In first-ring markets, where there is a lot of tract building, we’ll struggle to have an advantage,” says Dave Endy, co-owner of Stratford Homes in Long Lake, Minn., which produced about 200 homes from its two factories in 2012. “But we recently finished a project in Jackson Hole, Wyo., where we had a huge cost advantage because labor rates there are high.”
Those rates, in Jackson Hole and many other places, are likely to keep rising if the housing market’s recovery stays on its current upward trajectory. “As the picture has become more optimistic about home building, the need for workers has continued to build,” observes John Courson, president and CEO of the Home Builders Institute (HBI), which provides career training and placement in support of the national home building industry. And builders, he adds, prefer “job-ready workers” at a time when on-the-job training is less financially feasible.