Name: Why Factories Might Be the Key to Faster, More Efficient Construction
Uploaded: 2024-01-23T05:00:00Z
Duration: 6 min 2 s
Description: For years, the U.S. has faced a construction worker shortage and an affordable housing crisis. Now, builders can fast-track projects with modular construction, trimming timelines by up to 50%. WSJ’s Jamie Leventhal visits a factory to see it in action. Photo: Volumetric Building Companies

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For years, the U.S. has faced a construction worker shortage and an affordable housing crisis. Now, builders can fast-track projects with modular construction, trimming timelines by up to 50%. WSJ’s Jamie Leventhal visits a factory to see it in action. Photo: Volumetric Building Companies

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Why Factories Might Be the Key to Faster, More Efficient Construction

This blocky building wasn't really constructed here. It was actually made in a factory, and then it was shipped hundreds of miles and assembled on site. I wanted to see how you could construct a modular building like this one... in a factory, so I came to one, This is known as modular construction, and it could be a big deal for the US' construction industry, which has been facing a worker shortage for years amid a national crisis for affordable housing. Experts say modular builds can reduce costs by 20% and timelines by up to 50. But the industry faces some serious logistical challenges as production ramps up across the US. Two of its largest startups have already failed. So is modular construction meant to last? So everything in this factory essentially starts out like this block of wood, right?

Yeah, absolutely. So the project that we're looking at here is going to become an extended-stay hotel in Philadelphia.

This factory is owned by Volumetric Building Companies, or VBC, a construction company that's built some of the largest modular buildings in the country. The factory stretches nearly a quarter mile long and is divided into stations. Here, workers build units one at a time that will later fit together to make an entire building. To build one of these modular units, it all starts with the flooring. Next, they put the walls up. They'll put in drywall and electrical. And then lastly, they'll add the finishing touches. As they come together, they make their way down the factory by connecting rail line, kind of like a massive conveyor belt, and things here move fast. Things are actually happening so fast in this factory that I'm struggling to keep up.

We can have a module from one end of the line to the other in about a week.

So this should measure out to be about 12.5 feet wide and 65 feet long, just small enough to fit on a tractor trailer that gets shipped to its destination. On site, workers combine the units, install utilities, and add finishing touches. So it looks like any other building inside.

We actually design all of our modules to be structurally independent, to transport via road for long distances and to be lifted by a crane. That structural requirement ends up making our components stronger than the individual parts would be on a site-built project.

Why would someone choose modular construction over traditional construction?

The primary reasons are driven by schedule certainty and cost.

Newscaster: In traditional construction, workers might have to wait until the building's foundation is set to start assembling walls and other components. But with modular construction, workers can be building the foundation on site and the modules in the factory at the same time, speeding up the entire process.

This project was finished in 22 months, about half of what the construction schedule would have been should it have been built on site.

Newscaster: And the faster companies can complete their buildings, the quicker they can start charging occupants. Modular companies can also buy raw materials in bulk, which can be an advantage over traditional construction.

When you understand the modules that you're building, you can actually order material to the size and specifications that you need, where in traditional construction, you're still having to construct and measure that out on a job site to make it fit. So it's just much more efficient in module construction.

Newscaster: And since these buildings are made in factories using similar step-by-step processes, modular construction needs fewer skilled workers than traditional construction. That comes at a critical time since the construction industry still struggles from a worker shortage, even as the number of construction jobs rose in 2023.

We don't have a lot of people going into the trades the way that we did in the '50s, the '60s, and the '70s. You can train people much faster in modular construction because they're working on a short set of rote tasks.

As we lose our skilled workforce over the next decade, modular will become more utilized in almost every environment.

But experts say that modular construction works best for buildings with repeatable units, like hospitals, schools, multifamily units, and hotels. And a 2023 McKinsey report found that the modular construction industry isn't growing as fast as expected. Why do you think it's been so hard to gain acceptance here?

I think that there's plenty of reasons why modular has struggled in the US. Not every city in the country needs modular to build housing efficiently. There are times where modular construction can be more expensive than traditional construction. That's especially in locations where labor is plentiful or low-cost, or where the factory is located a very long distance away.

Some of the downfalls that we're still struggling with is the impact of having to transport these modules to job sites. It costs a lot of money to lift and pick those modules into a building, and so sometimes we get height restrictions that make it tough.

VBC is one of many companies fighting to get a foothold in the US market. But in the past two years, two other major modular companies, Veev and Katerra, have gone bankrupt. Does this make you worry at all about the future of modular construction in the US?

I think everybody should be worried about the future of construction, both in the US and globally. Modular building is probably not going to save the construction industry, but I do believe that we are a huge part of the future.

The first guys through the wall often get bloodied in some way. We're all learning and progressing because of the things that Katerra and Skender and Veev have done.

We've produced 6,000 units over the last decade, which is substantially more than almost any other company in this space, startup or otherwise.

I think what we have to really focus on for modular construction, for it to make the next wave, is to use it for the asset types that it's really suited for. If we can find locations where we can build these modular systems that are close to the site, there's some advantages, if you will, then, that really make it much more advantageous than traditional construction.

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