Is Modular Construction Destined for Bankruptcy?

From Belinda Carr.

Homes made in factories were supposed to save us from the housing crisis. Modular builders made lofty promises to build homes quickly, sustainably and efficiently while being budget-friendly. However, we have seen numerous prefab, offsite and modular builders file for bankruptcy recently like
Katerra, Veev and Modulous.

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0:00 Introduction
0:55 Katerra
2:06 Other failed businesses
4:36 Inexperience
5:49 Decentralization
6:17 Long-term investment
6:55 Restrictive codes
7:26 Uniqueness
8:16 Sponsor
9:15 BotBuilt
10:13 Conclusion

There are numerous reasons that contributed to their demise, but I’ve narrowed them down to five.
#1 inexperience: The sector is a harsh environment for innovation. Outsiders from the tech field who are unaware of the complexities of construction come in with ambitious plans to disrupt it but little of the expertise necessary to fill a niche in the market. This inexperience and arrogance lays the foundation for a company’s demise.

#2 decentralization: Construction is highly fragmented with numerous stakeholders involved in every project. This can make it difficult to implement new technologies that meet the needs of every company, supplier and type of construction.

#3 long-term investment: Many of the failed modular companies we reviewed raised money by using pre-order numbers and hypothetical projects that could be built 5 to 7 years down the line. They used that money to invest heavily in automation and robotics. Now, in reality, real estate developers are not obligated to fulfill those orders.

#4 restrictive codes: Government regulations, zoning laws and building codes often stand in the way of more factory-made homes. Construction companies operate on razor thin profit margins, especially when you account for the cost of expensive automation lines in a factory.

#5 uniqueness: A successful modular construction project is one that balances a logical, repetitive kit of parts with beauty and uniqueness both on exterior and interior.

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#modular #construction #housingmarket #stockmarket #housingcrisis #architecture