I’ve recently had some insightful conversations with several building material and service providers in the modular and offsite construction industry. These chats have highlighted a growing concern among these providers: the increasing caution around working with factories that aren’t transparent about their financials.
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Imagine investing your resources, time, and effort into a project only to discover that the factory has run out of money, leaving your bills unpaid. This is an unfortunate reality for many service providers. One provider, in particular, shared a story that perfectly illustrates this problem. They thought they had struck gold with a well-known modular factory, which was getting rave reviews in the press. However, behind the scenes, the factory’s management had no experience in modular construction. Eventually, the factory’s financial mismanagement came to light, and the provider was left high and dry, with no payment for their services.
Another conversation was with a national materials supplier who is about to take proactive steps to avoid such situations. Her company is developing a plan to require a deposit to be placed in an escrow account before they engage in business with a new offsite construction company. This way, they have some financial security if the project goes south.
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The underlying issues boil down to two main problems: underfunded projects and inexperienced management. These factors have caused significant headaches for many service providers and vendors in the industry.
So, is this becoming a trend, or is it just business as usual in the often volatile construction industry? Only time will tell, but it’s clear that greater financial transparency and experienced management are crucial for the stability and success of modular and offsite construction projects.
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