Has anyone thought to ask why West Coast tech companies are so enthusiastic to throw millions of dollars at start-up modular factories west of the Rockies but haven’t invested a single dime in any established, profitable modular factories east of the Rockies?
Factory OS recently raised $55 million in investment capital from Autodesk Inc., Citi, Facebook, Google, Morgan Stanley, and Lafayette Square. The investment will help Factory OS accelerate growth and further integrate digital technologies.
Is it simply the housing shortage in the West? Whatever the reason, the money is flowing in from the West Coast at unprecedented amounts.
But let’s take a little peek behind the curtain of what could be the real reason the high tech money is flowing into Factory OS and why the affordable and homeless housing markets are getting so much attention.
There’s definitely is a housing crisis on the West Coast and the Rockies and meeting those needs is something everyone in the off-site construction industry needs to do. Panelized wall and truss factories can only meet a portion of the demand, modular can only meet a small portion which means that somehow the output from both has to increase dramatically.
No off-site factory would ever turn their backs on millions in investment dollars to build more and hopefully, profitable product. However, they are turning their backs on the history of the modular industry and what got us to this point.
I’m not a betting man but I would wager those millions from the high tech companies came with the offer of lots of research, rethinking the entire process including the production line, and getting developers and investors to think of modular as simply a repeatable, lower-cost way of fulfilling the housing needs of the affordable and homeless markets.
The high tech money simply looked at the modular process and thought if we can make every module the same, keep options at a minimum, use BIM, AI, and other cool toys they’re working on, test them in an actual modular factory, then that is the place to spend all their time, talent and money.
The big question for everyone. What happens to all those senior management people that have spent decades learning the skills needed to run the unique production processes required to build modules on an assembly line?
The answer to that came three months ago when a Director of Production wrote me to say he was let go from his job and replaced with a college grad carrying a tablet and connected to a program written to help improve productivity.
Turns out the new guy was doing a time study of each production worker’s activities using a chip in the new badge every line person had to wear. He walked the floor with little interaction with the line people.
The line people kept calling their former boss asking what was happening and of course, he didn’t know.
This created a rift between the line worker and the tablet carrying “replacement” production supervisor (not his official title). Several line workers quit, which was probably going to happen anyway, but when more than usual began not showing up for work, production began to slow down.
The workers that remained were told to pick up the slack and the tablet-carrier kept an even closer eye on their efficiency.
The bottom line in this example is this modular factory used to have a reputation for building good quality custom-designed modules but now it’s trying to enter the huge project market where cookie-cutter designs are the norm. That market is a penny-pincher’s delight but one wrong step can mean the difference between profit and loss while the modules are still on the production line.
I hope it isn’t the case with Factory OS where the high-tech money is pouring in just to give Google, Autodesk, Facebook, etc a testing site for all their new digital and electronic experiments.
The off-site construction industry can meet the demand for all that new housing but it needs more factories that can turn out a 1,000 modules each year instead of just increasing a factory’s production output by 100-200 modules at the cost of tens of millions of dollars.
Gary Fleisher, the Modcoach, publishes Modcoach News and Modular Home Coach blogs for the modular industry professional and Modcoach Connects for construction consultants
email me at [email protected]
