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Original Comment

From time to time, we receive questions from our followers on social media about modular homes. This week we received some questions about setting modular homes. MHBA reached out to Anthony Zarrilli of Zarrilli Homes, LLC in New Jersey (www.zarrillihomes.com) to help answer these questions.

Q. What are the standard recommend qualifications of an installer of modular homes?

A. Standard recommended qualifications should be looked at prior to hiring a modular home builder. Your builder should have experience in both modular construction as well as traditional stick frame. Typically, porches, decks, detached/attached garages have to be done on site. This is over and above the modular home finish. Also, someone who is detailed oriented, organized and can set and keep to a schedule with a tentative completion date. The more details on the scope of project and schedule through completion that can be offered the more successful the job will be and ultimately happy you will be with the project.

Q. Wondering what the normal setup time allowance should be for a 2 section off frame modular home?

A. From the time the home is delivered to the property (and set on foundation) the time to complete should be 60-90 days. Depends on any/all site finish work (site work and/or decks/porches, etc. that need to be done over and above the modular home.)

Q. If a house arrives at a site and the prep is not complete to set the house how long could it sit on the trailer before being set?

A. A modular home should not be delivered to the site until the foundation and site it prepped and ready for the home set. If by chance, there is a delay due to high winds or inclement weather a few days will not harm the home modules. I would recommend that they should not sit on trailers for more than 5-7 days.

Q. Are there standards for tolerances in spacing between the sections?

A.There should be no more than 1” between modules. And ANY/ALL spaces should be filled in with products like or similar to Great Stuff expanding insulation on all floors, walls, ceilings and gable ends spacing in roof. It is common to have some spacing but excessive spacing is a sign of poor workmanship and/or house set.

Q. Is it common for the dimensions of the house not to match the dimensions of the foundation?

A. Typically, a house may not match the dimensions of a foundation by ½-1” and can be addressed on site with shimming, packing out, etc. There is a small tolerance that is acceptable but more than that could be a problem. However, each design has its own criteria.

Thanks, Anthony, for addressing these questions. If you have a question about modular homes, feel free to send those to info@modularhome.org.

Started on August 7, 2019 by Tom Hardiman

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Michigan Supreme Court Makes Historic Ruling in Favor of Industry-Backed Homeowner

Original Comment

The Michigan State Supreme Court recently handed down its ruling in the Thiel v Goyings case, involving a homeowner who utilized modular construction and a neighbor who opposed its use. MHBA filed an Amicus Brief in support of the homeowner in this case.

Background:
When David and Helen Goyings considered building their retirement home in Timber Ridge Bay neighborhood in Allegan, Michigan (north of Kalamazoo) they began speaking to Tim Cassidy at Heritage Custom Builders/Tim Cassidy Builders. “We’d seen some homes Tim built and were impressed with the quality,” Helen Goyings said in an exclusive phone interview with MHBA. “We liked that we were able to pick out and design our home the way we wanted because we didn’t want a cookie cutter home.” Goyings continued, “And, his homes were so well built, better insulation, thicker walls, and just a better product than the stick-built on-site home.”

Unfortunately for the Goyings, their neighbor didn’t like the idea at all. Once construction began and the three modules from Ritz Craft Corporation were delivered for installation, things turned nasty. Matthew Thiel owned a nearby home and opposed the Goyings use of modular components in their home construction, citing the Homeowners Association restrictive covenant. He took the Goyings to court demanding that their new dream home be torn down. Thus, began a four-year legal ordeal for the Goyings family.

After a three-day bench trial, the trial court found no cause of action and dismissed the case in favor of the homeowner. On appeal, the Court of Appeals concluded that the trial court erred and reasoned that the Goyingses’ home unambiguously fit the commonly understood definition of “modular” but never construed the disputed term used in the covenants— “modular home.” The restrictive covenant in question was written in 2006 and states:

“Manufactured Housing Units. No manufactured homes, whether classified as a mobile home, modular home, or otherwise, and no prefabricated homes shall be permitted on any Parcel in the Premises, regardless of which building codes are applicable to said homes.”

The panel reversed and held that the trial court should have granted judgment in the neighbors’ favor and ordered the Goyingses to tear down their new home.

But the Goyings were not done fighting and not willing to tear down their new retirement home. They appealed to the Michigan Supreme Court in hopes that their case would be heard. When asked if MHBA’s amicus brief helped her family’s case, Helen Goyings said definitively that it did. “It was peace of mind for us that the industry we chose to spend our money with backed us up. It gave us the confidence to continue fighting.” According to Helen, “the amicus briefs filed by MHBA and others were the biggest help in crossing the line to have the case heard by the court because the Court only took up thirty cases this year.”

In making their 5-2 ruling in favor of the Goyings, the Michigan Supreme Court stated in part “this is not a dispute about the definition of the word modular. And It’s also not a dispute about whether modular homes are nice. The dispute is about how the covenants define a modular home—that is, when does a home with modular components cross the line and become a modular home? How do we know a “modular home” when we see one?”

According to Heritage Custom Builders/Tim Cassidy Builders, the majority of the home would be stick-built on-site. This included the entire lower-level walkout basement, garage, roof gables, roofing, front porch, stone columns, deck, and other portions of the home. However, three modular components would be built offsite and delivered to the lot. All told, the completed home’s cost would be composed of about 59% stick-built construction and 41% modular components. This fact turned out to be the deciding factor in this case.

The parties did not dispute any of the (lower) trial court’s factual findings:

-It found that the testimony was uncontroverted that the overall quality of the Goyingses’ home would equal or surpass that of homes that are stick-built on-site.

-The completed home would be indistinguishable from a stick-built home in material quality and workmanship because the modules were constructed out of the same materials as a stick-built home and the construction methods used in the factory were the same as those used to build a home on-site.

-The home was subject to the same residential building codes as a stick-built home.

The lower court also found that the home’s hybrid construction would not be visible. It would be visually attractive, and, from appearances, “it would be unlikely that anyone would know that the home had been built anywhere but on the property.”

The court also determined that although the plaintiffs believed “that knowledge that the construction of the home involved three modules would reduce the value of the other homes in the area,” they did not present any evidence from an “appraiser, expert or other witness to support their belief.”

Finally, on the basis of testimony from the covenants’ drafter, the court determined that the purpose of the covenants was to protect the value of the parcels by maintaining a consistent standard of aesthetics, quality, and value for all homes built within the subdivision. The covenants prohibited manufactured homes, mobile homes, and modular homes on the basis of the assumption that such homes “are not typically going to be of a standard and of aesthetic appeal as what a stick-built home would be.”

In other words, the covenant was written in 2006 ASSUMING that a modular home would not look as nice as a site-built home and would therefore lower the value of nearby homes.

After a lengthy grammar lesson in their opinion, the Supreme Court landed on some key facts:

Ritz-Craft, the company that manufactured the modular components, might describe itself as a “ ‘modular home manufacturer,’ ” but the Goyingses did not purchase a modular home from Ritz-Craft; they contracted with Cassidy Builders and Heritage Custom Builders to construct a home that incorporated Ritz-Craft modules.

Though all these sources demonstrate that the Goyingses’ home is partly modular, they provide no guidance as to whether the modular components were extensive enough to violate the restrictive covenants.

The home does not fit the covenant definition of “relocated residence”—the modules were not a “residence” when placed on the lot. According to the builder, each component was “just a raw piece of construction material” and was “not even close” to being habitable without extensive on-site construction.

Nor does the Goyingses’ home breach the prohibition against “manufactured housing units.” The trial court found that the defendants’ home was mainly stick-built, with modular components integrated into it. And the Supreme Court agreed.

The Timber Ridge Bay restrictive covenants unambiguously prohibit modular homes. The materials, workmanship, quality, and outward appearance of the defendants’ home are indistinguishable from a site-built home.

Modular components don’t necessarily make a modular home. The covenants give us text and context to determine what a modular home is. A fair reading of those covenants prohibits a home that is more modular than not. And the Goyingses’ home is mostly not modular.

What Does this Mean for the Industry Going Forward?

This ruling can only be described one way – historic! MHBA is not aware of any other case in the country where a restrictive covenant against a modular home was overturned. And to have the ruling come from a state Supreme Court is even more significant.

MHBA had to incur legal expenses to file the amicus brief in this case with absolutely no guarantee of a positive outcome. According to MHBA Executive Director Tom Hardiman, “the Supreme Court could have ruled in favor of the Court of Appeals and ordered the Goyings to tear down their home. That would have been tragic. But we are proud to be a part of this ground-breaking ruling and proud of the homes our members build.”

While this case was specifically about whether one home violated the language in its HOA, MHBA believes this ruling will have a ripple effect. “We are opposed to any restrictions that place modular construction at a disadvantage to site-built homes”, said Hardiman. “As we approach 2020, it’s ridiculous that we continue to have this conversation given the lack of skilled labor and low availability of affordable housing inventory in this country.”

Paul Lindsley of Ritz-Craft Homes had this to say about the ruling: “This is a landmark decision for our industry. Systems built product plays a key role in the housing business and that role will continue to grow as site labor challenges continue to mount. My hope is this sets a precedent for future housing discrimination cases, and that it also paves the way for the decision-making process a developer considers when establishing restrictive covenants.”

Tim Cassidy of Heritage Custom Builders/Tim Cassidy Builders witnessed many of the hearings and said, “the attorney for MHBA proved to be very helpful to the case. He was very informed and provided a lot of good insight as to what is happening in the industry.” Cassidy continued, “We are happy with the outcome of this case and for the Goyings family. We built a beautiful home for them and now they can enjoy it.”

MHBA, too hopes the Goyings family can finally enjoy their retirement home!

Started on July 25, 2019 by Tom Hardiman

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Don’t be Confused by a “Hudular” Home

Original Comment

Before you build your home, be sure to ask your contractor this important question: “To what building code will my home be constructed?”

Every state in the U.S. has adopted some version of the base model International Residential Code (IRC) for new home construction requirements. The base model codes are developed every three years and states have the right to adopt and amend these codes to meet their local needs. Some states such as Maryland, are on the most current 2018 version of the IRC, while other states are using the 2015, or 2012 versions.

All site built and modular homes must meet the state and local building codes in effect where the home will be located. A manufactured home, on the other hand, is built to the federal Housing and Urban Development (HUD) Code. To address the affordable housing shortfall, the HUD code homes are built to a less robust and resilient standard and are therefore deemed to be more affordable. This is a federal “pre-emptive” code meaning these manufactured housing units must be accepted in all states. States and localities do have the right to determine WHERE these units can be located through zoning requirements.

Now this all seems pretty clear and straightforward, until a recent move by some in the manufactured housing industry. In an effort to obtain more conventional mortgage financing through Fannie Mae and Freddie Mac, some manufactured housing companies have developed what is being referred to as “next generation” manufactured homes. These new homes are still built to the HUD code, but with some enhanced features such as pitched roofs and drywall.

To be clear, we have no issue with manufactured housing. The industry has provided quality living accommodations to countless thousands of families over the last several decades. And if you want a manufactured home, by all means you should get one.

But this latest move causes some serious concerns. For starters, the cost of these next gen manufactured homes is roughly equivalent to a basic IRC compliant site built or modular home, which begs the question – why not just build to the IRC? Another potential issue is that these HUD code homes, once placed in a community, can be used as “comps” for appraisers when evaluating modular or site-built homes, even though they are not built to the same codes. Lastly, what will become of the current generation of manufactured homes if next generation homes succeed? Will they be further frowned upon in communities, creating even greater hardships for lower income families?

We sometimes struggle to educate the general public between the differences between a manufactured home and a home built using modular construction techniques. This latest move won’t help.

If your builder can't or won't answer that first question, you should consider finding a new builder! We know a few - give us a call.

Started on June 27, 2019 by Tom Hardiman

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New Report by McKinsey & Company: Modular construction’s time may have finally come

Original Comment

In case you missed it, McKinsey & Company recently published a new report on the staying power of modular construction. The report, “Modular Construction from Projects to Products” makes the case for a ten-fold increase in revenue for the industry in the next decade.

“There are strong signs of what could be a genuine broad-scale disruption in the making. It is already drawing in new competitors—and it will most likely create new winners and losers across the entire real estate and construction ecosystem. There is mounting evidence that this disruption is now happening. Promising signs of a trend that we believe has staying power and growth potential.”

But this report isn’t simply a marketing piece for the industry to tout. It’s more of a roadmap to follow. For example, McKinsey makes several recommendations on what manufacturers will need to do to capitalize on this unprecedented opportunity.

“Companies will need new capabilities in design, manufacturing operations, and digital technologies. Their go-to-market strategies may include deeper partnerships with developers, construction firms, and financiers. They will need to compete with other industries for scarce digital talent. Finally, they will need to introduce and maintain the classic kind of continuous improvement mentality that leading manufacturers have developed over the years.

The lean offsite manufacturing process is far faster than the equivalent building process onsite. This is due to the enclosed and controlled factory environment, the ability to coordinate and repeat activities, and increasing levels of automation.

More importantly, the more standardized, automated, and controlled operating environment of a factory can double productivity above what can be achieved with traditional builds, eliminating a great deal of onsite down time. This is even before considering the productivity benefits of establishing simplified, repetitive processes or advanced automation equipment.

One useful analogy is the automotive industry. Car makers use the same chassis in multiple car models but swap out various features to make different models look and feel distinct. Even within these models, customers are often given options to personalize a vehicle, all of which can be achieved in the manufacturing process.”

In order to realize these gains, all parties involved in the construction process will need to adapt. For example, public policy makers, struggling with affordable housing needs and labor shortages, need to adopt more manufacturing-centric policies to encourage growth, rather than adding new requirements to appease the concerns of skeptical factions within the building process.

We are not yet advocating for full-on automation of modular factories, as that requires significant investment and adds to overhead. But we fully agree with McKinsey’s assessment that manufacturers must embrace a continuous improvement mindset, lean manufacturing principles, and standardize processes where possible.

Started on June 24, 2019 by Tom Hardiman

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High Cost of Regulations

Original Comment

Without a doubt, every industry needs some degree of regulation to protect consumers and ensure safety. But at what point do agencies go overboard and start to actually hurt consumers in the form of higher costs?

On average, businesses pay between $8,000 and $10,000 per employee per year in hidden costs associated with various rules and regulations. That's just an average. Each year, MHBA addresses issues in various parts of the country that easily add to this figure. Automated sprinkler systems in single family homes even if the customer doesn't want them? Add $10,000.

Often, new regulations are imposed where none are needed, or when simple enforcement of existing regulations would suffice. One builder violates a provision of the building code? Add a new requirement for everyone to meet!

Sometimes policies are implemented that restrict the use of modular homes altogether, such as outdated template language in homeowner association agreements.

More often than not we discover the new rules are imposed for one of two reasons: 1) the people proposing the rules don't fully understand the industry and over-regulate to protect themselves or 2) Existing rules were not adequately enforced causing an over reaction.

And more often than not, its MHBA on the front lines addressing these modular home issues on your behalf.

There are lots of reasons modular home builders, suppliers, and manufacturers SHOULD be members of MHBA. Joining together to ensure a level playing field and protecting your business interests sure seems to make sense.

Housing costs in the U.S. are already unaffordable for too many people. Modular homes should be an option to help close this gap, not widen it. But every dollar added for unnecessary new regulations puts the dream of home ownership a little further out of reach.

Started on February 19, 2019 by Tom Hardiman

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They say a picture is worth a thousand words. So a video must be worth…..

Original Comment

Sometimes it’s difficult to explain the modular home process. When we find a good video, we like to share it with our readers. In this time-lapsed video from Connecticut Valley Homes, watch how the modules, panels, and components come together on site in a matter of hours. Of course, there is more work to be done on site to finish the home before occupancy. But it’s still pretty impressive to see an IRC compliant two-story home under roof in one day on site! Take a look at the video here:

https://www.ctvalleyhomes.com/docs/galleries/videos.asp?video=339&category=1859&name=Time%20Lapse%20New%20Home%20Day%20#1

Started on February 11, 2019 by Tom Hardiman

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Differences Between a Modular and Manufactured Home

Original Comment

One of the most common questions we get asked here at MHBA is about the difference between a modular home and a manufactured home. We checked in with Connecticut Valley Homes to address this question.

CVH: When thinking about factory-built homes, make sure you choose the one that is right for you. Modular homes and manufactured homes are both built in a factory offering value, time efficiencies, and quality control to name a few. Both are then transported to your building site. That is where the similarities end.

MHBA: So how are they different?

CVH: The key difference is the building code that the home is constructed. Modular homes conform to the same state and local building codes as site-built homes and often exceed the international residential code (IRC) that all new homes built in the U.S. must follow.
Manufactured homes, formerly known as mobile homes, are not built to the IRC code, but to a less stringent code that is defined, maintained, and enforced by the U.S. Department of Housing and Urban Development. Now also known as a “HUD” home, “HUD” requirements are set to a lower standard than the IRC code and were created to offer low-cost home ownership to more people.

It also helps to think of modular as a method of building, not a type of home. It is custom-built in sections called “modules” offering design flexibility and can have multiple floors. Plans are approved by a structural engineer and must meet the more stringent requirements of the IRC code. Modular homes can be built in any style from traditional two-story colonials with multiple roof lines to modern styles with beautiful rooftop decks. Since modules are built entirely indoors, materials are not subjected to the elements of outdoor construction like weather, vandalism, theft, etc.

Manufactured is entirely factory-built usually in one to three sections. Each section is built on a permanent steel chassis to support the frame. A manufactured home is all one level since the chassis is unable to support more weight. Because the steel frame is part of the structure and acts as part of the foundation, far less lumber is required during construction and it is much cheaper to “install” at the site.

MHBA: Any other differences?

CVH: Yes, several including cost and resale value, Modular homes will increase in value much like its site-built counterpart. While manufactured homes are generally less expensive than modular and tend to decrease in value. A manufactured home may be more difficult to refinance since it is not attached to a fixed foundation. Also, keep in mind that there may be residential zoning restrictions for manufactured homes in your area so placement in certain neighborhoods could be difficult.

To see other key differences between a modular home and a manufactured home, view the original article here: http://ctvalleymodularhomes.blogspot.com/2018/04/modular-vs-manufactured-homes-what-are.html

Started on November 19, 2018 by Tom Hardiman

Additional Comments (Click here to add or read additional comments)

The modular home is financed by the same conventional lenders that finance conventional home and at comparable rates. Manufactured homes are financed through finance companies, generally at higher interest rates.

Moreover, a modular home appreciates in value at the same rate as a comparable site built homes. Manufactured homes depreciate over time just as an automobile or other tangable personal property does.

Updated on November 20, 2018 by Steven Snyder

To expand this commentary on real life experiences with type of residiential buildings.

In California, the State structure type for modular is a Factory Built House. It must follow the CEC - GREEN CODE with an energy report as any site built home. It must be tested by a HERS rater to meet stringent Zero Net Energy qualifications before occupancy can occur as well a Cal Fire inspection fo fire sprinklers..
A local Tax assesor Land Use codehas its own catagories as manufactured home. Typically in writing, we have to inform the Tax Assessor of the States classification. It then is changed to SFR after review. \
This Tax assesor classifixation allows a Title change and for comparable appraisals however you get hit for a penalty (less vlaue) for it being factory built versus site built.

The local building inspector has less inspections and revenue opportunities

Updated on November 20, 2018 by Steve Lefler
Separating Fact from Fiction: 5 SIMPLE TRUTHS ABOUT MODULAR OFF-SITE CONSTRUCTION

Original Comment

MHBA reached out to Ken Semler of Express Modular to get the straight scoop on modular homes, starting with these five “truths.”

TRUTH #1: MODULAR DESIGN ISN’T BOXY DESIGN (UNLESS THAT’S WHAT YOU WANT)
Modular homes appeal to the masses of home buyers by offering design excellence through classic architecture. Just view the modular home plan collection at one of the top home plan websites, ArchitecturalDesigns.com. There you will see thousands of examples of top architects and designers whose plans and ideas can be “modularized” and built with the advantages of modular construction. While modern architecture offers wonderful design and beauty, most of America still chooses to live in a home that looks much like the one they grew up in.

TRUTH #2: MODULAR INCREASES CONSTRUCTION PRODUCTIVITY
A building system is essentially a highly engineered process of producing buildings or components of buildings in a highly cost effective and efficient manner. Roof trusses and floor trusses are components that many are familiar with that are produced using a building system. Almost every residential builder today would not imagine building a home without using roof trusses and even floor trusses. Why? Because they are strong, pre-built (built offsite then delivered and set), and cheaper than building those same components on-site.

Modular is actually a design approach. It is a process that divides a system into smaller parts called modules. These modules are built in a factory using many of the components and subassemblies that are used for onsite construction. These included roof trusses and floor trusses. The advantage is that these components and subassemblies are assembled into larger modules with the assistance of cranes, tooling, and jigs that just aren’t available in field construction. It is the smarter way that industries have discovered to produce custom products using standardized modules or assemblies.

TRUTH #3: MODULAR REDUCES CONSTRUCTION TIMEFRAMES
Building in a factory away from the jobsite increases construction efficiency and productivity enables better sequencing in construction processes and reduces weather-related delays. In typical onsite construction, the process is the bottleneck. Everything has to happen in sequence. Building off-site means various aspect of the building is done simultaneously increasing timeframe efficiencies. Overall construction completion timeframes are drastically reduced.

TRUTH #4: MODULAR MAXIMIZES HOME VALUE
The process of modular construction is the equivalent of construction efficiency. Efficiency means planning the entire construction process. The process builds efficiency in many ways. Here are just a couple:
Better Use of Materials – Material can be bought in the lengths and sized needed versus being cut as needed throwing away the scrap.
Buying Materials in Bulk – Instead of buying materials by the pickup truck load, factories pull the material needs of many homes together to negotiate better prices with suppliers lowering overall costs.
An often overlooked advantage of faster construction is the reduction in interest and carrying costs. With elaborate custom home construction projects that are financed with a construction loan, there are interest charges every month. These expenses are lost with no tangible long term value. By reducing the overall construction timeframe, money isn’t wasted on interest expense.

TRUTH #5: MODULAR CONSTRUCTION IS RESILIENT CONSTRUCTION
Resiliency is the intentional effort to design and construct buildings and landscapes to withstand both natural and man-made disasters. Modular homes are built strong. The basis for modular construction is to build a home that meets or exceeds building code. However, the modules that make up a modular building are built off site and transported to that site. The effort of getting from a factory to the building site is about the equivalent of surviving a hurricane and an earthquake before a module ever reaches a jobsite. It is placed on a carrier, driven at 55 – 65 MPH on highways, over bridges, and around curves. It may have to navigate back roads or tight residential streets. This 20,000 – 60,000 pound module is then lifted in the air by a crane with 2 or 4 straps or cables and placed on a foundation.

The resiliency built into every module is displayed at every modular home installation. In most cases, a module will only suffer from minor, if any, dry wall cracks. Structurally, the modules are stronger than anything that is built onsite. Resiliency is then exponentially increased when each of the modules are then connected with lag screws, bolts, and/or straps upon final installation. The strong interconnections between modules make modular homes extremely resistant to wind events as documented in the FEMA study following Hurricane Andrew.
Go here to read the full article: https://expressmodular.com/5-simple-truths-about-modular-off-site-construction/


ABOUT THE AUTHOR
Hi, I am Ken Semler the founder of Express Modular. I am passionate about this industry, our company, and the products we provide. Modern modular construction provides the ability to deliver healthy, safe, and energy efficient living spaces. Express Modular is a licensed builder/contractor in almost every state. I believe that modular homes provide the best way to deliver virtually unlimited design flexibility at the greatest value.

Started on November 12, 2018 by Katie Nicholson

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Modular Homes and Environmental Stewardship

Original Comment

There are a lot of people claiming that their product is “green” or environmentally friendly, including many modular home builders. But what exactly does that mean? MHBA asked Richard Wildermuth, CEO of Connecticut Valley Homes (CVH) for his thoughts on this.

CVH: There are some of the advantages found in every custom modular home we build. For example, modular homes are engineered to a higher standard of strength than site-built homes because they need to be transported to the building lot, lifted by a crane and set on the foundation. This results in a tighter, more completely sealed building envelope, which transfers into heating and cooling savings for the homeowner.

Another energy savings practice that we utilize is to insulate and seal all the gaps around electrical boxes, switches, water supply lines, plumbing waste lines, dryer vents and oven vents prior to the home leaving the factory.

MHBA: It seems like we hear a lot about inefficiencies around the windows and doors. Can that be addressed in the factory?

CVH: We use long-lasting, energy-saving windows and doors, which keeps temperature and air quality at a stable level and requires less from heating and cooling systems. Our sealed building envelope also prevents drafts through windows and walls limiting the presence of allergens and dust.

MHBA: So, it’s not only energy efficient, it can also improve indoor air quality?

CVH: Yes. Materials are safely stored in the factory while homes are constructed indoors; unlike site-built homes where supplies and framing are exposed to weather which can lead to mold or mildew issues.

MHBA: What about other “green” aspects of building this way?

CVH: Our construction process maximizes the use of construction materials which results in far less waste in landfills. Reduced onsite construction time means less disturbance to the building site. Fewer material deliveries, construction vehicles and less disruption to the surrounding neighborhood than with a site-built home.

To read the original article, go here: https://www.ctvalleyhomes.com/docs/why-modular/environmental-stewardship.asp

About the Author:
Connecticut Valley Homes believes in sustainable construction practices and environmental stewardship. For over thirty years, we have been building inherently green modular homes. Richard Wildermuth, President of Connecticut Valley Homes, was in the first graduating class of the National Association of Homebuilder’s “Green Building for Professionals.” As a Certified Green Professional, he believes in building well crafted, energy efficient homes.

Started on November 5, 2018 by Tom Hardiman

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Some additional Factory Built contributions to a GREEN best building practices environment

Inclement weather protection of materials
Theft prevention
Less Contractors for On Site work and visits on the surrounding neighborhood
Less use of building materials
Less Waste Inside and On Site
Energy Efficiency testing in side the Factory
- Blower Test
- Pressure testing of pipes
Home must travel the highways for wind testing and stress/vibrations equal to a constant earthquake

To name a few not mentioned in this discussion

Updated on November 5, 2018 by Steve Lefler
What is the process for a new modular home?

Original Comment

Similar to purchasing any new home, the first step is to establish your budget and secure financing. Unlike HUD code manufactured housing, modular homes are treated the same as all homes built on site when it comes to financing. To help you decide how much to spend on your new home, consult with your local bank/lender to learn about your financing options and learn the difference between being pre-qualified and pre-approved. This is best done prior to deciding on your new home floor plan, so you know up-front the size and style of home and amenities will fit your budget.

The next step is to set an appointment with a modular home builder to discuss the style of home, floorplan, and features to fit your budget. Most builders will have a variety of floorplans for you to review and many have model homes or design centers on site.

Once you have your home plan in mind, you need a place to put it! One of the best things about building a new home is that YOU get to choose the location. If you already own land, bring that information with you to when you meet the builder. If the property is undeveloped, many modular builders are also contractors who can help with site development.

You should visit your site with your builder to determine if the chosen site is appropriate for the home you want to build and to ensure it meets all applicable requirements. A site inspection also allows appropriate planning for any contingencies.

Hiring your builder. Now that you have chosen a home, received an estimate or proposal and your home site has been inspected, it is time to submit a good faith deposit for engineering of your home plans that will be needed to obtain your building permits, bank appraisal (if required) and to place your home order to build. The builder will provide you with a purchase agreement (contract) for the home and the remaining construction. This agreement is required to begin production on your new home. All services and functions being provided by the builder along with payment terms will be outlined in the agreement.

Home construction, installation and finish work. While your new home is being constructed at a nearby modular manufacturing facility, the project manager will determine a schedule for site excavation (if needed) and the construction of your foundation. Approximately 8 weeks after placing the order for your home, it is delivered to your building site.

Your home will be safely transported to your building site by a skilled professional and will be securely placed on the permanent foundation by the installation crew. Depending on complexity, your home should be 70% to 90% complete at this point. The builder will then complete all outstanding facets of the process which may include completing mechanical systems, hook up of electrical, heating & plumbing systems, finishing marriage walls, shingling, flooring, building porches, garage and landscaping or any other site installed item you have hired us to do.

The contractor or construction manager will do a final walk through with you and after the final close with your mortgage company (if required), you will be presented with a certificate of occupancy. This process normally takes an average of 90 days from delivery and installation for your new home to be move-in ready!

To read this article in its original format, go here: http://www.vabuildingsolutions.com/page.asp?tid=135&name=The-New-Home-Construction-Process

About the author:
Virginia Building Solutions (VBS) was formed in 2004 by owner and CEO John Garrett. VBS is a custom systems built / modular home builder based in Tappahannock, VA serving all of Eastern Virginia, the Northern Neck and Middle Peninsula. VBS is also expanding with two new locations to serve Central and Southwest Virginia. The company offers the best combination of custom quality finishes demanded by the most discriminating home buyer, and superior off-site building methods.

Started on October 29, 2018 by Tom Hardiman

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Managing Your Home Building Budget

Original Comment

MHBA often gets asked questions about budgeting for new home construction. We reached out to one of our members, Ken Semler of Express Modular to ask his advice on the subject. Here’s a summary of what Ken had to say:

When you build a new home using traditional construction, the final cost actually paid for the home typically exceeds the original contract by 10 to 30%. That’s a big difference! That means if you agree to a contract for $250,000 for your home, you will end up actually paying your builder $275,000 – $325,000 for your home.

MHBA: Why the extra costs?

This is often due to changes in customer choices. Building a home requires decisions. Not just one or two or six or eight. It requires hundreds of decisions to be made. For many, that is too many decisions to make at one time. Delaying decisions to later in the process means allowances are put in contracts as placeholders. Houzz and HGTV are great resources. However, when building a home, they can be dangerous. Every new item you see, that you just have to have in your new home, means additional and unplanned costs.

MHBA: So how can you avoid this?

The answer is fairly simple: Plan ahead, stick with original selections, and be decisive. The modular construction process actually helps home buyers better manage their building budgets by requiring so much upfront planning and demanding that decisions be made very early in the process.

Modular turns home building from a construction process onsite into a manufacturing process offsite. A factory has to design and know exactly what is being built. Plans have to be created and approved, by both the home buyer and the permitting authority. Materials all have to be purchased ahead of time and delivered at the precise time a home’s modules are being built in the factory. The more that can be done in the factory takes advantage of the efficiencies of offsite construction.

Modular limits budget creep by requiring practically all decisions to be make upfront. Many times, customers make all of decisions and then wait. They have to wait until the factory builds their home and delivers it. What appears to be a lack of activity early on at their home site when using the modular process becomes a scene of hyper-activity. Some say it feels like a big giant whoosh! The pace of activity can be almost overwhelming.

While the modular home is being built in a factory, the foundation and other site work is happening simultaneously at the home site. When the modular home arrives, drywall is complete, electrical and plumbing is mostly finished, kitchens and bathrooms are finished, and most other items are substantially complete. All of these decisions had to be made up front. But because of this, the price of the home didn’t change. The requirements of the modular process enforced a discipline that helped the home buyer better manage their home building budget.

Modular construction is a great way to build a very custom home quickly. The process enforces a discipline that requires decisions to be made up front. But it is this process that helps make modular a better and more cost-effective way to build your new custom home!

Read Ken’s full article here: https://expressmodular.com/modular-a-better-way-to-manage-your-home-building-budget/

About the Author: Ken Semler
Hi, I am Ken Semler the founder of Express Modular. I am passionate about this industry, our company, and the products we provide. Modern modular construction provides the ability to deliver healthy, safe, and energy efficient living spaces. Express Modular is a licensed builder/contractor in almost every state. I believe that modular homes provide the best way to deliver virtually unlimited design flexibility at the greatest value.

Started on October 22, 2018 by Tom Hardiman

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Be Careful What You Sign – Many Old Home Owner’s Agreements Could Limit Your Choices

Original Comment

If you are considering moving into a neighborhood that requires you to join a homeowner’s association and pay fees, make sure you are aware of all the terms. HOAs exist to help protect the property owner’s investment and to set forth the rules for what is and is not acceptable for your home and neighborhood.

Common HOA terms include prohibiting or requiring pre-approval before installing a privacy fence, setting forth certain design elements for your home including roof pitch and orientation to the site, and the fees for upkeep of the common areas.

In some cases, particularly with older HOAs, the language in the agreement is years or even decades old and may contain restrictions that seem completely irrelevant today.

As we have found on more than one occasion, it was not uncommon in the 1980s-90s for modular homes to be prohibited by the HOA. Often this was based on a misunderstanding that modular homes were the same as manufactured housing, which the drafters of the agreement felt would lower nearby home values.

In other cases, the restriction against modular homes was simply because the developer was the contractor or had an existing relationship with a site builder.

For whatever reason they exist, if you sign it, you are agreeing to those terms and limiting your choice on who builds your home and how you build it.

MHBA is currently involved in a lawsuit that is pending before the Michigan State Supreme Court where the homeowner received state approval for a modular home as well as a local permit. But once the home was constructed, installed, and occupied, another resident in the HOA pointed out that the home was modular, and the agreement prohibited any such homes deemed to be “modular.” The home itself is over 3,000 square feet and for all practical purposes, matches the quality, aesthetics, and size of neighboring homes. But the homeowner signed the HOA.

MHBA filed a friend of the court Amicus Brief on behalf of the homeowner in hopes of a ruling that will not only help the family, but also put an end to dated perceptions and restrictions on how consumers choose to build their homes.

Started on October 17, 2018 by Tom Hardiman

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Thank You!

Original Comment

On behalf of the Board of Directors for the Modular Home Builders Association, we want to thank all the sponsors, exhibitors, and attendees at our recent annual conference in Hershey, PA. The conference was the best attended event since we re-formed the organization as MHBA in 2012.

In addition to practical sales advice from Sandler Training and a housing forecast by Metrostudy, attendees had an opportunity to share their thoughts on everything from building codes to the impact of technology on the future of the modular construction industry.

During the business meeting, membership voted in a new board to lead the organization in 2019, while acknowledging outgoing board member Norm Hall of Simpson Strong Tie. The new board will consist of thirteen company representatives from eight different states. We also reported that the association has experienced a twenty percent growth in membership this year. To help address a weak link in our membership base, the board voted to create a special dues category aimed at enticing more set crews/installers to consider joining.

MHBA’s Consumer Awareness Program, currently funded by eight manufacturers, has generated a little over $25,000 through August for industry marketing efforts. MHBA is encouraging more manufacturers to consider supporting this voluntary program to help reach even more potential home owners.

MHBA also announced the winner of our 2018 Home of the Year Award. Over 1,000 people voted on the prior Home of the Month winners to select a home by Heritage Custom Homes and Ritz Craft Homes as the best modular home in the country for 2018.

While serving on the board or one of MHBA’s committees is a great way to get involved, we also want to encourage members to submit articles and images for our website and social media platforms, submit a Home of the Month entry, and encourage other companies to join the organization.

Again, thank you to all who helped make this conference a success!

Started on October 12, 2018 by Tom Hardiman

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This is the best Summit so far and with all the new people attending to learn more about our industry and the amount of attention modular is getting in the media we will probably see an even bigger attendance next year with lots of new people again networking with experienced builders.

I can't wait to attend more Summits and help promote them again and again.

Updated on October 12, 2018 by Gary Fleisher
That quote I gave you last week isn't good anymore. Have you heard that lately?

Original Comment

When it comes to home construction, more isn't always better, especially if we are talking about more materials price increases and more government regulations. These are just two of the hot topics we will be discussing at MHBA's upcoming annual meeting on October 10th at the Hotel Hershey in Pennsylvania.

Robert Gaudiosi of Heritage Global Inc. will speak on materials price increases and what we can expect for the upcoming year.

Cutting Through the Red Tape – Join IPIA Program Manager and Senior Auditor Neil Jones of Radco, Inc and MHBA Director Tom Hardiman for an overview and discussion of what’s happening at the state and federal levels regarding government regulations.

We will also elect our 2019 board of directors and announce our 2018 Home of the Year at this event. Exhibitor and sponsorship opportunities are available, and registration is now open here:

http://www.modularhousing.com/Events_Calendar.aspx

Started on July 11, 2018 by Tom Hardiman

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After Twenty-Five Years, Industry Makes Progress on Daytime Oversize Loads in Connecticut

Original Comment

The State of Connecticut has long been the outlier in terms of state transportation regulations among the northeastern states. While other industries transport oversize loads during the day, our industry must transport during the night, from midnight to 5:00 a.m. Monday – Thursday.

For the past two years, MHBA has introduced legislation to require the state to treat our industry in a similar manner that it treats others in terms of oversized loads. And for the past two years the CTDOT opposed our bill and killed it.

This year is different. With the support of the State Troopers Association and the backing of CT Transportation Committee Chairman Antonio Guerrera, we found a sliver of light and grabbed it! The DOT was adamantly opposed to any changes again this year. But the State Troopers Association pushed back. Chairman Guerrera basically got MHBA, the State Troopers, and CTDOT in a room and said figure something out.
And that’s what happened. The House bill recently passed the Assembly with the following terms:

One-year pilot program effective from passage date.

Oversized loads (14 feet wide but less than 16 feet) will be permitted to travel during the day with the following limitations – only one per day, Monday through Thursday, accompanied by three troopers.

These day loads will only be permitted on CT highways, meaning only units passing through the state and not delivered to the state will be able to use the day time slots.

State Troopers WILL measure the loads!

The DOT held firm that with the construction activity, oversize loads would be dangerous on smaller side roads in CT during the day. And unfortunately for us, the State Troopers agreed.

We realize that these changes would not help our members and projects going into the state, so we asked for one more concession – move the allowable nighttime moves up to shorten the time shipments sit idle on the NY/CT border. The DOT agreed to this change, but it will happen outside of the legislation, with nighttime moves for oversize loads beginning earlier (details still pending).

While this certainly was not everything we asked for, it represents real progress and a starting point. We felt it was critical to make some progress on daytime moves given that nothing has happened in the last twenty-five years. If there are no accidents or incidents during the pilot program, we have a strong chance of expanding the terms after the one-year pilot program.

Started on May 10, 2018 by Tom Hardiman

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Modular Industry Earns 96% Satisfaction Rate in Massachusetts – Working Towards 100%!

Original Comment

In the minutes recently posted by the Massachusetts Board of Building Regulation and Standards (BBRS) Rob Anderson, Codes Chief in Massachusetts, indicated that a survey was forwarded to the head of each building department in the commonwealth on February 21st asking whether or not they have experienced any difficulties with manufactured buildings over the last 2 years. About 70 responses were received. Most responses indicated no issues, some identify deficiencies that had been resolved and a few reveal ongoing issues. History demonstrates that, in most instances, difficulties relating to manufactured buildings occur during the set.

MHBA is aware of three ongoing issues as reported by Boston’s WCVB-TV. It is unclear from the BBRS minutes if the 70 responses represent 70 modular projects or 70 building department heads who may have experience with multiple modular projects. Assuming 70 total projects, the industry can definitely state the we have a 96% satisfaction rate in the state of Massachusetts (67 satisfied out of 70) over the past two years.

While we all want to achieve 100% customer satisfaction, we know that sometimes there are factors out of our control. We will also put that 96% satisfaction rate up against the site-built home industry any day!

Started on May 4, 2018 by Tom Hardiman

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MHBA Updates

Original Comment

We wanted to provide a few updates on items the Modular Home Builders Association is working on for the industry.

MHBA continues to promote the industry and reach out to potential home buyers to share the advantages of modular homes. This is done primarily though our Home of the Month competition as well as press releases, online advertising, and interviews in other publications. These efforts are funded by the MHBA member manufacturers who voluntarily support our Consumer Awareness Program (CAP) at $10/floor manufactured. This fee is passed on to your builder network and can be capitalized in the cost of the home making it a tiny fractional expense that does a tremendous amount of good for the industry. Please consider supporting our industry’s Consumer Awareness Program and pass the fee onto your builders whether they are MHBA members or not! They are benefiting from these efforts.

MHBA has retained a lobbyist and are working to get an amendment added to a transportation bill in Connecticut that, if approved, would essentially double the number of oversize shipments we can send into and through the state by allowing day time moves. Several members are financially supporting this effort.

We recently received news that the Michigan State Supreme Court has agreed to hear a case involving a modular home owner who built a state and local approved home in a development that had a restrictive covenant against modular homes and the lower court ordered the home removed. The Supreme Court specifically invited MHBA to file an amicus brief on the case. This may be the first time a state Supreme Court has taking up the issue of the validity of these restrictive covenants.

We are talking with various housing authorities and government agencies about using modular to address chronic housing problems, mainly in large urban areas. We have open dialogues going on now with NYC Mayor’s Office, NY Department of State, Fannie Mae, and various contacts in the SF/Bay area.

We firmly believe that the modular industry has a historic opportunity to gain major market share over the next 12-24 months if we can position ourselves and work together better. We are still a small national trade association with just over 100 total member companies trying to address multiple issues and opportunities. We need your help to move beyond 3% market share. We need more builders and suppliers in the organization to build up our reserves if we are to be able to keep fighting anti-modular rules and regulations. We need more manufacturers supporting industry efforts like CAP. We need to work together better as a unified industry rather than as dozens of individual manufacturers.

Save the Date – MHBA’s annual conference will be October 9-10 at the Hotel Hershey in Pennsylvania. Speakers, sponsorship and exhibitor opportunities, and more details will be posted when finalized.

Started on April 17, 2018 by Tom Hardiman

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We Have a Problem; Someone Should Call the Government!

Original Comment

On any given day in any given week, MHBA may be contacted by a member (sometimes a non-member) with an issue they are having from a government agency. In the past, we have written letters to local mayors, made visits to state lawmakers, and had talks with federal agencies.

I tried to find out exactly how many local, state and federal agencies there are in the U.S. and that task alone is daunting. The U.S. Census Bureau reports that there are a little over 89,000 local agencies in the country, an average of about 1,780 per state.

There are also 50 states plus the District of Columbia, and in each state a legislative, judicial, and executive branch. Under that executive branch, its hard to know exactly how many total state agencies exist. Texas, for example has about 150. At an average of 100 /state, we can add 5,000 to the total agency list.

Now, you think it would be easy to know exactly how many federal agencies exist. It is not. Multiple sources list the number from a low of 78 to a high of 400 agencies. The fact that there is no definitive number says quite a lot!

For the sake of this discussion, I’m going to take the liberty of rounding off the total number of local, state, and federal government entities at 100,000. MHBA has just over 100 dues paying members, so this will be easy. We are going to assign each of you 1,000 agencies to track and monitor to make sure no polices are passed that have a negative impact on our industry.

Of course, no one could do that. MHBA does try to narrow that list and monitor those agencies that are MOST LIKELY to impact our industry. Thirty-five states have a modular or industrialized building program that write and enforce the rules on our industry. That’s our sweet spot. We can also address legislation or legal actions that are directly targeting our industry, as those don’t happen with great regularity. We are currently engaged in direct advocacy efforts in New York, Connecticut, and Michigan. We are also always engaged in relationship-building and “soft” advocacy efforts in a dozen or so other states, including a call with officials from Massachusetts in a few weeks.

What we cannot do is allocate non-existent resources to fight policies and regulations that impact the entire business community. We are not likely to have any influence on changing the federal tax code that impacts everyone. Or environmental policies that impact the whole construction industry. Or transportation laws that impact the entire trucking industry in the U.S. But on that last one, we tried anyway:

About a month ago, MHBA was contacted and asked what we planned to do about the new federal transportation regulations pertaining to required use of electronic logging devices (ELDs) that were set to take effect. The rule, passed as part of the Moving Ahead for Progress in the 21st Century Act (MAP-21) law in June of 2012, included provisions that mandated the use of ELDs. This section of the law became effective in 2016, with a two-year window to implement. That implementation deadline was December 18, 2017.

Prior to that deadline, MHBA spoke directly officials at Federal Motor Carrier Safety Administration (FMCSA) regarding a potential exemption for HUD-code manufactured housing. If such an exemption existed, we wanted it to also apply to modular home shipments. The FMCSA replied - “I don’t have good news for you. There is no exemption for manufactured housing nor any other industry. The only exceptions are those cited on the agency homepage,” listed here:

-Drivers who use paper logs no more than 8 days during any 30-day period.

-Driveaway-towaway drivers (were the vehicle driven is the commodity) or the vehicle being transported is a motor home or a recreation vehicle trailer (at least one set of wheels of the vehicle being transported must be on the surface while being transported)

-Drivers of vehicles manufactured before model year 2000.

Many in our industry are now facing significant shipping increases as a result of these new regulations and wondering why MHBA did not stop them. More specifically, many are wondering why MHBA didn’t get the modular home industry exempt from the law. It took an act of the United States Congress and six-plus years to implement this law. And it will take an act of Congress to repeal it. That isn’t going to happen in the near future. It takes a Herculean effort just to monitor the agencies most likely to impact us. It is impossible to predict and monitor the thousands of other entities that MAY have some impact on our businesses.

Think of it this way: If every company in the modular home industry linked arms and joined forces, we could create a barrier (or perhaps a force field) around the whole industry to protect it. But when one company drops out, it stretches the others and our “force field” becomes thin in spots. When 100 companies try to create a barrier against 100,000 agencies, you can see how challenging this becomes. Conversely, every time a new company joins our forces, we all become a little stronger.

MHBA is very thankful for the support of the one hundred plus companies who have linked arms and stepped up to protect our industry. We are on the right track and we are growing. You may not always see the work we do, and those attacks may come in areas that don’t directly impact your business. In 2018, let’s make it a goal for every member to recruit one more company to join our ranks and make the industry stronger!

-Written by Executive Director Tom Hardiman

Started on January 26, 2018 by Joy Wang

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Modular Home Builders Association 2018 Goals

Original Comment

In 2017, MHBA surpassed the 100-member milestone for the first time in its history. Looking to build on that momentum, MHBA has several goals and initiatives already in place for the new year. Here’s a quick summary:

Less Government – One thing our association does better than any other is to lobby and be advocates for the modular home industry. MHBA is the only national association dedicated exclusively to the modular home industry – no other councils, divisions, chapters, or distractions. Our primary focus of our advocacy efforts are the state modular administrative program requirements. Each time a new form is mandated, your time and cost increases. MHBA maintains good working relationships with state program officials to ensure a fair and level playing field for our industry.

Currently, we are working with officials in New York to streamline the approval process. We also stay in frequent communication with officials in Massachusetts, New Jersey, Pennsylvania, Rhode Island, Maryland, Virginia, Minnesota, North Dakota, Georgia, Arizona, and California. But anytime an issue arises impacting our industry, we will respond.

Removing Barriers to Growth – MHBA is currently involved in a lawsuit before the Michigan Supreme Court in an effort to remove restrictive covenants that prohibit modular homes in subdivisions. This issue has been a thorn in the side of many modular home builders in many states, and we hope that a win in Michigan will spread to other states.

More Marketing and Promotion – MHBA plans to build upon the success of our Consumer Awareness program (CAP) in 2018. Last year, we saw a 21% increase in web traffic from the prior year. The main focus of the program is to drive potential home buyers to the website, so they can learn more about modular homes, then contact a local builder. One of the highlights of the program has been our Home of the Month contest, promoting the great works of our member manufacturers and builders. The MHBA CAP program is the only marketing effort aimed at helping to grow the market share for our industry. Member manufacturers fund the program by remitting $10/floor to MHBA specifically for marketing. Those participating companies are: Apex Homes, Manorwood Homes, Muncy Homes, New Era Building Systems, Pennwest Homes, Premier Builders, Ritz-Craft Custom Homes, Signature Building Systems, Simplex Homes, Superior Builders, and Westchester Homes.

In 2018, we plan to revamp the MHBA website to help improve customer navigation. In doing so, we anticipate an increase in the number of leads generated and distributed to our builder network.

In summary – less government, more marketing, and more leads!

We are excited about the opportunities in 2018 and want to ask you to continue your support of the industry trade association by renewing your 2018 membership at www.modularhome.org. Feel free to contact dave@modularhome.org with any questions about your membership.

As always, thank you for your past support!

Started on January 3, 2018 by Tom Hardiman

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MHBA Weighs in on Michigan Legal Case

Original Comment

The MHBA Board of Directors recently voted to file an Amicus Brief on behalf of the Goyings family and their case scheduled to appear before the Michigan Supreme Court. At issue is whether a developer or subdivision can restrict an otherwise compliant home based on the manner in which it was constructed or assembled, directly addressing poor language used in decades old restrictive covenants.

Case summary: The Goyings built a system-built home through a local modular builder. Their neighbors then sued to have the house torn down, arguing that it violated restricted covenants that barred “modular or prefabricated homes” from the neighborhood. The Goyings’ home was of superior quality, and substantial parts of it were to be “stick-built” on-site. Unsurprisingly, then, the trial court agreed that the Goyings’ house wasn’t a “modular home” of the kind described in the restrictive covenants. But the Court of Appeals reversed, holding that the Goyings’ home was a modular home because it contained modular components.

The attorney for the family argues that the trial court’s reading is the right one: that “an entirely modular, premanufactured or prefabricated home” couldn’t be placed in this neighborhood—but the Goyings’ home falls outside that definition. He reads various provisions of the neighborhood covenants together, and he explains why the contrary reading—requiring 0% modular components—would eliminate a huge swathe of homes.

As amicus, MHBA’s role would be a little different, stressing the broader policy implications of the Court of Appeals’ approach: less consumer choice and less affordable housing options, with little benefit (given the high-quality and aesthetically appealing nature of today’s system-built homes).

The inspection and quality control process in Michigan is more robust for a modular home than for a conventional site built home. Furthermore, these restrictive covenants that prohibit “modular homes” do not prevent a site built home from being constructed in a poor manner and lowering the value of surrounding homes.

In this age where Fortune 500 companies and developers around the world have embraced modular construction, it’s absurd that we still have to deal with the misconceptions of the prior generation in these template-based covenants. Every home and building contains some degree of prefabrication or component from roof trusses, to mechanical subassemblies. Why should it matter HOW the pieces are assembled, when the focus should be on the final product.

In addition to the legal case, MHBA is considering having legislation introduced that would prevent banning the method in which a home is constructed. While these are longer term efforts, we feel they must be challenged on multiple fronts.

Started on November 13, 2017 by Tom Hardiman

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What's Next?

Original Comment

In my first two articles about the proposed Chicago deal to build 20,000 housing units, I expressed my frustration that City leaders chose a foreign company over the dozens of nearby modular manufacturers. I also expressed my frustrations over excessive regulations that hamper the growth of existing manufacturers. But competition and regulations are reality in our business. The real question we need to be asking ourselves is this: What can we as an industry do to better position ourselves for future opportunities?

I am 100% absolutely certain that modular construction will be much more widely adopted in North America than it has been in the past. When leading companies like Marriott, Google, Amazon, and Starbucks start embracing modular, you can bet it will catch on.

McKinsey Global Institute (MGI), one the world’s premier business consulting firms, cited deployment of modular construction as one of their five ways to close the housing gap in California. In fact, MGI stated that using modular construction would save California $100 billion over the next eight years.

The interest in modular construction is here!

Why then, aren’t more people using it? There’s a question I get asked a lot. I think a big part of the answer is that the industry is largely regional in nature. Sometimes a market (like multifamily) gets hot in a region where there simply are not many modular factories who can (or are willing) to service that area.

The modular manufacturing base is primarily located in regional “hubs” across North America including in places near Harrisonburg PA, Douglas GA, Elkhart IN, Dallas, TX, Riverside CA, and Calgary, Alberta. But the multi-family housing needs are in places like Chicago, Philadelphia, Boston, San Francisco, and Vancouver. Transportation costs of the modules are often a limiting factor in determining service area.

In order to expand the service area, we must find ways to reduce the costs of transportation, or alternatively, reduce other costs to offset transportation. Those opportunities exist within the factories by gaining efficiencies through more automated processes, streamlining production steps, and improving the work “flow.” Implementing new technologies and communication strategies that make it easier for your customers or builders to understand your products is another “under-explored” area within our industry. Manufacturers must continually be looking to improve upon their efficiency.

We can also address added costs that result from excessive regulations. The industry as a whole needs to actively and aggressively push back on new regulations that target our industry and add no value or safety for the end user. Regarding industry government affairs efforts, I’ve heard it said dozens of times from many companies - “that issue doesn’t impact my business so I’m not interested.” If the industry has an issue in Maryland, for example, every company needs to be concerned, whether they do business in Maryland or not. An attack on one of our companies is an attack on all of us! We need to bring the full weight of the industry to the table at each for each and every and challenge we face and speak with a unified voice.

In many of these cases, it’s not the distance from factory to site that matters. Often, the manufacturers within a particular region may or may not have the experience or interest in building for that sector of the market (multifamily, for example).

Business owners need to be regularly scanning their environment, identifying new market opportunities, and investing in market research and analysis. In short, the industry needs to have an insatiable appetite for learning. But beyond this, industry participants must be open to the POSSIBILITY of changing their own business models to pursue new opportunities (easier said than done, I realize!).

These are fairly high-level recommendations that can easily go overlooked by readers. So, I will boil it down to a list of more tangible items the industry needs to focus on if our goal is to grow market share:

1) It’s hard to speak with a unified voice when many companies in the industry are not supporting their respective trade associations! MBI serves companies engaged in commercial modular markets (education, healthcare, retail, administrative offices, institutional facilities, hotels). MHBA represents the single-family home market. If you are a modular manufacturer or contractor/builder, or a company that supplies services or materials to this industry, you need to join one or both of these organizations! If you don’t like the direction these organizations are heading, join, get involved and make your voice heard, rather than criticizing from the sidelines.

2) Both groups have services in place to help fight excessive regulations. But we don’t always hear about issues when they first arise. Believe it or not, the state agencies don’t inform us of what they are doing behind the scenes. We are counting on companies being our eyes and ears in the field. If you are having regulatory issues, let us know about it.

3) MBI has its “Seals” program whereby manufacturers are asked to acquire one $20 seal (label) for each commercial module manufactured. The funds from this voluntary program are earmarked to address government affairs issues and to further promote the industry through greater marketing efforts. Only about half of MBI’s manufacturers support this program. As a result, the funds and actions we can take are obviously limited.

4) MHBA implemented its Consumer Awareness Program (CAP) about a year ago. We ask all manufacturers to voluntarily add $10 / single family module manufactured. Those funds are earmarked exclusively for marketing and promotion to potential home buyers. Only eight of MHBA’s manufacturer members currently support this effort.

5) There are all sorts of learning opportunities available for the modular industry. Some of which are hosted by the above-named groups and many by other organizations such as the NAHB’s Building Systems Council, or the National Institute of Building Sciences Offsite Construction Council. I understand that training is time consuming and sometimes costly for many companies, but what’s the alternative? Manufacturers must embrace a continuous improvement mentality and an appetite for learning as much as they can about new technology, processes, skills, markets, etc.

6) More quality projects delivered! The best thing any company in the modular industry can do is to deliver a quality project – be that a home or a hospital. We try to showcase our best projects through various outlets and always need more case studies. For single family homes, the easiest path is to enter your project in MHBA’s Home of the Month contest. For MBI, we use Awards of Distinction entries year-round for our marketing efforts. Make sure to get your projects in for consideration.

I think we have many pieces of the puzzle readily available for this industry to take off. But like any puzzle, it’s hard to complete without looking at the bigger picture to see how all the pieces go together. And it’s impossible if some of the pieces are missing.

Started on August 16, 2017 by Tom Hardiman

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Who's Courting You?

Original Comment

With all the political chatter about building a wall or imposing travel bans to keep certain people out of America, there is no such conversation about keeping foreign investment out. In fact, most public officials in the economic development arena are actively recruiting foreign companies to open facilities on U.S. soil, often offering generous incentives to do so. And I’m not suggesting that is a bad thing.

Reuters analysis of federal jobs data shows that out of 656,000 new manufacturing jobs created between 2010 and 2014, two thirds can be attributed to foreign direct investment. More recent jobs numbers are not yet available, but over $700 billion in foreign capital has poured in over the last two years bringing total foreign investment to $3.7 trillion at the end of 2016, a world record.

For example, German carmaker BMW has invested $8 billion in a 1.2 million square foot assembly plant in Spartanburg, South Carolina, which has become the largest single exporter of cars by value from the United States. (source: Fortune Magazine June 30, 2017).

And again, I’m not suggesting this is a bad thing, because it does bring much needed jobs.

In my last article about the 20,000 modular home development in Chicago, I admitted that maybe I was naïve or even jealous. That was wrong. The appropriate emotion I’m feeling is frustration!

I’m wondering if anyone reading this has ever built a home or modular building in Chicago. If so, I’d love to hear your story about how the city leaders greeted you with open arms, with reporters on hand to take pictures, and the tax incentives and training grants that economic development officials no doubt showered on you.

Didn’t happen like that? How about this – you felt as if you were being prosecuted for crimes you hadn’t yet committed while city officials had their eyes on you. They buried you in a mountain of paperwork, permits, and approvals. You were questioned about the quality of your work and your workers’ union status.

My point is simply this – while its all well and good for elected officials to go after new employers, who’s taking care of the existing ones? Who is making sure that the company that has already been employing local people and paying taxes is healthy? Because our industry is made up of a lot of smaller companies, we don’t often make the splashy headlines or land the mega deals – or gain the attention of our elected officials.

There are over 150 commercial and modular home builders in North America (excluding HUD code builders) each employing an average of 65 people in their plants. That’s 10,000 factory workers, not including all the builders, subcontractors, suppliers, and others supporting the industry.

Now there have been some deals made to existing U.S. manufacturers recently. President Trump was quick to the podium to pat himself on the back for saving 1,000 jobs at the Carrier HVAC plant in Indiana. And it seemed like State officials opened the coffers and worked overtime to make that happen.

So yes, its frustration I’m feeling. It’s fine that foreign companies and being asked to the prom, and great that some larger U.S. manufacturers have been shown some interests as well. But who’s courting the existing modular manufacturers?

While foreign companies and large manufacturers ae being showered with incentives, existing companies are being showered with regulations, taxes, fees, and tough labor laws.

I’m not feeling the love; are you?

In my next article on this subject, I’ll focus on what our industry can and should be doing to better position ourselves for industry growth (I’ve been getting A LOT of input on this lately).

Started on August 9, 2017 by Tom Hardiman

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US Steal? America for Sale

Original Comment

U.S. Steel is one of the most iconic companies in the history of the United States. They even got mentioned in the Godfather! U.S. Steel was the company that built Disney’s Contemporary Resort as a modular building in 1971. U.S. Steel’s South Works facility in Chicago once employed over 20,000 people. The company was a symbol of this country’s manufacturing prowess.

However, beginning in the 1970s, South Works began a long period of downsizing, finally closing for good in 1992. Twenty-five years later, the lot still sits vacant. Despite several efforts to develop the property, nothing yet has materialized. Until now.

The Chicago Tribune reported a plan involving two European companies to build as many as 20,000 modular homes on a 440-acre unused tract of land known as South Works. The Tribune quoted Mayor Rahm Emanuel as saying “this agreement is a major milestone towards converting an unused stretch of land that represents Chicago’s industrial past into a vibrant community that will contribute to the Chicago’s economic, cultural and recreational future.”

On one hand, you have to admire the grit and tenacity of Mayor Emanuel to make something happen with this land. Embracing modular construction is another bold move for Rahm, one that will need to be squared with construction unions. But is selling off part of the Windy City to foreign interests really a good idea? Even if it is the “baddest part of town”, to quote Jim Croce.

The two companies cited in the story are Emerald Living, a unit of Dublin-based WElink Group, and Spanish partner Barcelona Housing Systems. Now, the last time these two names surfaced in the same news story, we learned that a U.K. housing authority had cut a massive US$3.3 billion deal with them. Under the deal, five factories would be opened in the U.K., employing U.K. residents and building 25,000 prefab homes for the U.K. over five years. Sweet deal for everyone, right? Well, not the U.K. modular manufactures who were left out of the deal.

Oh, and one more thing – there was a third partner in the U.K. deal: Chinese mega corporation, China National Building Material Company. It is actually the Chinese company opening the plants and building the homes in the U.K. “based on designs pioneered by Spanish specialist Barcelona Housing System.” Why are those words important? Because it’s the same language that appears in the news stories about the Chicago deal - “The site will have a substantial residential component of up to 20,000 housing units built with innovative, environmentally-friendly technology pioneered by Emerald Living’s partner, Barcelona Housing Systems (BHS).”

The Barcelona deal was apparently selected over a “vague” Chicago-based proposal and another proposal from a Chinese company. But who exactly will be building these homes?

Who cares, you say – no one else was building anything on the southside. Let a Spanish (or even Chinese) company have at it! It will ultimately be better for the city and better utilize an unused piece of land. All true.

The sitting mayor of Chicago is going to tell people it’s a good deal to have a Spanish (and perhaps Chinese) manufacturer build 20,000 homes on a piece of land once occupied by the mighty U.S. Steel? Why? Because part of the deal included the company opening a factory in Chicago and agreeing that factory would be unionized. That’s how Rahm squares the deal with labor bosses.

The modular home industry builds between 25,000-35,000 homes nationwide on an annual basis. A project for 20,000 homes would keep ten modular factories, each employing an average of 125 workers, busy for the next ten years! Oh, and by the way, Elkhart, Indiana is less than two hours from Chicago. That area is also home to nearly a dozen residential and commercial modular manufacturers who would probably like a bit of that action (remember when then-President Obama visited the area multiple times during the recession)? So many questions:

-Is it good for overall industry growth that 20,000 new Chicago homes will be modular instead of site--built?

-Does the development and potential revitalization of the southside of Chicago justify selling off part of the iconic city to foreign interests?

-Do we care if worker paychecks are from Spanish or Chinese companies?

-Is this “modular developer” the new industry model?

Maybe I’m just naïve, or even jealous. Why aren’t more developers working with U.S. manufacturers on innovative solutions to our urban housing issues?

This article is not intended as a wake-up call for the modular construction industry. It’s a far bigger story than that. This is a wake-up call for the North American construction and manufacturing industries at large. And it’s a wake-up call for our political leaders.

There is way too much information here for me to properly vet and vent in one article. I plan on writing a series of articles about this issue, what it means for the industry, and most importantly, what we should do about it.

Started on August 4, 2017 by Tom Hardiman

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State Updates

Original Comment

Massachusetts Update:
We recently spoke with Rob Anderson Chief of Inspections for the State of Massachusetts. Mr. Anderson provided many updates to the program including the fact that the manufactured program has been moved from Department of Public Safety to Department of Consumer Affairs and Business Regulation.

The new building code for commercial and residential (9th Edition) becomes effective on July 1, 2017. Builders have a six- month “concurrency” period to pick either 8th Edition (based on 2009 I codes) or 9th Edition (based on 2015 I codes), but cannot mix and match code editions.

On January 2, 2018, all newly submitted projects must be built in accordance with the 9th Edition. The Department is still determining what sort of grace period will be allowed for projects approved under the 8th Edition prior to January 2, 2018, but not yet started.

For the foreseeable future, there will be no new modular program administrator. Linda Shea, the current office administrative assistant, will continue to be point of contact for the industry and issue BBRS numbers. Fifteen regional code officials in the state will be the reviewing authorities for any new project in their respective region with Jeff Putnam, serving as the State Supervisor of those fifteen officials.

New York Update:
New York Department of State recently announced that all modular projects, including New York City, will go through their program. The agency will accept third party approvals for residential projects. For commercial projects, the agency MAY accept third party approvals “at their discretion.” The current backlog and delay in approvals is partial caused by agency understaffing which is out of the control of the agency itself (budget issue). We will continue to pursue more third-party approvals for commercial projects to improve the approval process.

Pennsylvania Update:
Mike Moglia, the new director of the PA modular program indicated that he is not sure the PA program will come on line for commercial modular in November as intended. No one has been hired to fill either of the two staff vacancies created by the retirement of Mark Conte and Milt Stoltzfus. To be proactive and better prepare for the transition, the program is currently doing the following: 1) Accepting applications from Third Parties but not requiring their payment until the program moves forward. 2) Third parties need to acquire their Accessibility certifications through the Department of Labor & Industry.

The intent is that the Third Party be the authority for plan review and inspection in the factory, instead of Labor & Industry. Local inspectors are also being brought up to speed on commercial accessibility, since the existing program dealt only with residential.

Started on June 7, 2017 by Tom Hardiman

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Modular Summit Rated a Success by Participants

Original Comment

The most recent Modular Home Summit in Springfield, Massachusetts was rated as “excellent” by over 70% of the participants. Co-hosted by the Modular Home Builders Association and Modcoach, the event attracted fifty-seven total participants who heard about code and regulation updates from New York Department of State (NYDOS) and the Massachusetts Board of Building Regulations and Standards (BBRS).

Rob Anderson, Chief of Inspections for MA BBRS, started the day with a series of updates from the recently approved 9th Edition of the building codes. Rob stated that the new codes go into effect on July 1, of this year, but builders still had the option of using the 8th Edition until January 2, 2018.

Joe Hill, Don Thomas, and Daryl Andreades presented on behalf of NYDOS and answered pre-submitted questions from the industry. NYDOS still accepts third party reviewed and approved plans for residential projects. For commercial projects however, the decision to accept third party approvals is “at their discretion.” Regarding the use of foam only assemblies, the state will continue to allow this practice while working with the manufacturers of the products form more details.

Mr. Hill also advised the industry to review and comment on the upcoming 2017 supplement to the code, which includes a provision that may trigger mandatory sprinkler systems in single family homes. If you build a two-story home and add a habitable attic space, that will trigger the requirement for sprinkler systems to be installed in the whole house.

Mr. Hill also clarified that all modular homes going into New York, including New York City, need to go through the DOS program. Regarding systems package approvals once the 2017 supplemental code is adopted, factories will not have to resubmit entire packages referencing the supplement, just an updated cover page.

Alex Pollard from the Massachusetts Department of Energy Resources (DOER) gave a brief presentation about a $1 million grant program to build new modular homes to replace older manufactured homes in Massachusetts. DOER is looking for developers/partners to submit a turnkey plan on how they will use the funds to meet the program objectives. The solicitation information can be found at www.commbuys.com under the Zero Energy Modular Affordable Housing Initiative.

Mary Gaiski of the Pennsylvania Manufactured Housing Institute and Tom Hardiman of MHBA gave a history and update of transportation issues in the Northeast. It is clear that this issue will need to be addressed state-by-state, starting with the most extreme situations in Connecticut.

Rick Wenner of PFS and Chuck Osterday of NTA closed out the summit with several recommendations and best practices as to how to speed up the approval process.

The event was sponsored by Muncy Homes, Champion, Universal Forest Products, and Harvey Building Products.

Started on May 19, 2017 by Tom Hardiman

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