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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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