Regular readers of Construction Physics know that I formerly worked for the construction startup Katerra, which raised several billion dollars in venture capital in the hopes of revolutionizing the construction industry, and then went bankrupt.
Wouldn't fast built manufactured homes be a better business in emerging markets where countries are urbanising at a rapid clip? You can gain greater economies of scale and often build out an entire neighbourhood in one shot. Or does the lower labour costs in developing countries make the strategy completely uneconomical.
My thoughts exactly - I was an executive at a company doing prefab light steel panelization for SFH's and mid-rises, and all our best customers were in China, because they actually valued "being able to build really fast" enough to pay the slight premium.
Isn’t this approach still limited by transportation cost/distance? And presumably the need for cranes on site to assemble the panels.
Brian, I have always wondered why Lean/JIT principles have seemingly not worked out for site-built homes. It certainly appears there is still a lot of operational waste in the typical process for residential construction.
It will be interesting to watch Katerra 2.0 (ONX Homes) try again. Thanks for the thoughtful, balanced assessment of their odds, Brian. I think they have a reasonable chance at making precast concrete work in the south, I like the bathroom pods concept, and the interior framing using LGS/FRAMECAD seems an appropriate match for the structural concrete panel construction. How competitive (and lucky?) their approaches to land development and B2C sales will be is unclear, and I'd like to better understand how they will insulate and seal the buildings (devil's in the details). But, the technology that seems most problematic to me is their "AI-driven HVAC system (whatever that means)". I don't see anything exciting about their in-house HVAC system claims, which reek of "smoke and mirrors". We'll see which of these unknowns pans out, and how they react to those that don't. I hope you plan to keep us updated, Brian!
They didn't bet $200 mil of their own money, it's the investor's money. The new idea is the same old idea, promises of rapid scale-up that can't possibly materialize.
Precast has all the problems of transporting heavy loads on large distances and/or requiring bespoke manufacturing facilities close to the place of installation, without really addressing the main pain points of construction, the high complexity of a modern home that requires substantial on site work. Just look at that metal drywall framing, that took longer to install then building the entire concrete shell. Never mind the delicate tango of electric, plumbing, AC, all while perforating concrete walls.
The claim of speedups is thus largely false, because they can only speed up a limited part of the construction, and even if it was true, it wouldn't be a substantial selling point on the residential market, where paying the mortgage an extra month or two is acceptable compared to things like perceived durability, long term investment value etc. This is why the residential market is very conservative and why high productivity methods have seen a much stronger impact in the commercial market, where time is money.
These look like a panelized structure but site assembled & finished single family homes. Not sure the cost advantage of these, as most of the labor-intensive work is the site finishing. Maybe they have over-learned the lessons from Katerra and are now being too conservative. And concrete, really? Their web site sure flirts with green-washing.
I watched a YouTube video shot in their Florida factory, and remain underwhelmed. There are no real economies of scale when the production run is less than one house a day. A section of a pre-cast concrete panel shows a smidgin of insulation between a lot of concrete - not sure how "cool" that would be in Florida or Texas. A primary constraint with any factory system (pre-cast, modular, kit, tilt-up, whatever) is that the largest module you can ship on a public road is basically a 40-foot container.
A possible exception could be the brand-new (pending voter approval) "California Forever" project in Solano County, California - they have over 50,000 acres including an industrial area, so they could in theory build a factory to assemble building blocks on, say a 25' wide by 50' long floorprint for row townhouses, and just haul them across their own property and stack them in place.
Until a more carbon-friendly concrete can be developed and brought to market at scale, I don’t see precast concrete or 3D printed homes supplanting wood frame homes in the US or Canada.
Further, unless specialty trade contractor consolidation occurs at some point in the market, the punishing overhead and upfront capital costs of factory construction will likely never compete with the millions of “Chucks in a truck”.
There will likely be industry progress, but not disruption, using engineered wood products, like MPP light frame construction, that doesn’t require factories beyond the manufacturing of the initial raw material. Factories that inevitably shutter during the cyclical downturns of the industry.
Lastly, until zoning and permitting can be streamlined, the housing problem will never be solved by supposed technology enabled construction conglomerates. This is likely why Onx is focused in Florida, where the bureaucratic impediments are likely lower. Developing raw land can take decades in places like California; so good luck with that business model, at least in the short term.
Buyer don't really care about the carbon cost of concrete because it's much lower on a lifecycle cost.
Carbon in materials is a power production issue not a construction material issue. Norway is producing zero carbon concrete and Iceland processes bauxite at zero carbon or very reduced.
Para que onx tenga éxito tiene que cambiar a los administrativos lo mejor que tiene onx como administra o es André delgado y plati lo más incompetente es desde Ravi,venu,Diego clavijo y otros más yo fui unos delos que inauguró onx desde el principio y me despidieron por decir las verdades eso es un nido de corcusió
Or people who care about quality, energy efficiency, and life cycle costs. But I’m not sure how big or mature this market is.
I had a small vacation house designed by Maine-based architects GO Logic; I absolutely loved the design but finding people with the skills and understanding to build and commission it right was basically impossible (unfortunately my site was too far away to use their building or fabrication services). My BIL was interested in this kind of construction, got his builder’s license, and started a business along those lines. People didn’t want to pay for quality, though, and he couldn’t find enough skilled help, so he went back to his desk jockey job (after fixing our place when the contractor ghosted us without finishing the project).
The whole episode was unfortunate for these and other reasons. We were lucky to sell it for a decent price when the local market was still hot, just before interest rates jumped, but sadly I don’t think too many people cared about its insulation, excellent windows, or healthy air circulation systems (even in 2022). It looked cool and that’s what they responded to.
But I am pretty much in the demographic you describe, and I’d seriously consider this kind of construction if I were buying a SFH and it was available.
I accepted the premium when I embarked on that project, but it was frustrating that, even having accepted it, I didn't really get what I was paying for. In the right circumstances I might choose to do it again, but as they say, once burned...
If they do that, will they open themselves up to antitrust legislation? I mean this will be a company that's completely vertically integrated: buying and developing land, constructing houses, constructing the factories that make the materials to construct houses, running said factories, marketing and selling to consumers, and finally providing insurance and maintenance on their product.
Wouldn't fast built manufactured homes be a better business in emerging markets where countries are urbanising at a rapid clip? You can gain greater economies of scale and often build out an entire neighbourhood in one shot. Or does the lower labour costs in developing countries make the strategy completely uneconomical.
My thoughts exactly - I was an executive at a company doing prefab light steel panelization for SFH's and mid-rises, and all our best customers were in China, because they actually valued "being able to build really fast" enough to pay the slight premium.
How much a premium are we talking about? 5-10%?
Isn’t this approach still limited by transportation cost/distance? And presumably the need for cranes on site to assemble the panels.
Brian, I have always wondered why Lean/JIT principles have seemingly not worked out for site-built homes. It certainly appears there is still a lot of operational waste in the typical process for residential construction.
It will be interesting to watch Katerra 2.0 (ONX Homes) try again. Thanks for the thoughtful, balanced assessment of their odds, Brian. I think they have a reasonable chance at making precast concrete work in the south, I like the bathroom pods concept, and the interior framing using LGS/FRAMECAD seems an appropriate match for the structural concrete panel construction. How competitive (and lucky?) their approaches to land development and B2C sales will be is unclear, and I'd like to better understand how they will insulate and seal the buildings (devil's in the details). But, the technology that seems most problematic to me is their "AI-driven HVAC system (whatever that means)". I don't see anything exciting about their in-house HVAC system claims, which reek of "smoke and mirrors". We'll see which of these unknowns pans out, and how they react to those that don't. I hope you plan to keep us updated, Brian!
Very helpful, David R. Do you have a guess the thickness and type of board insulation ONX will use in this sandwich panel application?
They didn't bet $200 mil of their own money, it's the investor's money. The new idea is the same old idea, promises of rapid scale-up that can't possibly materialize.
Precast has all the problems of transporting heavy loads on large distances and/or requiring bespoke manufacturing facilities close to the place of installation, without really addressing the main pain points of construction, the high complexity of a modern home that requires substantial on site work. Just look at that metal drywall framing, that took longer to install then building the entire concrete shell. Never mind the delicate tango of electric, plumbing, AC, all while perforating concrete walls.
The claim of speedups is thus largely false, because they can only speed up a limited part of the construction, and even if it was true, it wouldn't be a substantial selling point on the residential market, where paying the mortgage an extra month or two is acceptable compared to things like perceived durability, long term investment value etc. This is why the residential market is very conservative and why high productivity methods have seen a much stronger impact in the commercial market, where time is money.
These look like a panelized structure but site assembled & finished single family homes. Not sure the cost advantage of these, as most of the labor-intensive work is the site finishing. Maybe they have over-learned the lessons from Katerra and are now being too conservative. And concrete, really? Their web site sure flirts with green-washing.
I watched a YouTube video shot in their Florida factory, and remain underwhelmed. There are no real economies of scale when the production run is less than one house a day. A section of a pre-cast concrete panel shows a smidgin of insulation between a lot of concrete - not sure how "cool" that would be in Florida or Texas. A primary constraint with any factory system (pre-cast, modular, kit, tilt-up, whatever) is that the largest module you can ship on a public road is basically a 40-foot container.
A possible exception could be the brand-new (pending voter approval) "California Forever" project in Solano County, California - they have over 50,000 acres including an industrial area, so they could in theory build a factory to assemble building blocks on, say a 25' wide by 50' long floorprint for row townhouses, and just haul them across their own property and stack them in place.
Do you self driving electric trucks will make factory built homes more viable since you will have significantly lower transportation costs?
It'd be great to have their custom HVAC system if they go out of business and you want warranty and repairs...
Until a more carbon-friendly concrete can be developed and brought to market at scale, I don’t see precast concrete or 3D printed homes supplanting wood frame homes in the US or Canada.
Further, unless specialty trade contractor consolidation occurs at some point in the market, the punishing overhead and upfront capital costs of factory construction will likely never compete with the millions of “Chucks in a truck”.
There will likely be industry progress, but not disruption, using engineered wood products, like MPP light frame construction, that doesn’t require factories beyond the manufacturing of the initial raw material. Factories that inevitably shutter during the cyclical downturns of the industry.
Lastly, until zoning and permitting can be streamlined, the housing problem will never be solved by supposed technology enabled construction conglomerates. This is likely why Onx is focused in Florida, where the bureaucratic impediments are likely lower. Developing raw land can take decades in places like California; so good luck with that business model, at least in the short term.
Buyer don't really care about the carbon cost of concrete because it's much lower on a lifecycle cost.
Carbon in materials is a power production issue not a construction material issue. Norway is producing zero carbon concrete and Iceland processes bauxite at zero carbon or very reduced.
So, ONX Homes is something like Soviet House-building Plant https://ru-m-wikipedia-org.translate.goog/wiki/%D0%94%D0%BE%D0%BC%D0%BE%D1%81%D1%82%D1%80%D0%BE%D0%B8%D1%82%D0%B5%D0%BB%D1%8C%D0%BD%D1%8B%D0%B9_%D0%BA%D0%BE%D0%BC%D0%B1%D0%B8%D0%BD%D0%B0%D1%82?_x_tr_sl=ru&_x_tr_tl=en&_x_tr_hl=uk&_x_tr_pto=wapp
Para que onx tenga éxito tiene que cambiar a los administrativos lo mejor que tiene onx como administra o es André delgado y plati lo más incompetente es desde Ravi,venu,Diego clavijo y otros más yo fui unos delos que inauguró onx desde el principio y me despidieron por decir las verdades eso es un nido de corcusió
The luxury market wants variety and customization which are hard to do with a limited number of precast concrete pieces.
Or people who care about quality, energy efficiency, and life cycle costs. But I’m not sure how big or mature this market is.
I had a small vacation house designed by Maine-based architects GO Logic; I absolutely loved the design but finding people with the skills and understanding to build and commission it right was basically impossible (unfortunately my site was too far away to use their building or fabrication services). My BIL was interested in this kind of construction, got his builder’s license, and started a business along those lines. People didn’t want to pay for quality, though, and he couldn’t find enough skilled help, so he went back to his desk jockey job (after fixing our place when the contractor ghosted us without finishing the project).
The whole episode was unfortunate for these and other reasons. We were lucky to sell it for a decent price when the local market was still hot, just before interest rates jumped, but sadly I don’t think too many people cared about its insulation, excellent windows, or healthy air circulation systems (even in 2022). It looked cool and that’s what they responded to.
But I am pretty much in the demographic you describe, and I’d seriously consider this kind of construction if I were buying a SFH and it was available.
I accepted the premium when I embarked on that project, but it was frustrating that, even having accepted it, I didn't really get what I was paying for. In the right circumstances I might choose to do it again, but as they say, once burned...
You are missed over at SB!
If they do that, will they open themselves up to antitrust legislation? I mean this will be a company that's completely vertically integrated: buying and developing land, constructing houses, constructing the factories that make the materials to construct houses, running said factories, marketing and selling to consumers, and finally providing insurance and maintenance on their product.