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Opinion: Richard Markuson

Friday, September 21, 2018

Richard Markuson

Is Modular Construction the Future in California
I attended the Off-Site Construction Expo last week at the beautiful, sunny (and at the time) peaceful UC Berkeley. Sponsored by the Modular Building Institute the expo featured a number of presentations from industry representatives working in or using modular construction techniques for both permanent and temporary structures.
As the New York Times put it in a June 2018 article "California is in the middle of an affordable-housing crisis that cities across the state are struggling to solve." Rick Holliday, a longtime Bay Area real estate developer, thinks one answer lies in an old shipyard in Vallejo, about 40 minutes northeast of San Francisco. Here, in a football-field-sized warehouse where workers used to make submarines, Mr. Holliday recently opened Factory OS, a factory that manufactures homes. In one end go wood, pipes, tile, sinks and toilets; out another come individual apartments that can be trucked to a construction site and bolted together in months." Holliday was a speaker at the Expo and one of the core elements in Factory OS's business plan is the use of a CBA with the Northern California Carpenters to provide a one-stop shop for construction workers--in all crafts.
This effort by the Carpenters has not gone unnoticed by the other trades. At a Bay area forum late last year, Jay Bradshaw from Northern California Regional Carpenters Regional Council observed "growth in modular is a promising opportunity for better and different workforce training and employment for our members." The Carpenter's Union is one of the few unions that has directly engaged with modular development.
And City officials in the Bay area envision modular as one approach to solving the astronomical price of new-home construction (approaching $900 per sqft). As reported in the SF Chronicle, "San Francisco officials continue to scout locations for a factory that can churn out modular housing units, Mayor London Breed is lining up the city to be the first customer. Breed is expected to announce Monday that the city is prepared to spend $100 million on hundreds of modular apartments that would grow the city's stock of affordable housing. Who will run the modular housing factory won't be known for some time, though the leading plan is to seek a private operator on city-owned or city-leased property. And even after a site is selected, it will take years to get a factory up and running."
But as the Chronicle pointed out, "Because a substantial portion of the work needed to build modular apartments happens in factories, not on construction sites, the advent of more modular housing in San Francisco initially met stiff resistance from the city's powerful building trades unions, who feared their members would lose out on job opportunities. But modular supporters cleared a big hurdle in January, when Breed, then serving as acting mayor, announced that the unions were on board and willing to partner with the city in the plan to bring the factory to San Francisco. In return for the unions' support, the city provided assurances that workers would participate in planning, developing and, eventually, operating the factory. 'If we decided to do this on our own, without (the building trades), most likely it would fail because they wouldn't be included,' Breed said. 'So instead of bringing them along on the back end, we're bringing them along on the front end to get their support and work with them so we do it right.'" Breed did not clarify what the deal entailed, but it is easy to surmise that the one-stop shop idea won't fly with IBEW and UA.
While it is too early to say how popular modular construction will be across the industry--you can be assured that the State Building and Construction Trades Council and their constituents will seek to control the market - which makes it hard to imagine a future with lower cost construction from modular--when the building trades control the industry.