Affordable housing is no longer affordable, and it’s causing major issues in our economy. Something must change, and all the reasons why are playing out in front of us, one client at a time. Working against us is the fact that the United States is slower to adopt innovative construction practices. Americans in our industry have historically been skeptics who don’t optimistically buy in to the market’s latest innovative ideas. As a result, we’ve kicked the proverbial can down the road for so long that innovation is about to be forced on us in the graphical shape of a hockey stick. More investment than ever before is being poured into our industry with investors seeing big opportunity and low hanging fruit related to expanding efficiencies.
At a very high level I’d like to share some large impact possibilities we could see in 10 short years or less.
Single family construction
We all recognize that field labor is the biggest problem our customers face. The bad news is it will not get any better. One of the trending efforts to cut down the amount of labor hours in the field is to adopt more component-based construction. Roof trusses are being adopted faster than ever. In addition, panelized wall systems are finally proving themselves as framers seek to build more houses and earn more money.
10-year look ahead
- 75% of houses framed in one to two days with complete panelized packages including floor panels delivered to the site.
- Suppliers either provide component manufacturing or have found a specialty niche that larger lumberyards/component plants do not offer.
- Installation labor is mainly supplied by the supplier/manufacturer in a turn-key price. With the ability to offer insurance, benefits, training, and opportunity, these companies attract talent better than single labor crew owners.
- Installers will be some of the highest paid people in the company, which will help attract more people into the field.
- The old school way of a builder buying “sticks” from a lumberyard and hiring a framer to build the home will not be able to compete with the efficiency gained from an all-in-one solution that suppliers/manufacturers are offering.
- Potentially 25% of super custom homes continue being built the way we do now, but the majority of consumers will not want to pay the extra cost or wait the extra time to stick frame the homes.
Another large inefficiency in our industry is distribution. We are entering the age of shared services, and these are much more efficient than our bins and silos service model. Multiple companies now offer delivery-share services in larger markets, and they are growing. Besides that, they are getting funded by investors outside of our industry that see the opportunity to make an impact. These delivery service companies own the same fleets we do, but they act like Uber, taking delivery orders on demand through app-based technology.
This model allows for more efficient distribution with 40% less unloaded time. They make one delivery and then head to the next closest lumberyard to grab the next one. With more trucks in their arsenal and responding on demand, they will turn around orders even faster than we could with our own fleets.
We’ve managed the last 100 years with our biggest value-offering focused on just being the closest store to the project. Multiple companies on many corners offer the exact same products delivered to a site with very little differentiation or value added after the mill cut them down. That model is dying at a very rapid pace.
It’s time to compete by adding a tremendous amount of value to the sticks that your competitors can’t offer, or by becoming the absolute most efficient at getting the stick from the mill to the site while still offering the lowest cost. The future is coming into focus, and your three, five, or 10-year plans require open minds to change, and forward-thinking leadership in order to adapt, survive, and succeed.