Prefab Lab
business development in housing industry

Challenges in Merging Modular Home Manufacturing

Over the past three years, I've delved into various modular home factories, each with its unique characteristics. While many specialize in constructing residential modular homes, they differ in construction methods, logistics, and quality control systems.

The complexity arises during discussions on construction approaches, product details, and target markets.

There are three main methods for module assembly:

1. Automated production lines

2. Module assembly from individual elements (ceiling, walls, and floor)

3. Indoor construction

Similarly, modules move within factories using three primary methods:

1. Rails

2. Wheeled or roller systems

3. Platforms

Interestingly, few modular home factories incorporate automation. Some handle all processes in-house, while others partner for certain aspects.

Focusing on small family homes, I'll avoid delving into the developer side of the modular business.

There are two customer types:

1. Networks of approved home builders who sell directly to buyers, with factories considering builders their primary customers.

2. Factories with retail sales centers selling directly to end buyers. This model, once diminished, is resurging due to high demand for modular homes.

Pros:

- Reduced competition: Merging reduces competition, consolidating companies in the market space.

- Synergy benefits: Merging factories enhances competitive pricing, marketing, research, production, and distribution.

- Economies of scale: Increased production and reduced costs lead to economies of scale.

- Cost reduction: Shared facilities and centralized production planning decrease order fulfillment time, reducing costs.

Cons:

- Lack of positive synergy: Merging doesn't always yield expected synergistic effects.

- Managerial conflicts: Differences in leadership styles and organizational culture can disrupt the new company.

- Delayed growth: Transitioning into a larger organization can lead to operational challenges.

- Ego clashes: Differences in owners' egos can pose challenges during the merger process.