For Module, a Pittsburgh-based manufacturing start-up that hopes to build affordable housing, the key to growth is keeping things close to home.
The company designs single-family homes that are built floor-by-floor in a factory, and then trucks the floors individually to their final destination. A crane stacks the floors on site, where carpenters and specialty subcontractors stitch them together and add the finishing touches.
The company used to rely on factories in places such as Clarion to build the floors themselves. But in May, the firm opened a factory in Carnegie, which will allow it to design and construct its own homes from start to finish. Looking ahead, it hopes for an expansion that would quadruple the size of the company’s workforce in two years.
“We started this as designers, architects, people with a vision and a sense of what we wanted our product to be,” said Drew Brisley, Module’s co-founder and chief product officer.
And having their own production facility will give them more control over the final product, he said, because “in some instances, we've had to sacrifice what that looks like and what that is by working with other manufacturers.”
The company’s leaders say they build higher-quality homes, faster — at the same price as competitors who build on-site. The company designs energy-efficient homes to sit on foundations and meet all zoning codes. (Mobile homes, by contrast, can be built to a much cheaper standard and aren’t required to be built on a permanent foundation. Modular homes meet the same building codes as regular construction methods.) And because construction of modular homes can begin even before the foundation is laid, the timeline for completion can be several months faster than homes constructed on-site.
Module has been involved in building 20 homes since its founding in 2016. But in two years, its team believes the new factory could allow them to manufacture 50 homes per year, employing 30 full-time workers.
The first two homes in its new factory were ordered by Amani Christian Community Development Corporation, a developer trying to increase affordable housing in the Hill District. They’re due to be delivered on Oct. 31. These homes fill a need in a city where affordable housing often has to be squeezed into vacant lots. And for the first time in Pittsburgh, they are being constructed by workers from the same region where the homes will end up.
“We should be able to create local jobs,” said Brian Gaudio, Module’s CEO. “Why should we outsource jobs to other counties or other states?”
The company is trying to stand up its factory with just a few hundred thousand dollars in seed money. So it has had to rely on subcontractors to staff the factory at first, forcing them to rely on labor that hasn’t been trained in a factory setting.
Brisely said other modular home factories focus on “throughput, throughput, throughput,” a term used to signify their focus on producing as many homes as quickly as possible. But Module believes it can improve upon traditional methods, Brisely said, and has started to “put our brains on it, start really thinking: how would we do it?”
‘An upward swing’
The modular homes industry took a hit during the Great Recession in 2008, falling from around 7 or 8% of all new single-family housing construction to between 2 and 4% today, according to Devin Perry, an assistant vice president at the National Association of Home Builders who puts out a regular report on the industry.
Recently, though, the industry’s fortunes seem to be turning, Perry said. Building more homes in factory settings was one of the main strategies the Biden administration said it would focus on promoting to help address the nation’s housing crisis earlier this year.
“The money being pumped into the industry, just anecdotally, it certainly seems like it's on an upward swing,” Perry said.
Module’s Carnegie factory is one of a handful of similar, smaller, boutique factories focusing on a particular kind of housing or a particular region, according to Tom Hardiman, the executive director of the Modular Home Builders Association. The association will hold its annual conference in Pittsburgh October 28-30 and will offer a tour of Module’s factory in Carnegie as part of the programming.
There is a massive need for more affordable housing now, Hardiman said, but it’s not clear that large-scale assembly-line production is the answer. In recent years, two huge modular housing startups, Katerra and Veen, tried to build factories that would churn out thousands of buildings for a variety of jurisdictions and purposes. They ultimately went bankrupt instead.
“They just said, ‘Whatever comes in the door, whatever customers wanted to pay, we'll build it for them,’” Hardiman said. “And they failed. They didn't have the expertise to build in all of those places and all those markets.”
Module, by contrast, is building a “last-mile” facility that will be focused on producing homes for the Pittsburgh area.
Hardiman said a major challenge for modular home builders is working out the kinks in their assembly line before they can automate the process and realize efficiency gains.
“You really have to get your process down first before you automate, make sure you've got the most efficient layout, assembly line, people,” Hardiman said. “Because if you automate it before you have your process nailed down, then you're only speeding up the mistakes that you're making.”
Building their process
On a recent summer morning, four workers inside Module’s Carnegie factory were mixing joint compound and smoothing out the edges between sheets of drywall. The walls themselves were nestled inside a giant factory that once was used by a steel business, with two 5-ton cranes overhead that can lift entire floors of each home and move them into place.
One of those employees, Alberto Flores, said in Spanish that it was his first time working in a home factory, but the work itself was similar to what he’d done on-site at other houses. Flores fled his native country of El Salvador after working for 27 years on the police force there, he said, because of war and gang violence — and made a new home for himself in Pittsburgh seven years ago. The other three workers who were working alongside him that week were recent immigrants from Mexico, Honduras and Guatemala. Although the plan is to eventually hire permanent workers in the factory, for now, the work is contracted out.
During production, the factory had six giant wooden boxes propped up by 3-foot-tall supports. Each of the boxes is a different floor for the two- and three-story houses being built. Only two of the boxes — the bottom floors — have a front door that the workers can walk into to get work done. So for the upper two floors, the workers ducked through the 3-foot gap underneath and then pulled themselves up.
Flores didn’t seem to mind. He said he moved to Pittsburgh because the pay in El Salvador was only $6 or $7 per day. “Es muy poquito,” he said: It’s very little.
Brisley, the chief product officer, was overseeing the work at the factory. In the first few weeks, getting the factory operational required all hands on deck, he said — and that meant most of the company’s seven employees were helping to set up the factory. But now, Brisely said, a single person oversees its day-to-day operations. Module is trying to hire someone to take over the job full-time.
Not all of the work has gone to plan. Modular factories can typically build whole walls before they are set in place. But when Module tried to get its framing contractor to also do the drywall, the framers said it would be cheaper and faster for them to just build the frames quickly and have dry-wall experts come in later. When it came time to drywall, the workers had to lift 14-foot sheets of drywall into the boxes through the roof — which slowed things down.
Brisely said he believes the company made the right decision at the time, though it wouldn’t necessarily do it that way again as it hires and trains its own workforce.
“As a start-up, the approach that we've always taken is, let's do the lean-and-mean approach, get things started, build that momentum,” Brisley said. “Then we can attract and hire as we need to.”
The company is also trying to innovate, Brisely said. For example, modular homes typically have to be wrapped in disposable plastic before they are placed in their neighborhoods to protect them from the weather. But Brisley said Module has experimented with a reusable wrap that it believes should last longer — and waste less.
“Even if we get to use it three times as opposed to one,” he said, “to me that's a win and a move in the right direction [for] sustainability and cost.”
Because the work will be repetitive from house to house, Module says there will be many such opportunities to reduce waste. The company’s leaders also believe its workers will be more productive because they won’t have to work outside in inclement weather or spend a long time commuting to their jobs. And like any assembly-line worker, they’ll be able to focus on familiar tasks.
The company is still learning to adapt its startup mentality — where new ideas should be fostered — to an assembly-line environment, where making too many changes can impede efficiency.
“Thinking about ways we can shave off minutes or even seconds of tasks is really important,” Gaudio said. “It's a different mindset.”
‘We could have gone fancier’
On a summer afternoon Marquis Cofer, Module’s chief operating officer, gave a factory tour to a group of about two dozen people, which included six members of the Urban Redevelopment Authority. In addition to showing off the partially built floors themselves, he showed off the bulletin board where he said the company tries to take suggestions to improve its processes.
“We could have spent more money to open this factory. We could have gone fancier. We could have hired an entire workforce to start,” told the tour group. “But we very intentionally made it very low-barrier to entry.”
Cofer said other communities have shown an interest in their cheap start-up model — “right-sizing” a factory in a way that will bring jobs closer to home.
Part of the company’s challenge is spreading the word about modular construction — not just to the construction industry that it needs to help produce the products, but to developers and other potential customers as well. Module will have to scale up fast to meet its lofty goals.
If they are successful, company executives want to help local partners in other cities open “last-mile” manufacturing facilities. Opening a modular house factory is more capital-intensive than regular construction methods — so they say they hope the Carnegie factory proves that smaller production facilities are an economically feasible way to increase housing supply,
Right now, Cofer said, the company’s ethos means that, on some days, instead of waiting for a crew to come in and fix a drywall mistake, he and another executive will do it themselves. (He was the last person, he said, to clean the factory bathroom.) But Gaudio said their roles will have to change as they expand so that they are doing less of the work themselves — and focusing more on growing the company.
“We're not perfect, we’re not getting everything right right away,” Cofer told the tour group. “Starting a new business, trying something new, you're going to get punched in the mouth quite a bit. But we're going to hang in there, and we're going to figure it all out.”
