Government Affairs Gets Results
Stephen Shang is the CEO & Co-Founder of Falcon Structures, but he didn’t have an easy path to running his own business. “Before Falcon, I was a part of seven different start-ups. They kept failing, one after the other,” he says.
Eventually, he received some critical advice to “stop swinging for the fences and hit a single… just get on base!” So Shang and a friend decided to “start a really simple business.” They considered selling smoothies and cleaning windows, but when they came across the portable storage industry, their curiosity was piqued. “Shipping containers were good assets, so if our business failed, we could at least sell them back and we wouldn’t lose that much money,” Shang recalls. “The plan was to do this sensible business for two or three years and then get back into tech start-ups.”
That was in 2003.
Back then, Falcon Structures was called Falcon Storage — because the initial business model was buying used shipping containers and renting them out for storage. “In the beginning we just wanted to keep things really simple. As an example, our tagline was: 'It’s A Box… You Put Stuff in It!'”
When the 2007/2008 recession hit, Shang says his company was “stuck with containers that nobody wanted to rent and we didn’t know what to do with them.” To keep the business afloat, they had to find new ways to use them.
“We stumbled across the urban training niche in the military, where schools, mosques, houses — entire villages and cities — were made out of shipping containers. During the Great Recession, we went after this niche and ended up growing to about 100 employees. We learned a lot about modular construction during that period.”
During the Great Recession, Falcon Structures turned unused shipping containers into military training facilities.
But there are always ups and downs in business and, Shang says, “Around 2012, the military training money started to go away, so we again needed to find another way to use containers. That’s when we really started pursuing modular construction in earnest.”
Issues for Containerized Buildings
In 2014, Shang’s company considered selling the container rental business to go all-in on modular manufacturing with containers, but they kept running into building code officials who didn’t think buildings made from containers were code compliant. “They were skeptical of their structural properties and they were scared people were going to die inside them.”
He realized his company couldn’t solve the problem alone, so he approached MBI and the National Portable Storage Association (NPSA), with a plan to work as part of a team to tackle the issue. “We saw there was a huge need to address this patchwork of regulations that had formed across the country. There was huge potential in the shipping container market, but code officials had no idea what to do with this modular technology,” Shang explains.
A taskforce consisting of members of MBI and NPSA created a white paper that was directed at code officials, demonstrating that containers could be safely used as building materials and explained how they could be permitted. “It accelerated from there,” Shang says. “We worked with the International Code Council [ICC] to incorporate containers into the building code. We also wrote guideline G5-2019, which gave building code officials guidance on how to work with containers.”
Working with the ICC has been a huge victory for MBI, Shang says. “A lot of the work we’re doing today with the ANSI Standard to get uniform modular codes across the country happened because the ICC got to know the MBI as a valuable, helpful trade organization through our shipping container work with them.”
Government Affairs Work
Shang is currently on the MBI Board of Directors and is the chair of the Government Affairs Committee. In that role, he volunteers a significant portion of his time working with and giving presentations to code officials. “As part of MBI they take me more seriously than they would if I were presenting as just the CEO of an itty-bitty company in Austin, Texas.”
As well as educating code officials, the Government Affairs Committee also retains lobbyists. “The lobbyists look for opportunities for modular construction — like affordable housing — and they also look for things that might be a threat to the industry.”
Another way MBI keeps abreast of issues in the industry is by hosting Town Halls — open forums where any member can speak up about an industry issue they’re facing. At the Town Halls, MBI Executive Director, Tom Hardiman, and Government Affairs Director, Jon Hannah-Spacagna listen to members explain issues they’ve run into. “MBI has the resources to advocate for improvements,” Shang says. “They might hear that members in California are struggling with a particular issue, and then MBI can tackle it. Where California goes, the rest of the country follows sooner or later. So if we can tackle it at the state level, we can get ahead of it before other states start to adopt similar regulations.”
Shang contrasts MBI with organizations that focus solely on trade shows. “Government Affairs work is one of the things that makes MBI different. Modular trade show organizations pop up, but they don’t have the same kind of influence that MBI has,” Shang says. “MBI has a well-deserved reputation for effective advocacy.”
Texas Building Heights
One example of MBI’s advocacy involved changing a regulation that restricted the height of modular buildings in Texas. Shang explains the history of the regulation:
“At the World’s Fair in San Antonio in 1968, a hotel was built using modular methods. Some Texas GCs became worried that modular building techniques would have a negative impact on the general contracting industry. In response, a law was instituted in Texas that modular buildings could only go up to four stories high.”
MBI hired a lobbyist and “figured out how to get a bill sponsored in the Texas Legislature to remove the height limit from the regulations. The bill passed.”
This is the kind of work that MBI does through its Government Affairs Council. “I bet there are modular companies that have benefited from MBI’s work without even knowing it.”
Falcon Structures has certainly benefited, Shang says. “MBI has really opened up our market. We’re now able to build things that are more complex and exciting than we could have dreamed of 10 years ago — like stadiums and multifamily developments,” he explains. “That’s because of MBI’s Government Affairs work — educating government officials about how containers can safely be used. This means that when we want to build something, they’re already primed to understand how it’s possible.”