Modular Building Institute
Permanent Modular Construction Annual Report 2019 | Modular Building Institute



International Market Overview

In 2017, MBI retained Professors Ryan Smith from Washington State University and Ivan Rupnik from Northeastern University to embark on a global research project. The aim of the research was to assess market conditions and adoption rates for modular and off-site construction in various countries, to determine the drivers and barriers to adoption, and to analyze those findings to improve the adoption rate in North America.


Sweden

Growth in Sweden’s modular industry appeared relatively recently, as compared to the United States and Japan. Lindbacks is currently the industry leader, having produced more than 10,000 housing units since 1994. Lindbacks, along with its two-other volumetric modular competitors, grew out of the large Swedish single-family home industry, but now focus almost entirely on affordable and market rate multi-unit housing. Like the US, Sweden’s volumetric modular construction is governed by a conventional building code.

Common to all three-major volumetric modular companies in Sweden is the marketing strategy of closely aligning modular construction with sustainable or green building. This strategy is showing immediate benefits in terms of consumer response but is also seen as a long-term strategy that anticipates stricter green building regulations.


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Japan

Japan’s volumetric modular industry is nearly as old as America’s. Sekisui Heim, the top player, started production in the early 1970s. Currently dominated by Sekisui Heim, the largest volumetric modular company in the world, with 10,000+ housing units produced, the Japanese industry has achieved an impressive level of market penetration (approximately 15 percent of new construction starts).

Japan is a renew culture stemming from the Shinto tradition of rebuilding temples as a religious act. Therefore, modular meets this demand for new, fast delivery of housing. Like Sweden, the predominant off-site system is panelized construction. Both volumetric modular and panelized companies utilize light-gauge steel components although some light-wood frame construction is also used.

Like many off-site construction systems, including volumetric modular, Japanese companies initially touted their systems speed and affordability. Since the late 1970s, the focus shifted to the superior quality of the product (on average, volumetric modular is eight percent more expensive than conventional construction in Japan).


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Poland

Poland is a relative newcomer to the global volumetric modular industry, the three key players all benefit from that countries steel industry as well as its furniture industry. All three companies are currently focused on Western European and North American markets.

Polish volumetric modular companies have developed the logistics necessary for a commercially viable export business. Polcom Modular has shipped complete hotel modules to Holland, the UK and, most recently, to New York City. DMD has shipped modules to southern Germany and to the U.S.


United Kingdom

It is estimated that off-site construction constitutes seven percent of the total construction output equating to £1.5 billion per annum. It is unclear how much of that is modular construction; however, modular construction has a long history in Britain stemming from colonial migration. Modular construction in the UK leverages techniques from Sweden and Germany/Austria that have a longer modern history with the technologies. The UK has also adopted techniques from Japan in its hot-rolled steel modular program.

The UK tends to be geographically specific, with light-wood frame Swedish techniques and automated equipment being used in Scotland and Northern England and light-gauge steel and hot-rolled steel more common in the Midlands and London. Like North America, the modular industry is regulated by the same codes as conventional construction. Off-site and modular construction is being used for primarily for low-rise.

The UK government has put forward numerous reports to industry from 1994 forward calling out the inefficiencies and lack of innovation (productivity). These reports set targets for the construction industry including lower initial and lifecycle costs, faster delivery, lower emissions, and the symptoms of such, dysfunction in training, and workforce recruitment. During this time, the reports have pointed to off-site manufacture as one solution to overcome such challenges.


Australia

Prefabrication in Australia began when the Manning Cottage was delivered from the UK during the colonial period. Despite early research from the Australian government on the potentials of off-site construction, Australian modular construction has only emerged in the last decade. Currently there are an estimated 74 modular manufacturers in Australia of 169 total off-site manufactures (2013). It is difficult to determine the overall contribution of modular to the construction industry in Australia, but in housing, off-site is estimated at five percent with modular being the dominant method.

Following population distributions, most modular manufacturers in Australia are located on the East Coast of Australia with the largest stronghold in the metropolitan region of Melbourne, Victoria.

Although there are two scales of volumetric modular occurring: steel and concrete modular for mid-to high-rise in centers and light-wood frame and light-gauge steel modules for urban and suburban housing development, the modular companies are more diversified, offering many different off-site solutions and material modular solutions for a myriad of building types – there is less concentration and specialization.

MBI obtained revenue data on 11 manufactures located outside North America. These companies we located in various parts of the world including Chile, Argentina, Italy, Poland, China, and Australia.

The average revenue from these manufacturers was $20.4 million in 2018, in line with average revenue of companies within North America.

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