‘What we can offer is speed’: Modular housing business owner on tackling supply

(Sarah Plowman / CTV News)

Inside Ironwood Manufactured Homes’ factory in Woodstock, N.B., workers pump out a house a week.

Owner Mark Gaddas points to a home that’s three days into construction. The drywall is being installed, which he says typically wouldn’t happen in on-site construction until the house is weather-tight. It’s one advantage to building indoors.

“That’s one of the reasons why we can speed things up over time,” he said.

Founded in 2018, Ironwood is a few months away from moving into a new factory that’s ten times its current size. There, they will be able to build more houses and add efficiencies, such as automation. Provincial and federal governments invested a combined $2.5 million in repayable loans to help.

“We strictly build custom modular houses right now. The new facility will give us the capacity to get into multi-residential,” said Gaddas, noting workers could build hotels, universities and dormitories. “We’ll have anywhere from ten to fifteen houses under construction at all times.”

Factory-built housing makes up a small percentage of Canada’s housing market, but Prime Minister Mark Carney has said prefabricated and modular housing are the future. He has pledged $25 billion in financing to prefabricated home builders as his government aims to double the pace of Canada’s home construction.

Carney has also pledged to order housing units from manufacturers in bulk to create sustained demand.

“It’s not the silver bullet to the housing crisis,” said Gaddas. “It’s part of the solution. It isn’t the ultimate solution. What we can offer is speed.”

At the University of New Brunswick’s Off-site Construction Research Centre, Director of Innovation and Operations Brandon Searle notes how off-site construction has been around for more than a century and often increases in popularity following or during a crisis.

He believes prefabricated and modular housing are a piece of the housing crisis puzzle.

“I’d say they’re a large piece,” Searle said.

Searle explained this kind of construction isn’t necessarily cheaper than traditional homes, but builds happen faster, with fewer workers and less waste. Costs are also more certain, since a lot of decisions happen before construction starts.

The industry faces barriers to scale up, Searle notes, such as high capital investment costs, disjointed policies across jurisdictions and the need for demand that businesses can count on.

“Creating that sustainable demand is a role that the government can play, but also incentivizing them to invest in innovation and automation,” he said.

Securing financing or insurance can also be a challenge, and it’s something the research centre is looking into to figure out what needs to change and what role Ottawa can play in underwriting projects.

Kevin Lee, CEO of the Canadian Home Builders’ Association, notes the main reason not many of its members build prefabricated and modular homes is because the traditional house construction industry is efficient in operating with the labour it has and in the structured environment it works in. He adds the industry is mostly made of small crews.

“That really has to do a lot with the boom-and-bust nature of the housing industry,” Lee said.

“The system kind of operates like a factory but instead of the house moving down the assembly line, the workers move through the house, but do the same repetitive activities, house to house.”

Lee says it’s more labour intensive but requires less overhead costs.

He adds factory-built housing can be a very important part of the future, and notes the real benefit is speed, but policy changes are needed, including consistent rules around the planning and approval process.

“At the municipal level, you cannot build the same house from city, to city, to city, because every city has different bylaws, zoning requirements, and interpretations of the exact same provincial building code, which vary city to city, and sometimes within the city, which makes doing anything at scale incredibly difficult,” Lee said.

Borrowing best practices

Ironwood’s new factory will add automation, including a saw to cut lumber and possibly a machine that, with the push of a button, installs nails or screws.

To borrow best practices, Ironwood is looking to European countries, such as Sweden, where modular housing reshaped the homebuilding industry.

“The automation that they have is much further ahead than where we are,” said Gaddas, adding there’s one manufacturer in Sweden with “a zero-labour line.”

“You have robots essentially building all the compartments of the houses that we’re talking about.”

Mathieu Laberge, Chief Economist and Senior Vice-President at the Canada Mortgage and Housing Corporation, said while this kind of housing is marginal in Canada, 90 per cent of homes in Sweden are made with some off-site component.

It didn’t happen overnight. Laberge explained that in the 1960s, Sweden decided it was the technology of the future and the government began funding projects to create a baseline demand.

“Now, they don’t need any more government support, because it’s a self standing industry. And that’s the point we’re at in Canada,” Laberge said.

Laberge and Gaddas point out there’s a lot of misconceptions around modular housing, like assuming it’s one-size-fits-all and that these houses can’t be customized.

“That’s not true,” said Laberge.

“They’re good-looking, they’re high-quality, well-insulated, weather-appropriate for Canada. And so, these are all misconceptions that we need to overturn.”