4. Logistics/Products

Manufactured Homes: Opportunity or Threat?

Old ideas rarely enjoy as enthusiastic a revival as manufactured housing is getting today. A concept as old as Sears kit houses and Levittowns has roared back to life, powered by an abundance of technology and a shortage of laborers. If it takes root, some lumberyards will face big—and potentially crippling—changes to their business.

Recent stories on what also is known as off-site construction imply a coming revolution:

  • LP Corp. invested $45 million in Entekra, a California firm that’s busy opening factories producing thousands of homes each year.
  • Silicon Valley–based Katerra has raised $1.1 billion in funding for its plan to build multifamily, student, and assisted-living facilities in factories across the U.S.
  • Amazon’s Alexa Fund has teamed with others to invest $6.7 million in Rialto, Calif.–based off-site builder Plant Prefab. • Another California firm, Dvele, is selling eight different models of prefabricated luxury homes.
  • Walpole, N.H.–based Unity Homes entered into a strategic partner-ship with CertainTeed to create new assemblies and components for high-performance homes.

The argument behind all these ventures is the same: Building a house on a jobsite is crazy compared with the consistency, precision, quality control, and efficiency you get from doing most of the work in a factory. Once indoors, weather and jobsite logistics problems go away. Planning improves. And in this age of labor shortages, it’s easier to get some people to work inside a plant than out in the open.

“A lot of people might say, ‘Hey, we’ve seen this movie before,’ ” notes Art Schmon, a partner at Forest Economic Advisors, which is organizing a conference in Boston in late October on industrialized wood-based construction. “But we haven’t seen this particular movie before because we haven’t had the labor shortage that we have now.” And technologies like building information modeling (BIM) are making collaboration possible in ways that hadn’t existed previously.

Manufactured housing’s advocates also can draw inspiration from other industrialized countries where factories are the norm. At Japan’s Sekisui House, the world’s largest residential builder, one campus designs, develops, and produces more than 470 buildings a month. As many as 600 trucks loaded with construction components roll out of Sekisui House’s complex every day.

Dealers generally welcome an increase in housing starts, but sales to a manufactured housing plant aren’t like sales to a production builder. For one thing, factory people count on their systems reducing waste in materials. What counts as waste for them is extra sales to a dealer.

Perhaps more important, off-site construction challenges what dealers do. A key LBM service takes railroad cars full of lumber, breaks them into smaller stacks, puts that lumber on trucks, and transports it to jobsites. In contrast, when you sell to a factory, it just wants the railroad car and doesn’t care what else you do. A factory could bypass you entirely and buy straight from the mill.

Meanwhile, lumber mills face their own challenge with this style of building. Entekra CEO Gerry McCaughey says a huge amount of framing lumber has too much warp, wane, and even bark on it to be usable by his machines. He says that early on, his U.S. operations were rejecting over 30% of the lumber delivered to them. Mills that hope to sell to companies like Entekra will have to produce better-quality studs than they ship out today.

“There’ll be a trend toward demanding higher-quality lumber,” Schmon predicts. “This is coming, whether [mills] like it or not.”

Not Much Pickup

Be skeptical about grand, technocentric images of completely autonomous trucks filling our interstates in 2048. Cast a wary eye at predictions that the trucking industry will lose 3 million jobs in 30 years’ time. But have no doubt about this: Trucking is the king of freight shipping in 2018, and all indications are it will remain so in 2048.

William Cassidy, a senior editor for the Journal of Commerce covering trucking, says automation has the potential to more quickly appear in the short-haul, loop-based circuits. Automation in these areas would likely influence lumberyards located close to jobsites. Still, most automated trucks in the short- and intermediate-term future will need truckers on hand for loading, unloading, city driving, and monitoring for situations requiring human intervention.

Long-haul trucking companies will adopt automation slowly, industry experts say, and the industry will always need human employees, even if not in the traditional “driver” role. Thoughts of squad platooning, electric trucks, and automated long-haul trucks all generate palpable excitement, but there’s little indication the industry will change any faster than it has in the past.

Under current regulations, truckers can drive only 11 continuous hours without a break. Autonomous trucks carrying those truckers would be bound by the same rules, making it very costly to utilize automated trucks for longer-haul deliveries while current regulations are still intact. As such, automated trucks will likely have a larger impact on short-haul trucking, with the long-haul portion of the industry untouched until regulatory hurdles are cleared.

Americas Commercial Transportation Research Co. suggests electric-truck sales could top 100,000 by 2035, and electric vehicles are projected to make up as much as 20% of the medium-duty truck market by that time, up from 2% currently. That said, the high cost to carriers of electric trucks and their shorter battery capabilities are likely to limit electric trucks’ impact to short hauls.

If not electric, what? Companies like Toyota and Nikola Motor are working on hydrogen–electric truck developments and are on an accelerated track. Toyota has developed a beta for its hydrogen–electric truck, with an 80,000-pound gross combined-weight capacity with a 500-mile range on a single battery charge.

Improved capacity, efficiency, and delivery times of new technologies and innovations will likely come at a price. In years in which the trucking industry is strong, the cost of innovation will likely be passed on to shippers.

Additionally, the trucking industry is anticipated to face a continued job shortage in the near future. One way the industry is beginning to incentivize trucking jobs is by raising truckers’ wages—which also will have an adverse effect on shipping costs.

In the rail industry, meanwhile, most of the investments are and will continue to be allocated to improving existing rail infrastructure and creating new freight locomotives rather than expanding the rail networks.

Wood You Wear This?

Don’t be surprised if the tag on a future T-shirt you buy says the blend of fabrics includes wood. The Finnish company Spinnova is turning wood pulp into a fiber for clothing. The T-shirt shown here is an example. The production process doesn’t use harsh chemicals, and, unlike cotton, it doesn’t require a lot of water or fertilizers to grow the product. A pilot factory is now working to commercialize the concept. It’s using Finland’s forests as its raw stock, but the core concept can work with many types of wood and cellulose.

Go Small, Do Big Things

Imagine 2x4s that split so much they can’t be graded as suitable for construction. Now imagine turning them into No. 2s or higher simply by painting them with what you might call a liquid form of wood.

Manufacturers of engineered wood like to say they reduce a tree to tiny bits and then put it back together stronger and straighter. Today, 90 years after plywood first was commercialized and 70 years after particleboard came on the scene, some of the biggest advances in the engineering of wood are taking place in labs that are exploring how to use the cellulose in wood and other plants.

At 100 nanometers long and 6 nanometers in diameter, the scientists’ building block is microscopically tiny—it takes 1,000 of these cellulose nanocrystals stacked end to end to equal the thickness of a sheet of paper. But they can do big things. For instance:

  • Oil rigs in Canada add a gel form of cellular nanocrystals to their drilling mud. It turns to water below the surface, thus helping the drilling process, and reverts to gel form back on the surface.
  • A Japanese company uses a form of nanocrystals in its pens. The cellulose nanocrystals help keep the ink liquid as it goes onto the pen’s roller ball and then cause the ink to thicken up when it touches paper.
  • Nanocellulose’s ability to absorb water can help keep surfaces from fogging. One company (FogKicker) sells a spray to coat swim goggles.

Even wood’s construction competitor, concrete, can benefit. Scientists at Purdue University have found that cellulose nanocrystals can increase the strength of concrete by 30% because they help more of the concrete to cure. And tests indicate that nanocellulose crystals have strength properties better than steel’s, at one-sixth the weight. Alan Rudie, a supervisory research chemist at the U.S. Forest Service’s Forest Products Lab in Madison, Wis., says cellulose nanocrystals were first noticed in 1949 and have been studied for commercial use since then, but most of the breakthroughs have come only in this decade. One of the biggest took place in Japan, where a scientist used a chemical known popularly as TEMPO to break down wood polymers. (A polymer mainly consists of similar molecules bonded together. It’s a building block of synthetic materials like plastics and resins.)

In most cases, using TEMPO causes polymer chains to dissolve, turning the substance into a liquid. But when applied on cellulose, very tiny strings called fibrils are recovered. These fibrils are about a micron (1,000 nanometers) long and still just 6 nanometers wide—tiny spaghetti noodles.

The fibrils “hold water tenaciously,” Rudie says. Thus, what results from adding TEMPO is a gel, not a liquid, even when the substance containing the TEMPO fibrils is just 1% solid and 99% water.

Research on nanocellulose crystals has been slow to develop for two reasons. First, there wasn’t much need; you didn’t need to go to the nano level to discover wood’s economic value. Second, it was—and remains—hard to detect nanocrystals when they’re part of a larger material, such as a reinforcing fiber in a composite. Only in this century have scientists developed techniques to see nanocrystals at work.

Scientists like Rudie are pushing microscopes to their limits to see the results of their experiments, and often, he says, “it’s far easier to discover that we didn’t do well.”

Despite those difficulties, the potential appears to be huge. One market research firm, Transparency Market Research, values the nanocellulose market at $54 million globally as of 2014 and forecasts it’ll be worth nearly $700 million by the end of 2023. Global Market Insights, meanwhile, is even more optimistic, predicting that the market will reach $1 billion by 2024.