This article originally appeared on the Professional Deck Builder website.
What if there were a way to offset the challenges that labor shortages are creating and at the same time increase your company’s production? What if your company could operate with fewer highly-skilled workers while delivering 10-day projects in five or six days, and do it with the same size crew? None of this is possible the way we deliver projects now, but maybe it’s time to look more closely at prefabrication as a business model.
A Perfect Storm
There’s no question that one of the biggest challenges facing the construction industry is a shortage of labor, both now and in the future. While there are attempts to bring new people into the building industry and encourage and promote technical education in schools (in fact, Congress recently reauthorized the Carl D. Perkins Career and Technical Education Act, which allocates $1.3 billion for such an effort), just how long it will take and how successful these efforts will prove to be may take years to determine. Meanwhile, the cost of delivering outdoor projects will likely continue to rise.
In my view, there are three factors that have combined to create the labor shortage “perfect storm” scenario: an aging labor force in the construction industry; a lack of interest among younger workers; and a gradual exit of legal and illegal immigrants from the workforce. This combination has pushed our industry into crisis mode.
Barring some miraculous increase of available labor, continuing down the current project delivery path isn’t a great option. As the labor pool shrinks, contractors will see limited sales growth, which will in turn limit the growth of manufacturers and retail building suppliers. Meanwhile labor rates - for skilled carpenters and laborers alike – will continue to rise, along with the price tag for jobs that are delivered.
To keep employees, contractors will have to offer add more perks to their benefits packages, such as better insurance coverage and more paid holidays. Subcontractors will be under the same pressure, and will go where the money is. These added expenses will put a strain on most small companies, who will have to raise the selling price of their projects to offset the added costs of doing business.
Traditional vs. Prefabricated
Pre-fab and modular building techniques are not new to the building industry. Starting in 1984, I contracted modular apartment and hotel work that was delivered on site in the form of 12-foot-by-24-foot completely finished cubes that were set with a crane. We built as many as eighty 10-foot-by-12-foot decks on these same sites by setting up and pre-framing in one location, decking all but the last four boards on the attachment side and utilizing a forklift equipped with a telescopic extender and extended forks to insert the deck modules into place. When I visited Japan in 2006, they were pre-cutting every deck package they built in a shop, then delivering and assembling the deck in the field because of space constraints.
While these techniques work for simple cookie-cutter decks, I think a similar approach could also be used to prefabricate decks with radius features, multiple levels, and other design features that are popular today. With the right systems in place, anything that can be built in the field can be prefabricated.
I envision three possible scenarios. The first would be an independent facility that takes the designs and approved drawings of multiple local contractors and creates either precut packages or panelized components that are then assembled in the field. By outsourcing much of the actual construction of the deck to an independent fabricator, a contractor would benefit from the equivalent of supplemented labor supplied by the fabricator. This is where I see the biggest “New Opportunity” for a completely new type of business.
Although it may be possible for an independent to begin a startup at a smaller scale until the trend begins to take hold, the company would have to be prepared to ramp up relatively quickly. This would mean having the necessary enclosed space and equipment, which would require a larger investment and potentially operating at a loss or no profit for a while.
I envision the startup as being more of a millworks-type of operation, though possibly without all the equipment investment (this may depend on how robotics and CNC machines might be utilized). While there’s risk to this approach, there’s a potential huge reward if this deck delivery trend takes hold for the early players.
In the second scenario, a decking products manufacturer would offer and produce the same services as the independent operator mentioned above. One problem with this approach, of course, is that most manufacturers focus on a few types of products, and so would probably have minimal interest in being involved in putting together fabricated packages of this scale. Still, I think that this is an approach that could be branded and outsourced.
In one variation, a steel-framing provider might offer modular pre-assembled components that could be ordered through local building supply stores (or possibly directly) and delivered much the same as material is now. That same provider might even consider offering pre-designed decks, which could be marketed and sold to the DIY market either online or through building supply and box stores.
Larger building supply operations might think about offering these services, because they have the space and materials on site and fewer startup costs. While some may conclude that this is an operational burden they don’t need that’s outside their business model, others might come to a different conclusion if this new process truly changed the landscape. If a lumberyard sees that its sales are impacted because the products that it used to sell are now going through another channel, it might cause it to look at bringing this process in house.
In my third scenario, a contractor would prefab his projects while working off site in a controlled environment. While not necessarily reducing the need for labor, it may be a way to utilize less-skilled workers and increase productivity during the winter months. To an extent, this could be done on a small scale in a garage, and the same workers who prefabbed the deck could later assist in the field as needed with handling modular components on delivery day.
Contractors who pause operations in the winter while waiting for the snow to melt could continue to sell jobs, prefabricate them, and stack the projects for quicker installation when the weather breaks. If there’s a change to the process, it might be in the form of taking a larger deposit since expenses for a job could begin before you’re actually on site and bills could come due before your draw payments begin.
With the right system of checks and balances in place, I don’t think there would be any sacrifice in the level of quality using any of these approaches. Methods that allow for field adjustments would be needed, and systems that extended into the field to assure dimensional accuracy would be crucial. For example, a plant that produces a precut package might send its own field rep out to verify the house attachment detail.
Because of its relatively light weight compared to PT lumber, steel framing is probably the best alternative for modular components (precut packages could utilize either wood or steel framing). The average weight of an 8x16-foot steel-framed deck section - the maximum size that could fit on a flatbed truck without requiring a special permit – is about 180 pounds without decking, and could be handled by hand. These sections could be quickly assembled over field-installed beams, columns, and footings. Other components, such as stairs, landings, stoops, and arbors, could be precut or prefabricated and shipped to the jobsite the same way.
Wood framing might be feasible, but it would require special handling to avoid warpage, and lifts or cranes to handle the extra weight. Actual usage of this heavy machinery would of course depend on site accessibility, local availability, and customer attitudes about yard and driveway usage.
Would Contractors Buy In?Many deck builders believe that that anything that is prefabricated can’t be as good as what can be custom-built on site. Some may think that this approach would detract from their identity as a builder, while others are simply “old school” and don’t easily accept change. But a couple of my friends in the decking industry have already successfully tried prefabrication.
In 2004, John Lea of Deck South utilized the “pre-cut / off-site system” to build multiple decks for a large multifamily project. He told me that he thought the system worked well and allowed him to expedite delivery in a way that wouldn’t have been possible using a conventional approach. Another contractor, Jason Varney, the owner of Dock & Deck and the host of the “Docked Out” television series, pointed out to me that the trade-show displays used at Deck Expo and International Builders Show, which can measure as much as 3,000 square feet, can be installed in two to three days because they are prefabricated.
If you are a low-volume contractor that struggles with putting work on the job board, you probably wouldn’t benefit from prefabrication, and younger “one crew” operators with a couple of reliable helpers may not see the labor forecast as a problem. But even these types of businesses could potentially be more productive and benefit if some of these new production approaches enter the mainstream. After all, there are no guarantees that the employees they rely on now will always be there.
Prefabrication would be more appealing to larger contractors that count on more production and are already experiencing labor shortages, and thus may see this as the only path to grow (or even just maintain) their business. Many of the more successful operators can already sell more than they can build, and this approach may offer some relief and allow an expansion for production. Trend setters who have made their reputations by not being like everyone else and are progressive in their thinking would likely be the first to consider it.
A prefab operation will still have to hire workers, but two elements should make it easier to fill those positions. First of all, those workers – who will work with templates and jigs following controlled routines – will need fewer skills than traditional carpenters. And fewer employees may be needed, depending on the level of mechanization. The pay rate would be lower, and because the jobs are inside, it will likely be easier to find employees.
The Firstest, or the Mostest?
As a very successful friend of mine once explained to me, successful businesses either are the first into a particular niche, or have a good business plan that they can replicate at a large volume. Someone who sees prefabrication as a "Firstest" opportunity can come up with a good business model, and if able to reproduce it in other markets, may find considerable success. This is especially true if prefab decks can be targeted to the DIY market, where they can be sold and shipped as pre-designed kits ready for assembly complete with instructions.
Of course, this is a radical idea with a number of unanswered questions. What kind of volume would an independent operator need to achieve in order to be profitable? How do transportation costs factor into the discussion? How well can robotics be incorporated into the production side? How large of a market would be needed for a prefab business to operate profitably? How would actual project delivery costs compare to traditional deliveries, and what would the actual increase in potential production be? And what exactly does the business model look like?
I’m sure many reading this will say that you can’t do “custom” this way, and that no one is ever going to change the way they build decks. That may well turn out to be the case, but if the economy stays healthy, and the growth rate of new labor continues at the current scary slow pace while current participants age and cycle out, it just might not be the craziest suggestion I ever made. In fact, I think it’s just a matter of time before prefabrication becomes more common in the deck industry. Just how long this process will take depends on how quickly the labor shortage worsens and the success of current efforts to attract new workers into the labor market.
I do know that if I were operating my former company, I would be looking at ways to utilize less-skilled labor and exploring in-house prefabrication. And if I could outsource and order prefab framing and modular components that I knew were put together properly and that my crew could assemble in a way that met my standards, saved me time, and allowed me to be more productive while still being competitive in the market, I’d be all over it. And I’d be sure to tell my customers that one of the benefits of this new approach would be that we will only be on their property for half the time that others may be. As a result, their chances of requiring “therapy” after we’re done with them would be cut in half as well.