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Should You Care About Off-Site Construction and Tall Wood Buildings? This Guide Can Help.

Conventions can become reality distortion devices when all the participants sound like true believers. That vibe was evident among the more than 400 people from 266 companies in 13 countries who came to Boston on Oct. 24-26 for the first-ever Industrialized Wood-Based Construction Conference. Organized by Forest Economic Advisors (FEA), the event pressed the case for factory-built housing, modular construction, and using mass timber like cross-laminated timbers in buildings up to 20 stories tall.

FEA calls these innovations “a $1.6 trillion opportunity for construction disruptors” and uses its website to tout stories with headlines like “Mass-Production of Homes the Panacea to the Housing Crisis.” Heading into 2019, you can expect lots of stories and conferences implicitly promoting the idea of building homes off-site and then trucking components to the jobsite. The IWBCC faithful certainly will be among the cheerleaders.

But how big a deal is all this for your LBM operations? I believe that, over the next couple of years, the answer will depend largely on which types of customers you serve. Beyond 2021, the growth of mass timber and off-site construction also will be influenced on how willing all parts of the supply chain are to change their ways at a time in which economic growth is likely to cool.

So, for the new future, off-site construction and mass timber are big deals if you sell lots of products to:

* Companies that build 50 single-family homes a year or more, particularly if they are in housing developments.

Builders of multifamily housing projects.

* Customers in states with high labor costs.

You also should care—a lot—if you’re a mill or a distributor.

You have far less reason to care if you sell mainly to:

* Full-service remodelers and home improvement companies.

* Custom builders, particularly the high-end, bespoke variety.

* DIY customers.

* Builders in states with relatively cheap labor.

Speakers at the IWBCC offered myriad reasons why prefabricating structural elements and using mass timber produces buildings that are cheaper, faster to build, and generally better-constructed places than site-built structures can achieve.

So, what’s not to like? The problem is that, as one speaker said, “The construction industry has become very good at doing the wrong things very well.” Nobody in the auto industry would ever think of assembling a new car in your driveway, yet we do that with houses every day. The general construction process is just as wacky, operating more like a relay race—with its individual taking and shedding of responsibility to carry the baton—than the showcase of teamwork that it ought to be.

In other words, the off-site and mass timber revolution won’t occur unless there is a near 180-degree change in attitude by all parties toward the building process. It takes more advance planning by all parties, better accuracy on architectural drawings, early buy-in from trades, and heavy use of BIM (building information modeling) and related software.

Dealers, distributors, and lumber manufacturers also need to think about how off-site and mass timber will alter the supply chain. Off-site components factories purchase wood by the railroad car, and they might choose to make the deliveries themselves. In that case, the local dealer could get cut out of production housing entirely or else be consigned to take the occasional fill-in order. And total wood consumption might drop a bit, because off-site facilities don’t waste as much wood. What’s waste to them is extra sales for you.

On the other hand, mass timber represents a significant new sales opportunity, and while it’s getting the most attention for its role in mid-rise high-rises, there also is growing desire to use CLTs and LVLs in one- to five-story structures—particularly in areas that have to worry about earthquakes. Depending on where you’re located, mass timber could be a good alternative to stick framing in low-rise office buildings … once there are enough workers in the area who know how to use it.

All that’s good. But given that these projects tend to be in the multifamily and commercial spaces, you may not benefit unless you pursue that business. If you’re not in these sectors now, it might be worth the effort.

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