Hope this augments Gary's post. Almost all the best modular companies do not share their strategies, processes, and financial statements—"They make money alone in the dark." Their leaders think differently and fully. They know construction is tough to scale, and growth is very risky. Reviewing publicly held Modular Constructors' annual statements shows that margins continue at single % net profit before tax, and they lost money during COVID-19. It is important to note that constructors' and manufacturers' value-added is the same - hovering around 30% (ABS 2024). However, modular constructors suffer just like traditional constructors (and unlike manufacturers) with adverse conditions such as highly variable project availability, poor client pay habits, the client has design input into the product, stops-and-starts due to client decision-making, not owning the product (cannot sell it when they want), few material suppliers (who have outsized negotiating power), the threat of substitution, relatively few customers (raising the dependency on each) and a highly disproportionate number of competitors per $ billion.
It was recently brought to my attention that I spend more time writing about failure in the offsite and modular industries than I do about successful companies, which is correct. Failure is a sharing and learning lesson that few in the offsite industry write about. #offsiteconstruction #modular #success #failure Vaughan Buckley Bob Bender Bob Schieler Tommy Rakes Ken Semler Toby Davis Sabrina Fiorellino Sarah Noel The Hon Richard Evans 🇬🇧 Stefan Lindbäck Bill Murray
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1moMatt Stevens PhD FAIB, your analysis certainly shines a light on the unique challenges faced by modular constructors. It's clear that while modular construction promises efficiency, the industry is constrained by similar pitfalls that traditional construction encounters – particularly economic volatility and client dynamics. This underscores the importance of innovative strategies and resilience in business models within this sector to navigate such complexities effectively.