Labor issues will be one of the major drivers in how we change the way we build.
Like many of you, I enjoyed building things as a kid. Legos quickly turned into wood shop which led to building a summer family cabin, and before long, I was crafting a rewarding career in the construction industry. I am fascinated by engineers, architects and craftsmen around the globe who continue to evolve and innovate. That said, I was recently asked whether I thought the industry had truly evolved since Levittown - the most famous, 1950’s American postwar suburban development.
My answer? Not as much as it needs to or should have.
Let me explain.
Levittown, Long Island was “… built on the eve of the baby boom and just before the 1948 Housing Bill liberalized lending, allowing anyone to buy a home with 5 percent down and extending mortgage terms to 30 years. Millions of families needed homes. Housing starts were down during the Depression and World War II. Returning vets armed with their GI Bill of Rights and guaranteed Veterans Administration low-interest loans wanted to move into places of their own. The Federal Housing Administration was guaranteeing loans from bankers to builders, and Long Island farmland was going cheap…”1
Forward thinking real estate developers, Levitt & Sons, bought up the land near Hempstead, NY and went about building small, affordable homes for a new America. They also rethought home building: Cut out the middlemen suppliers, streamline construction, circumvent local zoning codes and keep labor unions at arm’s length. When the last nail was driven in 1951, 17,447 houses stood in Levittown.
It was a monumental, paradigm-shifting achievement. Consider for a moment that the average time to dry-in that single family home in Levittown was 1-2 days. This included a finished roof, windows and doors, but no interior work.
Today, production builders take about 5-10 days to get fully dried in. That is five-times slower! To be fair, houses today are two-times the square footage and have quite a few more options ... but it is fascinating that Levitt & Sons were famously able to build a home “every 17 minutes” in 1950, pioneering many of the techniques still used today. Aren’t we better off with seismic codes and hurricanes codes? What about asbestos and lead paint? While building in the 21st Century may take longer, it IS an undeniably better process.
Is there still room for improvement? Of course! Even though 85% of homes are stick-built on-site, I believe it’s high time the industry marches forward and embraces alternative methods: such as building with larger and more sophisticated panels or using tools such as CNC machines and factory automation that can do things more efficiently and with less errors. I see small pockets of success all around us, which begs the question, why not more?
One word: labor.
What we build today is different than in 1950, but “how” we build is similar. The labor force, both skilled and unskilled, arrives on job sites every morning and constructs homes using lumber, nails, siding and such. Every time there is a recession, hundreds of thousands of construction workers are laid off as housing starts tumble. Inevitably, when the market strengthens, a middle majority of industry veterans return to join the new workforce until the next cycle hits. But there is a new wrinkle in the equation, and that is the decreased number of construction workers (skilled and unskilled) returning after the bust. In addition, formal training for tradesmen is stagnant so they aren't learning new skills or honing existing ones.
The impact of this reduced skilled labor pool is having significant impact on the number of homes that can be built. Major production homebuilders such as DR Horton, Lennar and Pulte, to name a few, have consistently brought up labor issues in their quarterly reports. Pulte stated that a large reason for missing their Q3 2015 sales goals by 6% was “a dearth of labor to finish homes on time.”
In a previous post, Trend Report: Coping With Labor Shortage, I shared the following information: While residential construction spending climbed over $36 billion in August — to reach it’s highest point since October 2007 — there were more than 676,500 fewer workers in the residential construction industry compared to eight years ago.
This labor issue is causing hundreds of millions of dollars in “pain” to builders. The upside? That “pain” has and will continue to drive innovation and change.
I, for one, believe it’s time builders rethink “how” we build. Unlike Levittown or today, the new age of building shouldn't be weather vulnerable, fraught with jobsite improvisation, or include rework or punch lists caused by trades screwing up other trade’s work.
The time has come for the housing industry to embrace and expand on what it truly means to build shelter. Perhaps it’s working in controlled environments and leveraging automation. Maybe it’s fully finished, pre-assembled wall sections, rooms, or whole shelters that arrive on a jobsite and can be erected by a crane in a matter of days versus months.
And because we will be in controlled environments, the materials and techniques will change. More specialized tape and adhesives in lieu of expensive metal fasteners (look at evolution of cars assembly) will be utilized. Larger “engineered” wood components (ie. CLT, large format OSB) or metal will be used since you aren’t constrained by how much a worker on a jobsite can lift. Highly engineered hybrid materials with multiple functionality will improve durability, comfort, aesthetics and even the health of our indoor environment.
I am excited to see what the future brings for our industry and I’d like to throw this question to you: What pioneering efforts are you seeing? What do you think we will do to build faster, more affordable homes for the next generations? I look forward to hearing your thoughts.