Modular an industry in transition

Although new to the UK market, DMDmodular are currently involved with the world's tallest modular hotel in New York. Ewelina Wozniak-Szpakiewicz, CEO of DMDmodular, shares her views on how the offsite market is developing globally.

Last year we saw dynamic growth of the worldwide modular construction industry market. One of the fastest growing markets is the UK along with the USA and China. The UK market for modular buildings is estimated to have increased to around 8% of total construction output in 2018. By 2020 in China, it will have reached more than 15% and in some popular market segments, be as high as 35%. As for the USA market, modular broadly is estimated to make up 3-5% of the total construction industry but is consistently growing.

So is it a revolution or an evolution in the construction market? This progress illustrates a world modernising the way it builds and thinks about the built environment. When looking at the hospitality and housebuilding sector, we can see how the markets are changing, driven by modular construction technology.

Market Drivers

The construction industry has long revolved around three key attributes - schedule, quality and price - are the key drivers in any project. But tradition says you can only choose two. Modular has always excelled at project schedules, leaving clients choosing between price and quality. Before we choose, let's look at some other drivers in the economy and the world. Most of Europe, the USA and Japan are not replacing their populations. Technical occupations have replaced trade occupations in most of these countries. Where are the bricklayers of the future coming from?

The constant change in our economic cycles has also chased a once-steady workforce in construction to other market sectors, hoping for less volatility. We hear from all parts of the world that the labour to meet the demand simply does not exist.

One can make the argument that modular production hasn't changed at all, the world we live in has changed and now modular construction has a new role.

It is impossible to characterise every separate market driver but we can point out some key differences. Most residential markets will continue to be cost-sensitive. Time is less a value than quality and price. Until the lack of traditional capacity becomes critical, modular will compete with one of its key attributes nullified. Markets which are subject to revenue opportunity will look at modular differently.

If you own rental apartments, hotels, restaurants or student accommodation, the sooner you are in business, the sooner your income stream begins. In some cases, your expedited arrival may capture a market demand ahead of a competitor

Let's take the quality issue of the table. It is reasonable to state that modular construction can offer equal quality to any 'traditionally' delivered project. It would not be unreasonable to see the value of a controlled environment and automation providing superior quality in a modular factory. The market tension then is clearly the value of time versus cost. If one uses the same materials as the traditional build, one would expect the costs to be the same. With the required redundancy in structures and the shipping costs, we often see premiums in some sectors with modular. If significant revenue or a market is at stake, the decision for modular is easy. If no traditional construction capacity is available, modular construction may be the only viable solution. These cost variables are fluid, however, based on the market location. It is clear that major urban hubs, let alone cities like London and New York, have premium costs and equally premium general conditions. Here, modular can deliver significant values.

Poland - The EU's Biggest Success Story

Okay, while I may be biased, the country has become one of the hottest manufacturing environments in Europe. Poland's economy continues to perform strongly. It is set to be among the three fastest-growing economies in the European Union this year (GDP growth of 4.8%). Production and export data reveals Poland is a major producer and supplier to the automotive industry. The Polish window industry has a leading position in the EU as a manufacturer. Another economic backbone is the furniture industry, developing extremely fast - the fourth position in the world as the exporter, and sixth as the world's largest producer.

Great Manufacturing Environment + Growing Modular Market = DMDmodular

There is a connection between our modular business and the furniture industry which applies high levels of automation in its production process and is important to efficiency and quality control. DMDmodular is lucky that its parent organisation, Black Red White S.A., is one of the largest and most innovative manufacturing furniture companies in Europe - established in 1991, with around 8,000 employees and 17 production plants across Europe.

DMD is an ambitious and fast growing company with a global export approach. The core business is focused on hospitality and residential sector, which requires high-quality standards, time reduction, flexibility and innovation. Our aim is to provide volumetric modular solutions where technology, quality and aesthetics integrate together.

The company was responsible for the implementation of the first four-star categorised modular hotel in Poland near Warsaw. The company was also selected to build the AC Hotel by Marriott, the world tallest modular hotel which will be located in New York and we currently have housing projects in Holland and Germany in the development stage. DMDmodular is new to the UK, but is an ideal collaborator for the modular delivery market and headquartered in an ideal location.

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