Modular homes on the production line. — ©2024 The New York Times Company
AS an architect, Ivan Rupnik thinks the solution to affordable housing shortage is obvious: build more houses. Start today.
But the way homes are built in the United States makes speed impossible.
Years ago, Rupnik’s Croatian grandmother, an architect herself, pointed him to an intriguing answer to this conundrum: modular housing projects built in Europe in the 1950s and ’60s. Rupnik was awed.
Sure, prefab complexes, and especially Soviet bloc housing, could be ugly and homogeneous, but the process created millions of housing units in a flash.
Hooked, Rupnik started researching modular housing for his doctoral dissertation.
In the archives of the Harvard Graduate School of Design, he stumbled upon a reference in an old journal article that took him by surprise: an industrialised housing initiative called Operation Breakthrough that built nearly 3,000 units between 1971 and 1973 – in the United States. How had he never heard about it?
It turned out few people had. Unable to find much more information, Rupnik turned to the Department of Housing and Urban Development (HUD), which created the programme.
In 1969, when Operation Breakthrough was announced, HUD was less than four years old, and affordable housing was still a bipartisan issue.
The plan’s visionary, HUD Secretary George Romney, a former Republican governor and Nixon appointee (and, yes, Mitt’s father), pitched it as Economics 101: if you quickly increase the supply of housing, you drive down the price for all.
Romney said the country needed to build 26 million houses in 10 years, almost three times as many as had been built in the previous 10.
Industrialising construction, he argued, was the only way to do it.
While nearly every other industry has become more productive since 1968, productivity in homebuilding – the amount of work done by one worker in one hour, essentially – has declined by half.
The country is barely building enough to maintain the status quo, which is some four million units short of need, according to Freddie Mac.
In the coming years, with population growth, climate change and the natural deterioration of housing stock, more will be needed.
Housing shortages were already a problem in 1969. Romney understood that companies wouldn’t invest in the machinery and overhead needed to industrialise because varied local building and zoning codes made it impossible to scale up.
Operation Breakthrough proposed using the vast purchasing power of the federal government to guarantee a large market, and in the process, document and change the regulatory barriers to industrialisation.
Operation Breakthrough selected nine sites around the country. Among its factory-built experiments was housing for the elderly in Kalamazoo, Michigan, and owner-occupied co-ops on a lake in Macon, Georgia.
The programme created public housing in Memphis, Tennessee, and 58 town houses in downtown Seattle for renters with housing vouchers.
But in 1976, Congress decided that the programme was too costly and that HUD shouldn’t be doing demonstration projects. Less than a decade after it was announced, Operation Breakthrough was dead.
But as Rupnik pored over the record, he was struck by what the programme had accomplished.
It had led to a national code that regulated and greatly expanded the previously lawless trailer home sector, which now accounts for 10% of single-family homes.
To Rupnik, the experiment demonstrated something powerful: when a uniform national building code was implemented, industry would respond.
The barriers to building housing fast, in other words, weren’t technological but institutional.
While Operation Breakthrough made little impact in the United States, it radically influenced other countries.
Japan sent a delegation to tour the Operation Breakthrough construction sites and study its reports.
Nearly all construction in Japan now is industrialised, and 15% of homes are prefabricated in steel.
In Sweden, 45% of construction is industrialised. Builders there also erect tall structures with wood, the preferred housing material in the United States and the one that’s most climate friendly.
After he got his doctorate, Rupnik co-founded a firm called MOD X that focuses on advancing industrialised construction.
He couldn’t shake the absurdity that in the United States, industrialised housing makes up just a 3% market share.
So he and his MOD X co-directors got HUD to let them reevaluate Operation Breakthrough with the goal of figuring out how to produce efficient industrialised housing in the United States.
In June 2023, the firm’s research team set out to see what US housing might be like if Congress hadn’t cancelled Operation Breakthrough, and went to Sweden to find out.
The premise of Operation Breakthrough was essentially this: what if we could build houses in the same way the automotive industry produces cars?
Lindbacks, a family-owned construction company in Sweden, just shy of the Arctic Circle, took that question literally. Before opening a housing factory in 2017, its management visited the factories of Toyota and Volvo as well as nearby pulp and paper plants, borrowing their best ideas.
The Lindbacks factory now spans 4ha, an aircraft hangar for the most earthbound of structures.
In the vast factory floor, humans moved around machines like people on the track of a music box.
Everything in the factory was oriented around one main line, a slow-moving conveyor belt on which finished components were assembled into fully formed modules.
The main line was the spine. More time-consuming sub-assemblies – shorter lines with machines building floors, walls, ceilings and so-called logistics like countertops and cabinets – fed into the spine like ribs.
One boxy unit was completed every 30 minutes. The units could be connected to create apartments of different sizes and floor plans.
On one rib, an interior wall travelled onto a rack, where it stood vertical for painting. This trick struck Mary Tingerthal, former commissioner of Minnesota Housing and now a special adviser to a modular company called RISE, as almost revolutionary.
The little industrialised construction that happens in the United States tends to proceed down a single assembly line. Wet construction, like painting and staining, generally happens within a closed box and slows the progress.
In this factory, she marvelled, “It’s constantly out in the air!”
But the most remarkable difference between the United States and Sweden is regulatory.
US building codes try to make buildings safe by prescribing exactly what materials must be used and how (a prescriptive code). In Sweden, the government does this by setting goals and letting builders come up with a way to achieve them (a performance code).
So, for instance, US building codes dictate the thickness of drywall that must be used for fire resistance, how many layers are needed and how many nails are required to attach it.
In Sweden, the code requires that a wall must resist burning for two hours, say, and lets engineers and manufacturers figure out how to accomplish that.
The regulator’s job is to check the engineer’s work.
The result of both is fire resistance and structural safety, but in the United States, each residential building needs to be granted a permit. During construction, work often halts for inspectors to make periodic visual inspections. That contributes to a stop-and-go pace that frustrates pretty much everybody except lenders, who get interest on financing.
Sweden’s codes require more work on the front end when builders have to demonstrate that their methods are up to snuff, but factory processes that comply with the performance code can be certified.
This encourages innovative solutions and results in less waste.
With factory-built houses, modifications are minimised because customers generally select from a standardised framework, and changes are allowed only up to a certain point.
The factory builder’s advantage is quality control and speed. Real profit, long-term profit, comes from streamlining the building system for predictable outcomes and fast delivery.
“It’s not about the cheapest product,” said Stefan Lindback, the fourth-generation CEO. “We want the cheapest solution.”
About an hour and a half south of the Lindbacks factory is Sara Kulturhus, a cultural centre topped by a hotel, a 20-storey mass timber building, constructed with factory-made units.
The hotel tower contains 205 identical rooms sheathed in double-pane windows, like cubbies sealed in glass.
Before Sweden adopted its performance-based code in 1995, wood buildings had been limited to two stories; almost overnight, wooden buildings could be as tall as engineers could prove safe.
Construction accounts for 40% of global carbon emissions, but in Sweden it’s 20% because so much is built with the country’s plentiful wood. Carbon is captured in the trees harvested and in the trees planted to replace them.
While wood costs more than some other materials, building with it requires less energy and allows for faster construction. That means developers can both pay off construction loans and rent units sooner.
To Rupnik and others on the research trip, the advantages of modular housing were obvious.
But efforts to build this way in the US have had difficulty flourishing.
The most famous US off-site housing manufacturer is actually infamous: Katerra, founded in 2015, was the startup that everyone believed would make the leap. It had oodles of money – SoftBank invested US$2.4bil – but it tried to do everything, everywhere, all at once.
“They went on a very rapid growth acquisition,” said Todd Beyreuther, former senior director of advanced building materials at Katerra, who was on the Sweden trip.
A year into the pandemic, having splurged on state-of-the-art factories and acquisitions, the company imploded and filed for bankruptcy.
But Rupnik is excited about other initiatives across the country. A company in Philadelphia bought Katerra’s factory in Tracy, California, and has completed more than 6,000 modules.
In Vallejo, California, Factory OS has made housing for clients like Alphabet, Google’s parent company, and Oakland developers. In Minneapolis, the public housing authority commissioned RISE Modular to build 16 buildings around the city.
What may ultimately force the adoption of industrialised housing in the United States is a skilled labour shortage.
This has already affected one area of homebuilding: roof trusses, the structural timber framework that supports a roof. Trusses require precisely cutting angles, a skill few workers possess, and so the structures are now mostly made in factories.
Productivity means more permanent homes for more people, faster.
Speed secures perhaps the greatest long-term savings: preventing the trauma of homelessness and offering security, community, continuous enrollment at the same school.
Speed is how industrialisation achieves affordability. Even when the labour and material cost savings are modest, the introduction of many more units in a relatively short period of time has the effect of lowering the market price of all units.
That was Operation Breakthrough’s objective and MOD X’s main takeaway from the research trip. — ©2024 The New York Times Company
