Housing 2.0 creator Sam Rashkin examines why panelized, modular and other systems-built housing has never captured real market share, and uses true-cost accounting, including a SIP versus stick-framing comparison, to show what changes when labor shortages are priced in.
00:00:00:10 - 00:00:22:00
Mike Collignon: All right. Hello again everyone. We are back after a little bit of a gap there, but we picked a very inspiring day on which to return. It's find a rainbow day. Now, if it if it looks out here. We're getting a little bit of rain here today. But a little bit of sunshine too. I might be in luck and hopefully you will be too.
00:00:22:02 - 00:00:47:06
Mike Collignon: You know, the construction industry is facing a workforce crisis that is comprised of availability, cost and skill. For example, over 50% of contractors reported project delays due to workforce shortages and over 90% of builders reported framing crew and carpenter shortages in 2022. Now, that's not today. That's three years ago. So imagine these things probably haven't gotten any better now.
00:00:47:08 - 00:01:10:11
Mike Collignon: Those shortages have contributed to an increase in the average new home construction cycle time to an estimated 8.6 months. Now, there is a solution to this, at least in the near term. Advanced manufacturing and automated construction methods. Today, Sam Raskin will discuss the current landscape of systems, build companies, and the critical strategies that must be adapted for them to successfully scale.
00:01:10:14 - 00:01:35:17
Mike Collignon: Now, in case you're wondering who Sam is. He's the creator and teacher of the housing 2.0 content, which is based largely on Sam's latest book, housing 2.0 A Disruption Survival Guide. The full program was established to help empower you, our building professionals, to design and construct higher performance, healthier, more sustainable homes at a fraction of the cost. Now, before all that, he was integral to the development of the Energy Star and Zero Energy Ready Home programs.
00:01:35:18 - 00:01:56:21
Mike Collignon: Now, Sam's going to lead us through today's seminar and also address your questions at the end. Now, before we get started, we need to recognize our sponsors. The first is Panasonic Healthy Indoor Living Solutions. They're helping builders across the country differentiate themselves with powerful, code compliant and cost effective indoor air quality solutions that provide a safer environment for home buyers.
00:01:56:26 - 00:02:23:08
Mike Collignon: And we also have LG, who is a leading proponent of the electrification movement. And they're proud to pave the way with arguably the broadest portfolio of home electrification products, from air to air and air to water heat pumps for HVAC, water heaters, clothes dryers and washer dryer combos to advance energy storage systems, EV chargers and super efficient appliances, including the industry's first Energy Star certified induction Cooktop.
00:02:23:11 - 00:02:46:23
Mike Collignon: LG's innovation and technology will help us promote decarbonization and collectively create a better life for all. Now, during the course of today's presentation, you can submit questions for Sam. Simply use the Q&A function located in the menu bar at the bottom of the zoom window. I'll review those questions, impose them to Sam after his presentation. Sam, you got any rainbows where you are?
00:02:46:26 - 00:03:15:12
Sam Rashkin: Not today, not today. Hey. Thank you Mike. And like Mike, I could not be more grateful for sponsors Panasonic and LG. And I'm happy today to talk to you about a special topic very close to my heart. Systems built housing. So we're going to rethink how do we scale systems built housing. For decades and decades it's been a big promise but very short on me meeting that promise.
00:03:15:12 - 00:03:46:14
Sam Rashkin: So today is going to be a really important topic for us. What we'll do today is we'll start with some quick background on housing 2.0. We'll dive into why systems built housing. What's the basic driving reason why I believe it's so critical to the industry? What are systems built homes and why are systems built homes not scaling? And then let's rethink how we can maybe change gears and get systems built housing to truly grab a significant market share in this country.
00:03:46:16 - 00:04:15:10
Sam Rashkin: Now, don't believe that all conventional home home construction is going to go away for mainstream production housing. That's where I believe systems built. Housing really critically needs scale. So let's jump into the first topic, a quick background on housing 2.0. Now, I always start with this very important data point about where do people spend their time. Substantial national lab research looking at hundreds and hundreds.
00:04:15:12 - 00:04:44:17
Sam Rashkin: People surveyed found that we spend a whole bunch of time residents our homes, work, dining, outdoors, vehicle and other indoor locations. But essentially, the takeaway that's so critical to spend nearly 70% of our time every day in our home. Essentially, home is where life happens. Huge kind of point where you should feel really significant that you're involved in the housing industry.
00:04:44:17 - 00:05:13:09
Sam Rashkin: It's where people's lives happen. Now, post-Covid, I'll submit probably we're getting closer to 75% as we spend more time working at home and that number keeps going up. So the key thing is why housing 2.0, then the reason why it exists, the core fundamental, fundamental reason why this program is so important is homes are going to happen. Better life's going to happen better with housing, two homes where life happens better.
00:05:13:09 - 00:05:36:00
Sam Rashkin: And what we do is we provide a framework, fundamentals for consistently delivering a better user experience at lower cost. And so the key point I want to make is within that framework, of course, we advocate for high performance sustainable homes. They're absolutely a must have. But like any five legged stool it wouldn't stand up. You need are the legs.
00:05:36:03 - 00:06:05:11
Sam Rashkin: And so we have to optimize also the design community sales quality. There are a whole array of consumer expectations that have to have to be met for the place where we spend 70% of our time, and the framework includes about 160 best practices. Now, how do we do it? And the first thing is asking people to do something they hate to do, which is invest more into the home, particularly into the user experience experts and special features that are a sure thing.
00:06:05:15 - 00:06:27:26
Sam Rashkin: We know certain investments will create a home that lives better. And so you see we have two options the lowest first cost option on the left and housing 2.2.0 on the right where we make an extra investment. But the secret sauce to housing 2.0 is how we do it is by optimizing cost. And they're kind of six pillars for how we do that.
00:06:28:00 - 00:06:58:06
Sam Rashkin: Instead of excessive space we optimize space. So it's right sized and we live better with less space. Then complexity is incredibly costly. So we go simple. Non integrated systems are incredibly cost costly and pervasive. So we integrate systems. Waste of course is by definition spending money on something adds no value. So we go lean design and lean build to again reduce cost with no compromise and user experience.
00:06:58:06 - 00:07:21:16
Sam Rashkin: And often better. Then we have way too much excessive customization in the housing industry. So we want to mass customize and we have a tremendous lack of productivity. So you want to enhance productivity with these six pillars. You have a net lower cost therefore a cost savings. And because you've optimized user experience you have all this added value for lower cost.
00:07:21:16 - 00:07:46:08
Sam Rashkin: So the key thing we have to do is third step is translate that value. How do we translate these better homes for lower cost. And I will submit if you go to the housing 2.0 framework and all the details that we cover, somewhere about 30 to 70% greater value than traditional home. Now, the key resource, or the key thing I try to do is keep gathering empirical empirical data.
00:07:46:10 - 00:08:12:11
Sam Rashkin: How effective this framework is. One of the ones I had a pleasure of listening to at a conference was from Los Construction, a project where they built the first building on the site, which is a multifamily apartments, and they built the second, but only optimized of the design experience, most of the design, and they got 24% reduced costs from the first building with units that live better.
00:08:12:11 - 00:08:37:00
Sam Rashkin: So again, I love the empirical evidence and your main resources. The book housing 2.0 Disruption Survival Guy guide has over 360 citations. Tremendous amount of graphics. Again, for those that are interested in this, this is the best reference. So now let's jump into why systems built homes. And there are three key reasons why. One is the trade crisis.
00:08:37:04 - 00:09:03:18
Sam Rashkin: Second is of productivity crisis. And the third is the affordability crisis. These three crises converging on the housing industry at this very time that we're living right now. And I don't think any of these are a surprise to anyone, but we'll cover them briefly. The trade crisis and Mike cover, the number of these points in the introduction is one of the skill and and just training.
00:09:03:18 - 00:09:30:10
Sam Rashkin: And when we look at the surveys you have the year we see builders are struggling. 60% of builders expect costs and availability of labor to be a real problem in 2024 and 2025. And you can see right there on the survey, right how significant that is when it comes to also the trade crisis. 60% of builders reported framing crew and carpenters shortages in 2024.
00:09:30:10 - 00:09:55:16
Sam Rashkin: So that's more recent data than Mike gave you the carpenters and framing crews. So again, we still have way too many to many builders just trying to figure out day to day where they're going to find the workers. And then we have the impact on the work itself. 54% of contractors reported project delays due to workforce shortage. And this is a really much more recent survey from the end of last year.
00:09:55:16 - 00:10:32:03
Sam Rashkin: And the trade crisis itself has been calibrated a number of times. And the Home Builders Institute 2023 study had submitted that there are about 723,000 new workers needed each year to meet demand and combat combat the 1.5 million home shortage. We have tremendous shortage of labor, counterbalanced by the fact that the workforce is aging. The average construction worker age, according to the Bureau of Labor Statistics, is over 42 years old, and there's no pipeline to replace them.
00:10:32:05 - 00:10:56:19
Sam Rashkin: For every two that retire, there are only five. I mean, for every for every five that retire, there are only two work workers in the pipeline to replace them. And that's just not that's just going to compound the crisis and make it even worse. And again, this comes from the Home Builders Institute labor market report. So that's that's that's the trade issue.
00:10:56:19 - 00:11:28:11
Sam Rashkin: And kind of the big kind of a sister of the trade issue is the productivity crisis. And it's it's just incredibly severe. And I like to start first by showing this visibly just what, what productivity innovation looks like in an industry. So we can look at how a car was first made in 1903, cobbled together in a back room by one person, and then, of course, by 1913, the big innovation model T assembly line transformed production of cars.
00:11:28:12 - 00:11:51:18
Sam Rashkin: Productivity went up like 100 x. And then you look at a production line today and the man of work amount of work produced by one person per hour is like again, another 100 x from what it was and used to be because of robotics and advanced production lines. So you visibly you look at the auto industry and it's a stunning improvement in productivity and the housing industry.
00:11:51:18 - 00:12:21:07
Sam Rashkin: We can look at a home being constructed 150 years ago. This is a picture I got from the archives archives of the Smithsonian and compare it directly to Bill today in 2025, and marvel at the lack of innovation and how we build enclosures virtually. We're stuck with very unimpressive innovations, maybe ballooned to Western platform framing, dimensional to engineered lumber with some power tools and better connectors.
00:12:21:07 - 00:12:50:00
Sam Rashkin: But it is a stunning lack of innovation. And the outcome, of course, is predictable. Housing is the only industry to decline in productivity, productivity 50% decline in home building productivity since 1968. And so that just will not get the job done. When you have an affordability crisis, it's working against the other crisis and creating and compounding the ability to deliver more attainable housing.
00:12:50:03 - 00:13:16:01
Sam Rashkin: So on top of that, we see that because of the productivity challenges, the cycle time, the average time from start to completion for a home has now increased on average for the industry to 8.6 months. Production builders, particularly the big nationals, may do it in less in three months or four months, but it is is incredibly slow in terms of what it takes to build a home.
00:13:16:01 - 00:13:40:02
Sam Rashkin: And again, because all of these are connected, if there's a trade shortage and trade skill challenge, then you have a cycle time challenge that just follows suit. And so time costs money. And that's a real problem when it comes to affordability. And then the productivity crisis have been other studies that have been done that simply look at when you have a given amount of resources going into producing a product.
00:13:40:04 - 00:14:05:05
Sam Rashkin: What percent is value added, non value added or just basic support activity and housing compared to manufacturing? Manufacturing is pretty scary. Only about 10% of construction resources really add value. And that's more than six times less in manufacturing. So just huge opportunities to improve productivity. And one of the big culprits is how poorly digitized the housing industry is.
00:14:05:08 - 00:14:34:06
Sam Rashkin: McKinsey and company did a study and quantified digitization across all the major industries. And. But for agriculture and hunting constructions, absolutely the lowest. So when you look at the color of the all the key assets and usage and labor factors that were looked at and how digitization works for the industry, they're almost all dark red or orange, which means hardly any use of digital technology.
00:14:34:07 - 00:15:01:28
Sam Rashkin: So this is really hurting productivity. And then it's hurting for everything's working together. When McKinsey and company, in a separate study, actually quantified for the entire construction industry, what is this lack of productivity cost? It was scary. $200 billion per activity gap that could be closed by adopting advanced manufacturing methods. Again, back to again. Why system building so important?
00:15:01:29 - 00:15:20:17
Sam Rashkin: We have to close that gap if housing is just getting crazy and affordable. Which brings us to the last crisis affordability. And I'll show you one slide here because it tells the entire story. You can look at the bottom of the black curve is for meeting household income and then look at the median household price. And this is scary.
00:15:20:19 - 00:15:41:17
Sam Rashkin: Now we're seeing kind of a trend. We have a big increase. And then we have a drop and a recession. And then we have an increase in a drop in recession. Increase in a drop. Well here we have the gray bar show the recessions. And here we are today with another crazy increase in the cost of housing. Watch is why many analysts predict some sort of correction and possibly recession.
00:15:41:17 - 00:16:18:01
Sam Rashkin: And with all the turbulence going on now, the many forces that may amplify this trend to happen once again. But the point is, this is not sustainable. A widening gap where the product gets ever and ever more costly relative to the resource available to buy it, the household income. At some point you hit a cliff. Now all the distortions that are happening because we have a crazy amount of small amount of inventory when everyone's holding onto their homes to protect their low interest mortgages, or there's supply chain issues and we can't build this fast.
00:16:18:03 - 00:16:46:07
Sam Rashkin: Whatever reasons, those distortions won't last forever. And this this reality will kick in. 70% of US households cannot afford a median price home, according to the National Association Home Builders. That's all you need to know about affordability. Something has to give. So what are systems? Built houses. And essentially I'll tell you, they are a crisis ready.
00:16:46:09 - 00:17:11:26
Sam Rashkin: Off the shelf solution that could be applied to address these challenges in the industry. And again, a huge chunk of homes will still be built conventional traditional construction. But for people who need to afford a house and can't, we need we need to employ this kind of innovation. And the five main options are kits, which are basically today mostly framing kits.
00:17:11:26 - 00:17:42:05
Sam Rashkin: The lumber is precut and pre-made for the house. Various types of panels that are delivered on site that are made in a plant, framing CIPs, structural insulated panels, insulated concrete panels, or IPS precast concrete which today is mostly used for foundations. Modular which are whole modules, fully finish or partly finish and dropped on site. And then there are hybrids of panels and modules and modules mostly used for the very trade intensive parts of the home.
00:17:42:05 - 00:18:02:01
Sam Rashkin: The kitchen is in the bath, so these cores are dropped on and panels for the rest of the home. And in 3D printing, where you print in a factory or on site, the home of the special equipment that can print using various materials, most commonly concrete or composites. And so now you have a tremendously reduced or mitigated need for trades.
00:18:02:03 - 00:18:32:27
Sam Rashkin: You have superior quality and cycle time to improve productivity, and affordability is huge. From the time cost savings, both for operational expenses or running in the business, that are reduced by 30, 40 or 50 days times 5 or $800 a day, and velocity. If you're producing 50% more homes and you're making 20 30,000 per home margins times 50% more homes, that could be hundreds of thousands of dollars additional revenue month that can be used to reduce the cost of your product.
00:18:32:27 - 00:18:52:04
Sam Rashkin: And then we were less. Rework is cost savings and tremendous less waste is cost savings. So this is why systems built homes are so important today. And let's just go through each of these options and see what they look like. But I just want to again explain where a lot of the cost of energy comes from on cycle time.
00:18:52:11 - 00:19:29:06
Sam Rashkin: The design permits are the same for systems of site built, but with site built you can only do lot development and foundation at that time by itself, where with systems built the same time you're doing the site and lot development. The home can be constructed at a plant to be dropped on the site when it's ready. So then when you go to site built, you have to do all this construction on site where where a systems built, you're disassembling the panels or the modules at a fraction at the time, and the site restoration is almost completely eliminated or substantially eliminated.
00:19:29:08 - 00:19:58:04
Sam Rashkin: This by various studies is about 30 to 50% time savings because of the simultaneous ability to build the home of the plant. When the site's getting ready and the numbers get to be pretty significant. If you're saving 30, 40, 50 days, and research tells us that it costs about five $800 a day operational expenses for a builder, you get into real money 1520 $5,000 for 30 days, 30 to $50,000 for 60 days.
00:19:58:04 - 00:20:24:05
Sam Rashkin: And again, the average construction time today is 8.6 months. So let's look at the various different types of of site options. No site belts. Not new. Back at the turn of the century, Sears kit homes were available that were the entire home dropped on site. All the pieces inside, outside. Here's a home that from 1925 for $2,200. That was 30,000 pieces.
00:20:24:05 - 00:20:57:10
Sam Rashkin: You see, they are advertised in magazines. Here's an actual home today. Obviously gone through many different, probably upgrades and so forth. But, you know, it was amazing what was done at the turn of the century. Today our kids are mostly for framing packages. This is one framing package company where again, you send your drawings and all the pieces are cut and they are organized by sequence and how they're installed and they're numbered so that you can't make mistakes in the field.
00:20:57:12 - 00:21:19:02
Sam Rashkin: No 101 has to go next to 101 in the corner, and everything's made up so that you can't have labor. You take labor mistakes out of the equation, and then the labor can just assemble quicker because everything's stacked in sequence, ready to go. And so it's a big time saver. The next step up is panels, the most common panels or framing panels.
00:21:19:04 - 00:21:42:06
Sam Rashkin: Here you can see the panels being installed on site. And some panel companies, particularly wood framing, would do both the inside walls and the exterior walls and the roof and so forth. And then you have some more advanced panel companies like Unity Homes has a very advanced high performance wall plant, and they make beautiful homes that are built on site.
00:21:42:06 - 00:22:14:21
Sam Rashkin: And so this is pretty well developed in the country in terms of the capability. We'll talk about scaling in a few moments after conventional frame panels. The structural insulated panels, they're elegant. They're simple. They're insulated assemblies that are just dropped on site. You have two skins, usually OSB sandwich and glued to the polyurethane core, usually extruded polystyrene, expanded polystyrene, most often sometimes poly isocyanate.
00:22:14:21 - 00:22:27:07
Sam Rashkin: And again you have the panels that drop in there quick elegant the incredibly airtight. They're like having like a incredibly efficient.
00:22:27:09 - 00:22:48:22
Sam Rashkin: Blanket around you. They work so well. So I'm a big fan of structure. Insulated panels should be much more used than the art today. The insulated concrete panels are kind of a derivative of the insulated concrete forms. They're much less labor intensive. You have a whole panel set of blocks. You see. You pour the concrete in the core that you see in the panel on the left.
00:22:48:23 - 00:23:13:27
Sam Rashkin: One person can lift it and set it in place. You have these metal stirrups on the inside and the outside for catching both the interior and exterior finishes. And again, the number. They're elegant, that going fast? Very simple. And the homes very airtight, very high performance and very much faster construction. Then you have precast concrete, which is really amazing for foundations.
00:23:13:28 - 00:23:39:07
Sam Rashkin: You know, it's about 5000 psi versus 23,000 psi poured in place on site. So it's more waterproof. You have all that more efficient use of the concrete, 70% less concrete, because that rib configuration that you see, and because of the metal stirrups that are attached to the end of the rib you have fastening for your drywall, so you don't have to build a whole frame assembly to have a finished basement.
00:23:39:07 - 00:24:04:08
Sam Rashkin: It's ready to go. We have our ten insulation everywhere around the rib and in the cavity, and you can add more insulation in the cavity if you want, and it goes in faster. And it's just really an elegant way to do. Basements can be used above grade two. And this is a kind of a finished basement minute ago and have again, this is a Finnish foundation made it to be a finished basement.
00:24:04:11 - 00:24:29:07
Sam Rashkin: Notice there's no footing. So you have much better flow of moisture from under the slab to the drain tile as well. And then you have modules built in the factory. Often they're pre finished, sometimes not finished or partially finished. And you build these modules and on site you drop them in place even faster. But more waste using that 33% more material than you would for traditional wood frame on site.
00:24:29:07 - 00:24:52:15
Sam Rashkin: And that's because of all the redundant surfaces floor to floor, wall to wall. But there's much less waste in production. The plant to counter some of that. But again, it's a big box. It's a lot of expense to get a permit, a trailer vehicle, get it down the road. So, you know, you have countervailing Catling forces for helping and reducing costs and adding costs.
00:24:52:15 - 00:25:22:16
Sam Rashkin: But generally it's a way of really reducing trades. And then you can have panels plus cords where you build the core in the plant, and then you use panels for the rest of the wall. So the left is a premade bathroom on the right premade kitchens, and you would just drop those in place. Here's an example for Adu accessory dwelling unit where one company has two cords one for the bathroom, one for the kitchen, and because both cores are about 8.5ft wide or less, they fit in the back of a normal truck.
00:25:22:17 - 00:25:41:14
Sam Rashkin: You get rid of the permit, you get rid of the trailer vehicle, you can ship it incredibly lower cost and you get like maybe 1012 trades working so much more efficiently and a plant better quality control on the most critical spaces that need so much work and so hard to do in the field, then so much lower cost.
00:25:41:14 - 00:26:05:07
Sam Rashkin: And then the other five exterior panels go on to create a complete building on the outside. For more panels, complete the framing of the walls on the inside and you have a building. And so the spaces that are just open volume can be cost effectively applied to just the panels. But you see, there's just ways of doing mixing and matching to really get this optimized.
00:26:05:08 - 00:26:32:03
Sam Rashkin: And the last option is 3D printing. And this is one where it's 3D printed in plant. This is two halves that are dropped together on site. And so everything's done in the plan completely except for whatever foundation work is needed on site. And here's an application where you build on site. We have like a big printer, prints concrete dropped on site leveled, and then you have a whole system of concrete being mixed going through the system.
00:26:32:03 - 00:27:01:26
Sam Rashkin: And it can do anything you want. Curved Wall Street walls. It can work 24 hours a day just printing, printing, printing and no labor except for the operator running the equipment. Now, what's interesting is that start to see some of the large national companies, production builders. Looking into this. I wasn't sure what to expect from 3D myself, but here you have Century Communities doing a project with 72 homes on the left and Dr. Horton doing another project in South Florida.
00:27:01:26 - 00:27:26:08
Sam Rashkin: So we'll see what happens. 3D all these things have to compete with each other, but you see what the options are. So the big question then is why are systems built, homes not scaling. And the numbers are pretty amazing how low the net scaling. This is a kind of comparing the market penetration for systems built single family homes in Sweden, Japan, Germany, UK and US.
00:27:26:09 - 00:27:58:02
Sam Rashkin: And of course you can see us is obviously incredibly lagging only about three, 3.5% I think today maybe 4% since 2018, but hardly moving the needle where other countries are going from 7 to 11, UK 15 to 20, Germany and Japan. And then you have the poster child for complete transformation to systems built in Sweden. 85% of the homes there are systems built again, single family homes we're talking about and they've just taken over.
00:27:58:02 - 00:28:37:02
Sam Rashkin: And for obvious reasons, everyone in Sweden sees these homes and go, I wouldn't buy it. Seipel. Tom, this is crazy, the amount of quality, performance and we'll talk more about that in the show examples. They just wouldn't make that compromise. And you know, I think our industry has a lot of delusions about how much customization is needed. I keep countering a lot of the builder friends I have that it is a delusion for again, for not for the luxury homes and the higher end homes for the mainstream buyer who wants to get into a house and not be financially burdened your way over customizing the product you're providing.
00:28:37:04 - 00:29:02:23
Sam Rashkin: So why doesn't it go to market in the US? Is is the key question. I spent my life managing change and learning about change and having the privilege to make Sony mistakes, trying to transform markets to innovation with Energy Star and Zero Injury Home. And when we were successful, I was militant about wanting to understand why were we successful?
00:29:02:24 - 00:29:30:12
Sam Rashkin: Because so much of what we were doing was by instinct and not by a repetitive process that we could do over and over. And my studies have led me to a framework for how we scale. And one of the most important resources that's a partial look at the framework is the book Inside the Tornado by Jeffrey Moore. Mostly focus on the technology industry, but everything I believe that's covered is just as relevant to construction and the essential
00:29:30:15 - 00:29:59:07
Sam Rashkin: From that research and analysis that is done there in that book is that we normally when we, we map out a market diffusion curve for a new innovation, we would draw this s curve that you see here and market penetration on the vertical axis and time on the horizontal axis. And you start off slow, just basically dealing with early adopters who will embrace new innovation.
00:29:59:07 - 00:30:28:25
Sam Rashkin: And it's a long slog to get to the mainstream users. And then you get to the libraries and you know, this is supposed to be how it works. Well, the research and analysis from Geoffrey More suggests something is very different than it. In fact, if we look at these profile, the two, the two main demographics involved in the diffusion curve, early adopters and mainstream users, early adopters are unique.
00:30:28:27 - 00:30:42:04
Sam Rashkin: They accept higher costs. Don't gamble on the future rewards. And and when I say rewards, I mean both cost and the value equation is so enticing to them they go.
00:30:42:07 - 00:31:09:23
Sam Rashkin: You're also accepting certainty. They're venturesome. They'll cope. If things are not going as planned, they'll accept except setbacks and figure things out and accept high friction. They don't matter. They don't mind working in innovation clicks to work around issues, and they'll build a complicated transactions. They want to deploy the innovation. Then when you get to the mainstream user, you could not be more diametrically different.
00:31:09:25 - 00:31:35:24
Sam Rashkin: They reject high cost and discreet. Any new idea that isn't obviously a just so compelling to them, and they will not pay an extra penny if they don't understand the value. And it's not lower cost. They reject uncertainty. You know they'll deliberate forever if they're not sure they resist anything that's confusing them. They want proven solutions and they reject friction.
00:31:35:27 - 00:32:00:20
Sam Rashkin: They give me the whole product solution. I won't have to figure anything out. I want to form a click. I want simple transactions. Everything about them is different. So as a result, this is a myth that you have a smooth transition from early adopters to mainstream users. In fact, there's a chasm. That's the reality that that there's a big kind of chasm you have to cross before you can get to the mainstream user.
00:32:00:20 - 00:32:26:16
Sam Rashkin: And if you don't cross that chasm right here, which is the whole focus of scaling, then you go flatline. So when you see flatline for CIPs or for modular or for a lot of these systems built are options today in the market, it's because they're not crossing the chasm, then not addressing the incredible challenge to get to the mainstream user.
00:32:26:23 - 00:32:54:17
Sam Rashkin: So thus wire homes not scaling, they build across the chasm. They don't optimize the cost plus value equation in a way that it's absolutely understood and compelling. They have way excessive friction and way excessive uncertainty. And I can virtually map out any company. I say that's system built, and I will essentially benchmark them against these three chasm factories.
00:32:54:18 - 00:33:25:29
Sam Rashkin: And I can always accurately, I feel, predict if they will scale or not scale. So when you rethink scaling systems, built homes, it's just a response to that reality. You have to cross the chasm. You have to optimize cost and value in a way that is so transparent to the end user. And you again, it's you have to figure that out and you have to mitigate friction, and you have to mitigate in certainty this is what you have to do.
00:33:26:03 - 00:33:53:16
Sam Rashkin: And then there's one extra part about scaling is there are bright spots out there that inform a path for how you can do this. You have models you can copy. They're motivating because they're doing it and they're accomplishing. It's not all these aspects of crossing the chasm, critical parts of it. So you want to leverage those bright spots, those areas that are truly demonstrating.
00:33:53:22 - 00:34:19:15
Sam Rashkin: There's a path to addressing each of these challenges. So let's look at them individually and then look at actual examples where things are being done that create a foundation for scaling in this country. So in optimizing cost and value, one of the most important elements that's missing from the industry is systems built, optimized designs. A lot of the panel companies in particular, and even some of the modular companies are really guilty of this.
00:34:19:16 - 00:34:48:03
Sam Rashkin: The builder brings in the plans, and then the plan has to figure out how the hell am I going to get our plan to be able to make that custom design? It's just adds so much cost to the site systems built process. What you have to do is develop designs that are fully optimized for how everything about how that plant works, and all the elements that have to be followed to reduce and minimize cost.
00:34:48:04 - 00:35:07:24
Sam Rashkin: It doesn't change the quality of the design, it's just a set of factors you have to integrate if you want to minimize cost. And then of course, you can minimize costs by using more advanced production. It gets higher quality at a less resources. That's just going to reduce cost. And there's a whole array of different amazing things being done to really improve production.
00:35:07:25 - 00:35:37:11
Sam Rashkin: A lot of offsite plants today are just really building indoors, and don't have anything more sophisticated than just a kind of a line that these, that, that the product can slide down and go from one station to the next. So there's a lot of advanced production technology. Like I said, you look at an advanced automobile plant today and it's just a stunning amount of efficient systems with hardly any waste.
00:35:37:13 - 00:36:06:27
Sam Rashkin: And then one of the biggest challenges is translating all the value. When you're done with a systems built product, you know, what is the true cost. So often that's missing? I'll talk more about that and even messaging all the advantages in a way that the end user understands. There are killer apps also for using some system building solutions, in part just to address really key challenges or pain points in the industry.
00:36:06:27 - 00:36:34:01
Sam Rashkin: And when you create that experience using the systems built product by the builder, then they're willing to move into more and more use of that systems building option and then mass customization. Again, we just over customize way too much. So let's look at next mitigating friction. We want to make sure that if you deliver a product that you also have a solution.
00:36:34:01 - 00:36:51:03
Sam Rashkin: So the builder doesn't have to fight to find trades that know what to do with it, or the transit have to then come in and install the electric, the mechanical, mechanical, the plumbing. You have to make sure that all that is not a friction point for the builders. The best thing to do to mitigate friction is have set up services.
00:36:51:03 - 00:37:15:00
Sam Rashkin: So the builder is not required to find someone that knows what to do with that panel, or set up the module. And then whole product solutions are always your friend. The whole enclosure or finished home. Or companies can be vertically integrated where they take the builder out of the equation and they build, they they develop the land they build and they manufacture the home and those that's that's again the model you'll see in Sweden.
00:37:15:02 - 00:37:41:17
Sam Rashkin: And, and one example here in the US where I think, you know, maybe just selling to a builder is too difficult and you just know you have a better product and your best. The builder is not vested in the construction and completely outsourcing it. So maybe you need to be in some cases vertically integrated and then uncertainty. One thing is, you know, the system Bill world has I think compromised a lot on the design side.
00:37:41:17 - 00:38:04:03
Sam Rashkin: It's time to integrate world class architects to create these pre-designed homes that break this uncertainty, that a systems built home will be just as pleasing as a site built home, and also backing up what the site builder can't do. You can build to a level of performance they can't quality that they can't, and cycle time that they can't.
00:38:04:05 - 00:38:30:18
Sam Rashkin: I'm not going to talk more about that because of time constraints, but it's amazing. Under warranty, the system built home really is. I'll mention a little bit about retail centers and the Swedes do it. And also getting people to touch, feel and just see the innovation. When you watch a when I watch a sip home be assembled, it's so elegantly obvious how much less risk that is for everyone involved the builder, the homeowner.
00:38:30:18 - 00:38:57:05
Sam Rashkin: And when you just see the quality of the product or what it looks like going and it's just nothing like a frame. Tom. So last one I want to mention in detail is leveraging bright spots. They give you direction, hope and motivation because they're getting it done either in whole in terms of scaling or in parts, the addressing the friction, the addressing, the cost and value or the uncertainty and the key questions what's working?
00:38:57:05 - 00:39:19:14
Sam Rashkin: How can we do more of it and look around the marketplace rather than reinventing a whole new solution? And so let's look at individual ways that we have bright spots and examples that show we have the scaling opportunity. And the first I'll talk about is plant prefab in California. Their basic product is zero energies or water emissions waste.
00:39:19:14 - 00:39:45:05
Sam Rashkin: And it's a super environmental home. But they add this world class design, which is to me one of the unique things about them. As a bright spot, you get the benefits of their factory production, but it's not a very advanced production line from what I can tell. They have these optimized designs for their product, which are critical, but they have the world class design that makes them desirable to their bias, I believe.
00:39:45:05 - 00:40:03:28
Sam Rashkin: And it's a whole product solution, I think, except for the foundation. And they have all sorts of linkages to set up solutions to, to help you get their product on site installed. So if you go to the web page, you know, you have all these architectural choices and they don't they pick, again, world class architects to take their product.
00:40:03:28 - 00:40:27:13
Sam Rashkin: And using the constraints of what the modules that can be dimensions for shipping and spans and so forth. They come up with designs that have no compromise with the best site built homes designed by architects. And so they take all that uncertainty away. And then, of course, you walk through these homes and all the quality of energy start showing and comfort advantage.
00:40:27:13 - 00:40:53:21
Sam Rashkin: And they're just beautiful homes. So this is one great bright spot, I think, about how to integrate world class architects. Then in terms of advanced production, the most advanced I've seen, we'll see how much difference this makes is audible there. In Nampa, Idaho, they had this amazing plant only opened about five years ago, that 53 six axis robots that are amazing, all software enabled.
00:40:53:21 - 00:41:12:14
Sam Rashkin: They can on the fly almost make any tweak and innovation to the product. But the plants amazing. Have all the robots in the center of a square donut, and all the cutting machines and floating machines around the outside of the donut, and they make all these amazing modules. Now what they say I don't, I don't have the data.
00:41:12:15 - 00:41:38:18
Sam Rashkin: I'm being real frank with you. But if you read their content, is that the cycle time for building multi-family homes is about 40% less? That's a huge benefit. That's right there. Just as almost any cost premium 160 modules in three weeks. And their killer app for them is multifamily. Because modules for multifamily are so ideal, you just drop them in and you have you can create these beautiful apartment buildings.
00:41:38:18 - 00:42:01:13
Sam Rashkin: It's so suited to that particular building type, modular in particular, about 20% cost savings and high cost markets like California where they serve. So the plants lower, they, you know, low cost market for labor and building is Idaho. And they ship it to California for about $100 a square foot. And again, the quality of the accuracy of the strength of the product will be superior.
00:42:01:13 - 00:42:26:24
Sam Rashkin: But this is true. I look for someone who's taking the advanced production to the max. This this is a pretty interesting bright spot. We'll see how successful they are. The Swedes believe that robotics is not cost out. So we'll see in this case for particularly multifamily because Swedes are doing only single family if it does cost out because modular is so ideal in multifamily.
00:42:26:29 - 00:42:52:10
Sam Rashkin: And then in terms of optimizing design, I love this Howard Building science. Rob Howard's a good friend and a great model for everyone to follow. He's just such a compassionate, amazing builder. This is workforce housing. This homes under 200,000. It's a sip home. It's incredible quality. It's not cheap siding. It's not cheap cabinets and cheap appliances and cheap equipment.
00:42:52:10 - 00:43:16:01
Sam Rashkin: It's a $200,000 home that's well equipped because you saved so much money with a SIP optimized design. Now, he also has a two story, I think, 1500 square foot model and other models. But if you look at this model, I'll just show you one example how optimized it is and follow suit and all the other products. And then I'll show you the cost equation later.
00:43:16:01 - 00:43:40:07
Sam Rashkin: But what's simple why it's optimized is simple roof simple footprint. The the the spans are perfect for the panel. The post and beam location are ideally set up so they fit right in the wall locations. No exterior wall plumbing four four inch walls outperform six inch walls, so he gains two inches around the perimeter for about another 20 or so additional square feet.
00:43:40:07 - 00:44:01:27
Sam Rashkin: Because he used SIPs versus conventional framing, he would have needed six inch walls. He uses all the attic volume for storage and or vaulted ceilings and his two foot dimensions, so that it's right in line with what the plant makes. And here's the product, and I will submit it's just a simple box that's beautiful. Beautiful because of proportions, because of simple details and trim that work and color.
00:44:01:27 - 00:44:21:10
Sam Rashkin: He does everything right. And so you go inside again. It's not cheap cabinets. It's not cheap appliances. It has really good quality washer, dryer and finishes. And here's the basic layout where you can see the posts in the middle of this wall over here in the center of a perfect location, so they can support the ridge beam, and then the simple roof.
00:44:21:11 - 00:44:54:17
Sam Rashkin: You can look at the bathrooms and see all the plumbing on interior walls, and it's just everything's optimized. And then here's the section to the home and the roof plan again, where you can see how simple it is ideal for sips. In the sections of the house you have half the house has storage above the bedrooms. The other half of the house, which is the kitchen dining great room area has vaulted ceilings all any extra value at no cost because the SIP allows you to do that because it's fully insulated versus an attic where you lose that space.
00:44:54:19 - 00:45:34:09
Sam Rashkin: So the other bright spot is how do you translate that value and explain the cost and value. And for the Structural Insulated Panel Association, I was contracted to develop a tool called the True Cost Bidding Tool. And what we did was we took all the interrelated costs. When you use time construction, there are a lot of interrelated costs that happen with structure, with insulation that Ortiz included with the panel, air flow control that's already included with the panels, the finishes that are easier to do or mechanical, electrical, plumbing, and all the advantages of quality and lean with less waste, less rework.
00:45:34:09 - 00:46:01:09
Sam Rashkin: And all those costs are factored in. And then value adders, you know, the much improved quality, resilience, structural integrity, dimensional accuracy that's worth that's worth more than zero. And then the added volume, if I'm adding 20ft² in the floor plan because of four eight four inch walls instead of six inch walls, and it costs $200 a square foot, that's $8,000 right there.
00:46:01:09 - 00:46:22:22
Sam Rashkin: And I get all that attic living space. If I have, I use it. In this case, I use the storage and the vaulted ceilings adds a lot of value. You know, storage might be worth 30, 40, $50 a square foot. So that's another 15, 20,000 of value. And then it may help you qualify for incentives like Energy Star zero ready where you might not with conventional framing.
00:46:22:22 - 00:46:46:16
Sam Rashkin: You can account for that as well. But when you do this true a cost accounting and not just comparing a bid package result framing package versus a SIP package, you get to the right answer. So that's what we did on this project. We compared what would he have gotten with a framing bid versus a SIP bid. And it wound up at the SIP versus framing.
00:46:46:16 - 00:47:09:17
Sam Rashkin: If you simply look at bid packages for each of those was $14,000 higher in this in this chart, the horizontal line here in the middle is the framing cost of framing. If sips is higher, you go above. If it's lower, you go below. Its $14,000 higher, which would mean in effect, this is why builders are getting sticker shock.
00:47:09:17 - 00:47:52:24
Sam Rashkin: When they get a sip bit, they compare it to the framing bid that goes $14,000 more. That's a 56% premium. I'm out of here now. In the case of Rob Howard, he's really an advanced builder. He's willing to he's the early adopter. He's willing to do the analysis himself to figure it out. And this is what he figured out, that he shouldn't have to figure out that the SIPA tool bidding tool figured out after the fact, which is that, in fact, when you looked at all of his costs, the savings on insulation, on air ceiling, on rework, on waste, on time, everything he was saving, it netted out for lower costs to do sips in
00:47:52:24 - 00:48:21:08
Sam Rashkin: framing. Plus, he added $37 $7,000 in value because he had a storage loft because of the space he could use above the bedrooms. He had vaulted ceilings. He had more square footage on the floor. He had absolutely wildfire resistant home and higher impact resistant construction, and he had much more high quality construction. So all that extra value and cost savings netted $37,650.
00:48:21:08 - 00:48:51:23
Sam Rashkin: Cost advantage. That's what he did. But he had to figure it out himself. So the purpose of the true cost tool is when you get a sip bid, you see the true cost comparison, and now you can make a much more informed decision. So it helps translate the value. And then what? I'm also really when I work with a subsidiary, I always wonder why they don't really push some of the killer apps, like helping builders go from vented acts addicts to unbending attic.
00:48:51:23 - 00:49:13:25
Sam Rashkin: When you have a vintage attic, you have a couple big issues. First is when you look at the red lines showing this diagram. Those are the air barriers. So outside it's sheathing and then it's the concrete below. And then it's the walls and the sheathing and the windows. And then it's the drywall at the top. And what you notice is whoops, I'm missing the air barrier on the top side of the insulation.
00:49:13:26 - 00:49:31:21
Sam Rashkin: That's why you need so much more attic insulation than you do in the walls, because you have no top side air barrier. And so that's one problem. The second problem, very often we stick the air conditioning or in heating system up in the attic where it's 135 degrees in the summer, instead of 90 degrees as it is outside.
00:49:31:21 - 00:50:00:05
Sam Rashkin: And it's just as cold in winter as it is outside. It's a horrible place for a heating cooling system in the ductwork. So the killer app is use a SIP attic and what happens is you going faster so you reduce cycle time. You have all this additional condition space for extra rooms of storage, or having your heating cooling system in a condition space, which will make them tremendously more efficient.
00:50:00:07 - 00:50:23:02
Sam Rashkin: You have more comfort in the house, you have a stronger home, and you have a more resilient house. No fire embers can't get in during wildfires into your attic the way they can with vented attic and all the cost savings have to be accounted for. You don't have a ridge Venice vent or a gable vent. You don't have all the plethora of air barriers and air sealing details you got to do with a conventional vented attic.
00:50:23:04 - 00:50:49:04
Sam Rashkin: Well, the time you're saving is money. So, you know, very often we can move an industry to market by at least getting its killer app embraced by the industry because of the compelling business case that you see here. And this is a SIP attic, and this is what the space can be. That is serious value right there. If I'm getting space like that, I'm adding 800ft² at $300 a square feet.
00:50:49:04 - 00:51:15:20
Sam Rashkin: And that's, you know, what am I know? It's like $100,000. It's just $250,000. I'm adding tremendous value. You're blowing away whatever premium that you think you're paying for the SIPs. If you take advantage of optimizing your design for the system built technology. Another good example I like a lot is Simple Homes in Denver, Colorado. I think it's a pretty amazing company.
00:51:15:21 - 00:51:39:04
Sam Rashkin: They they use a frame panel construction, but they do a great job optimizing cost and value with factory production and optimized designs, and they mitigate friction. They have a whole product solution. They're not going to just send you panels and you go figure out what to do with them. A big issue again, with the industry. That's how most most of the companies work.
00:51:39:05 - 00:51:57:12
Sam Rashkin: They'll send you the panels and you got to hope the electrician knows what to do with them. The family will install them, the framer will do the interior walls, even though they're losing the like two thirds of the project to the company, and they'll still work with you. And uncertainty and issues that is creating so much friction, uncertainty for the SIP industry.
00:51:57:12 - 00:52:16:16
Sam Rashkin: And really explains for me a lot why it will struggle to scale. So this company says no whole product solution set up will give you great designs. So this is their product. You know it comes to site and these beautiful panels, the quality they do in the plant is so much better than the field. And they have in the plant.
00:52:16:17 - 00:52:45:02
Sam Rashkin: They had the weather barrier, the windows, they have the floors, they do the interior walls. It's the whole product. It's the whole package. And this home is a good example just how good their designs can be. I think this is a beautiful, simple cottage design. I think the floor plans great. It's all built in a plan. I watch their four minute video of the minute of their video showing the installation of a home.
00:52:45:02 - 00:53:08:05
Sam Rashkin: Just like this one. Four hours is all it takes from foundation to a fully full enclosure and interior walls was four hours. It's just you can't believe how much cost savings that is. So this is an incredible bright spot for me as well. And then mass customization. I just don't know how the systems built world can ignore this.
00:53:08:05 - 00:53:30:23
Sam Rashkin: How powerful this is for taking their product in the next level. This is a site built example that would be perfect for systems, built modules or panels. This is a good friend of mine, digital that used to be a developer builder kind of company, and they would use the system over and over. You see the six building blocks are A, B, C, D, E, F.
00:53:30:26 - 00:54:00:29
Sam Rashkin: They form a floor plan that you see here for the first floor and for the second floor you use the same blocks over and over. They use a world class designer to really optimize design and the health aspects of the home and lighting, color, landscaping. They get all that stuff integrated. You see how beautifully they're creating the narrow space between the home to be actually landscaped and, and, and a outdoor living benefit that most site builders ignore.
00:54:00:29 - 00:54:23:25
Sam Rashkin: So it's beautiful how these building blocks assemble to these beautiful floorplans, all optimized by the designer. And then you have the kitchens and bathrooms are all the same in every home. He's not building dozens of different kitchens. You can change the counter, you can change maybe a cabinet finish or a backsplash, but minimal choices and you get these beautiful options.
00:54:23:26 - 00:54:49:25
Sam Rashkin: So with those six building blocks, you have all this diverse architectural options as the home buyer, and you have 2 or 3 choices on the number of stories. The roof truss configuration pop out windows, front porches and siding, trim packages and color packages and look what that produces. That's what mass customization does. And this is the actual product finish.
00:54:49:28 - 00:55:16:12
Sam Rashkin: And I will ask anyone to tell me if that looks like a track built production home subdivision that looks almost like a custom home subdivision, because mass customization with an expert designer produces this outcome, and this can be done so easily by offsite construction. And I. A final word about mass customization. Since I get so much fight from my builder friends about this, is I just.
00:55:16:13 - 00:55:48:23
Sam Rashkin: I saw this article, I thought just put it together for me. Why does out designers get bold with kitchen colors? The reality is that we feel we have to offer all this insane amount of customization when what's going to happen is that whatever decisions you're overwhelmed customers agonize over today and they'll cry in in the showcase centers where they're trying to make all the choices out of exhaustion and out of just stress, trying to get the right choices.
00:55:48:25 - 00:56:10:15
Sam Rashkin: They would make a completely different choice in a few years as a reality from whatever they do in that process, because everything keeps changing. And to put that customization in a situation where they thought abilities off the chart and mass customization can make things so much cheaper, it's crazy enough about that. Okay, two bright spots I'll wrap up with.
00:56:10:15 - 00:56:34:26
Sam Rashkin: And the first is the Swedish factory built homes. Since they have 85% of the market, maybe we should see it as something worth emulating. Notwithstanding, I understand Sweden's not a big housing market. There's a lot of homogeneity and advantages with the codes, but it's a lot more than that. This just shows you all the companies and by the number of homes that built a year.
00:56:34:27 - 00:57:00:06
Sam Rashkin: So you have some companies up to 1000, about 650, a lot of a bunch of 503 hundred, and they do about 80%. But even the small guys do pretty well. A little sophisticated production, maybe, but the main concept with the top six companies is always the same. No one in the factory you have the logs come in and others, they mill the lumber produce.
00:57:00:06 - 00:57:26:01
Sam Rashkin: The lumber had amazing quality. Then it goes through the production plant. How come the best built homes in the world? Stunning harms that come out and they do it all. It's the whole Crossing the Chasm package. They optimize cost and value with these amazing optimized designs for their production process that optimize performance, passive house level efficiency, optimized quality.
00:57:26:02 - 00:57:49:25
Sam Rashkin: They're all not only how they build, but all the accessories and the cabinets and the and the fixtures. Everything's amazing what they do. They use mass customization and advanced production methods, then minimize friction with whole product solution near the whole they have integrated. You go to them, you buy the home at a retail center, you get, you customize it with them with the choices you have.
00:57:49:26 - 00:58:13:06
Sam Rashkin: They then schedule the construction. They build it for you. And it just it's amazing. And the uncertainty goes away because you have these role class designs and the retail centers where you walk, smell, feel every aspect of the home and see this is transformative. This is a whole different way of construction from anything else that is older and wasn't built in a factory.
00:58:13:08 - 00:58:36:19
Sam Rashkin: So here's the process. Basically, they take a design and optimize it for simple the forms of boxy but beautiful by details, proportions and good quality materials. On vented addicts, I never sacrifice that is a asset. They would never give up. They use that volume always to enhance how it lives, and they use quality details and components and they mass customize.
00:58:36:20 - 00:59:00:19
Sam Rashkin: They get many styles with basic building blocks. So here's an example of a product that might be an entry product. So it's about a 1400 square foot home for 186,000. These are about five year old numbers. So things have gone up a bit. But still this is passive house level triple glazed window. Incredible quality materials inside, incredible quality materials outside in components.
00:59:00:19 - 00:59:25:15
Sam Rashkin: And it's $185,000 soup to nuts. Then you step up. This is a little bit of a move up product. This is $169 a square foot at 280,000. Complete four bedroom, two bath. Again beautifully designed, amazing windows. And then of course, the very high end. It's about 239 to 40 a square foot, about 400,000 plus for 1800 square foot house, three bedrooms, two bath.
00:59:25:15 - 00:59:48:09
Sam Rashkin: But when you go through every aspect of the detailing, the finish, the quality of the fit, the trend, the performance, passive house again, amazing windows, these triple glazed European windows that are beautiful. This is incredible for the price. And they do it with events production in the factory. That's they've just figured out the whole way of engineering had optimize the process and the team.
00:59:48:15 - 01:00:09:23
Sam Rashkin: They really focus on product and customers just like any like like a Toyota plant would be. The small producers can even work with this system and they don't believe in the robotics. It doesn't pan out for them, but they do very advanced cutting machines and flipping machines. I mean, this is what their plans look like. They're engineered for absolute optimized productivity.
01:00:09:24 - 01:00:27:11
Sam Rashkin: Everything moves along the line. You see eight people are working in this plant. That's all it takes to produce 500 homes a year. That's just stunning what comes out of the plant, all with eight people and very simple systems. And again, look at the quality of the wood that's milled in the plant and look at the quality of the framing.
01:00:27:11 - 01:00:49:12
Sam Rashkin: And it's all being done with equipment automated. It's not in a very little hands or touching the product to make it and assemble it. Same with the roofing systems. They use advanced lasers and other technology to make those and like I mentioned, passive house level performance. So the completely differentiates the new home from buying an older home in Sweden.
01:00:49:12 - 01:01:14:26
Sam Rashkin: This is every aspect of this I can go through, and I normally do in our presentations on high performance, but it's, you know, it's thermally broken. It's it's again, it's super insulated at every aspect windows, the walls, the, the, the slope addicts. Everything about it is super, super built. And then they've engineered the whole site process from maximum quality.
01:01:14:27 - 01:01:38:28
Sam Rashkin: Most US plants, the quality is only the border of the business is around the plant where they manage the quality. When it goes to the field, the plant is not in control. In Sweden. They own the quality in the plant and then when it gets shipped, they own the quality on site. They have a whole system of how they set up scaffolding and, and the cranes and rigs they use to install the panels on site.
01:01:39:00 - 01:01:57:02
Sam Rashkin: Same quality as in in the plant in the field that is so different from American site built homes. And this is where it completely differs to have the retail centers where they take all the uncertainty out of what you're getting, the quality of what you're getting. They translate it in brochures beautifully and you see these beautiful homes again.
01:01:57:03 - 01:02:19:11
Sam Rashkin: It's just so easy for them to sell to mainstream buyers. Enough. Last bright spot is Onyx, kind of a newer company currently based in Florida, also moving to Texas as we speak. And first I want to do is again, this is the message. When you go to the website, we believe the world demands that we build different and build better.
01:02:19:11 - 01:02:42:02
Sam Rashkin: I go crazy when companies overcomplicate their message. You know they had it. Just take out these words. We build different and build better. You know, go into six words from like 12 words. So that would be my recommendation to Onyx is just you had me that we build different and build better. You didn't need all the other words on the website, but what a company they optimize.
01:02:42:02 - 01:03:09:09
Sam Rashkin: Just like the Swedes, they have their formula and their way to optimize cost and value with optimized designs, mass customization, events, production, the mitigating friction with a whole product solution. There's no there's nothing missing. You get the whole soup to nuts home from beginning to end, set up services and the vertically integrated they develop, they build, manufacture. So that's why they can control things at a much higher level and they mitigate uncertainty.
01:03:09:11 - 01:03:29:29
Sam Rashkin: They used to self ensure the homes for the buyers because there was so little risk they were willing to do it. They find they found an insurance provider who understands how little risk are in their homes, and their homes are being sold a very substantial insurance discount. And they showed that model homes explain how much value there is to this factory built home.
01:03:29:29 - 01:04:05:10
Sam Rashkin: So first I want to start with build different and better by, at the very beginning, completely rethinking the enclosure. We're building homes in incredibly hot, humid region of the country, incredibly disaster prone region of the country. We want to minimize structural risks and construction cost. And so when you compare wood to concrete, it's a stunning difference in which product delivers on all things that you would care about.
01:04:05:11 - 01:04:31:18
Sam Rashkin: Load. If you want to want low, high humidity risk, you want no chance of mold, zero chance of rot, zero chance of dimensional and warp stability problems. If you want no expansion contraction issues that may create cracking or or sealed seal problems with vinyl windows and wood frames. Wood is a complete no or acts on all those attributes.
01:04:31:19 - 01:05:00:14
Sam Rashkin: Concrete is crushing them. It it dresses all of them almost bulletproof. If you want disaster resistance, high impact pest wildfire wood is completely vulnerable to all those concrete. Again, completely. It mitigates those risks. And do you know in Florida is like I think the highest termite cost state in the country, it's over $1 billion a year of termite damage is done every year.
01:05:00:14 - 01:05:23:16
Sam Rashkin: You don't need to have all those chemicals sprayed around your house. You don't need to pay for the pest service. You don't have to pay for the higher insurance costs. It's just incredible how much resistance the concrete gives you. Structurally it doesn't. The product performance doesn't vary with orientation of material, no sustained load creep. And then on construction costs, you have less job site waste, less labor and job site protection.
01:05:23:23 - 01:05:44:10
Sam Rashkin: The materials doesn't have to be done. So wood no concrete. Yes. It's just you know, sometimes when you say step back and say, what am I trying to do here? You start to ask questions. Am I even using the right material building with wood like all the other builders? And they said no. So I visited a plant last year and these are my shots from that.
01:05:44:10 - 01:06:08:20
Sam Rashkin: But it's a completely robotic operation building the walls assemblies. They basically this is a robotic system that sets the forms for all the openings and and sizes the panel based on the card drawings, and it just moves everything automatically. And so you create these forms for pouring the concrete. And there are two inch slabs that are poured. And then they're steam cured to 8 or 10,000 psi.
01:06:08:27 - 01:06:26:04
Sam Rashkin: And then you have two sandwiches come together to create the wall so that you see them putting the insulation on the panel on the right that will be flopped over on the panel on the bottom, or a different panel. And then you create your wall panel. So you see on the right there again, the panel on the right will be flopped over the one on the left.
01:06:26:04 - 01:06:50:27
Sam Rashkin: And it creates a panel like this at sealed on the edges. When it's done and it has all the wiring, the plumbing, whatever you need. And it's then curious to again, eight 10,000 sits bulletproof for moisture. It can't have any moisture flow. You can't have any bulk moisture issues. It's just a incredibly strong product that's impact proof. And it's stacked and sequenced, ready to be installed on site.
01:06:50:28 - 01:07:11:15
Sam Rashkin: And then they build the pods for the bathrooms and a separate plant. And, you know, they just form them and drop them on site. And basically it's a finished bathroom that is dropped on site. I like to see them get some more advanced finishes and designs in the bathrooms, and I believe they're going that direction. Then all the interior framing and the roof framing is done in a separate section.
01:07:11:15 - 01:07:30:29
Sam Rashkin: They have a rolling machines that takes the steel and it bends it into channels, and then it cuts it automatically and creates all the pieces they need. And there's more people working here, obviously, than in the robotics section of the plant, but they build again the interior walls and the roofing. So what you're seeing here is the foundation.
01:07:31:00 - 01:07:54:06
Sam Rashkin: These stem walls are made in a factory and dropped on site. And they do what other builders don't do. They raise the house way above the base flood elevation, way more safe against flooding than typical builders. And so you have the stem walls and even the entry steps are made in the plant. So you see those entry steps, stem walls, and then they drop the factory made walls on the foundation.
01:07:54:07 - 01:08:21:06
Sam Rashkin: And then even these interior stairs they made in the plant poured concrete and is dropped on site. Then they build the interior walls and a steel. You have your finished homes, and their basic construction cycle is so much less than this. Typical site built is about 22 subcontractors in eight months, and as they show it's one system in 30 days, they plan.
01:08:21:10 - 01:08:43:27
Sam Rashkin: The company may hire a think painting crew to come in and a drywall crew. Not much else. Otherwise everything else is done by the company. So they have about, I would estimate about $45 million annual revenue increase just from the added productivity of the plant that can produce that many homes in 30 days. Produce a home in 30 days.
01:08:43:29 - 01:09:03:24
Sam Rashkin: Plant can do it. I think about 1000 homes a year. I think currently at a plant might be doing 500 homes a year again, 30 versus 60 day cycle time for another production builder, again, 8.6 months for the industry at large if they have a 15% profit margin.
01:09:03:26 - 01:09:27:26
Sam Rashkin: That's where I can calculate about a $45 million advantage every year to having additional production. But $600,000 is an average retail price, right in line with other new products of the same size and quality. So this might be one of their neighborhoods you go to again. You can see it's a traditional neighborhood. The only difference is the homes are higher above the ground, the most of the builders.
01:09:27:26 - 01:09:52:18
Sam Rashkin: So that flood protected. This is a home, this one starting at 300,000. This is a two level starting at 500,000. This is the inside. It's all hard surfaces which enhances health. You know again high performance, bulletproof, airtight, amazing ability to control moisture and much better. No moisture issues in the assemblies. And you get a lot of different architectural looks out of the home.
01:09:52:18 - 01:10:21:06
Sam Rashkin: But essentially this is what's happening there optimizing affordability because of just the insurance premiums for savings probably dwarfs the energy savings that most high performance builders get. The sales process is so simple, there's so little choices. It's completely minimized to avoid cost. So because of that, because you have they haven't over customize their homes. They're able to offer so much more value at a better cost.
01:10:21:06 - 01:10:47:06
Sam Rashkin: And that's and they sell everything they can make, as far as I can tell, that ultra low utility bills and amazing ultra low maintenance, there's like nothing to do with the basic infrastructure of the home. It'll be cosmetics that come up. It's such a bulletproof home. On wellness, you have completely maximized resistance to moisture hurricanes, tornadoes, floods, termites you even have almost a safe room or a safe house in a tornado.
01:10:47:12 - 01:11:06:07
Sam Rashkin: The bathroom itself even has a concrete lid, so it's a complete safe room, and the house itself is virtually almost bulletproof. And then it of course, the interior quality is so good in these sounds. And then in terms of future value, the quality of the durability that will persist, and all the built in smart features that can do.
01:11:06:07 - 01:11:32:02
Sam Rashkin: And I estimate, you know, this is like so much incredible value when you add it up. Just the utility savings over 30 years, the insurance savings over 30 years, the maintenance savings over 30 years. This is hundreds of thousands of dollars of added value. So I'm done. And what I just want to leave you with if we're going to rethink scaling systems, built homes know everything of research.
01:11:32:02 - 01:11:51:29
Sam Rashkin: And study tells me if you want to scale, these are the four things you got to do. You have to figure out how to optimize cost and value. So it is crystal clear to the mainstream buyer. And that's something that Rob Howard had to figure out on his own, making his own decision. He is six. You have to mitigate friction.
01:11:52:01 - 01:12:21:20
Sam Rashkin: You cannot expect builders to have to go ahead and find the contractors to fill in the gaps and figure out how to use your system and understand it. That's not going to happen beyond the early adopters. You need to mitigate uncertainty. People have to really understand I can get the esthetics I want. This is superior quality in ways that will you back it up and don't make it any uncertainty that you have, the quality that the site built world can't deliver, and you have to do more of what's working.
01:12:21:23 - 01:12:45:26
Sam Rashkin: Look at the examples out there that are absolutely demonstrating incredibly effective ways at doing the first three cost and value, friction, uncertainty. So leave you with that and I hope that makes sense. And Mike, if you have any questions I have about at most about 7 or 8 minutes, I can do questions all.
01:12:45:28 - 01:13:07:26
Mike Collignon: All right, Sam, thank you much. We'll get to as many questions as we can then in that time frame, we've got a question from Shanti wanting to know how will insurance costs impact housing costs, and are there systems built approaches that can address these now? I think you kind of hit a little bit on some of that disaster and resiliency.
01:13:07:26 - 01:13:12:03
Mike Collignon: But talking about insurance costs impacting housing costs.
01:13:12:06 - 01:13:36:17
Sam Rashkin: Well sure. Again what what Onyx used to do is self ensure their homes they go I have no risk here. I'm not going to have any cracking drywall. I'm not going to have any any damage to this home in a hurricane. I'm using tempered glass that's incredibly resistant to impact resistance on these walls. Nothing will happen. Notice I had the hip roots invented.
01:13:36:17 - 01:13:58:13
Sam Rashkin: So when can't get in, uplift, destroy the roofs. It's it. They said this is crazy. The insurance costs are like ten, eight, nine, 10,000 a year. We'll self-insured and save them thousands of dollars. Not wanting to be insurance company, they finally bring insurance companies out to see this kind of construction and insurance company understands and nanosecond how little risks they have.
01:13:58:13 - 01:14:18:23
Sam Rashkin: And they're able to negotiate a better package for the buyers and get themselves out of the self insuring business. So insurers eventually will come around and realize that they have to address their price to their risk, because otherwise companies like this don't even want to give them the business. So yes, it's a great question and thank you for asking it.
01:14:18:23 - 01:14:44:22
Sam Rashkin: I think, though, it's going to take a lot of education with the insurance industry to help them understand the real differences before they can address their business model and have different price structures, or you can just be able to qualify much more easily for the Institute for Business at Home Safety's Fortified Home program, and that will get you a 25 to 40% insurance discount just by doing that.
01:14:44:22 - 01:14:57:18
Sam Rashkin: And again, the Onyx home, for instance, in Florida, would instantly qualify for those discounts by virtue of that. And that may have been the system they used to get it.
01:14:57:21 - 01:15:22:23
Mike Collignon: We had a question from Lauren. Beyond continuing to educate, providing the proper sales service and support, showing successful case studies, what more can be done for systems built to gain more recognition in the US market? And kind of conversely, what has made systems built so much more successful in some of the European markets?
01:15:22:26 - 01:15:52:09
Sam Rashkin: What else suggests in the European markets, it's made it more successful for getting to what can the US do is I mentioned one of them on which is, let's say in a country like Sweden, you have all these companies all working with a homogeneous code and a different regulatory environment, and they probably makes it easier for them. So and also I think the the culture is different and the buyers attitudes are different there.
01:15:52:11 - 01:16:18:15
Sam Rashkin: I don't think in this country there's been a lot of systems built work where again, a lot of the early modular work was pretty much low end. You had the manufactured housing factory made homes for very low end and, and a lot of systems. Building was deferring to just lowest cost and lower quality materials, just to try to get people to use it as a strategy rather than try to compete on other bases points.
01:16:18:15 - 01:16:42:13
Sam Rashkin: So I think Europe had an advantage that people came in with better strategies and for some reason understood ways to mitigate cost, objections, uncertainty and friction. So what the US market can do, I think, is hopefully learn from this. You know, Katara was a $2 billion disaster. SoftBank put 2 billion in plus other investors and got nothing out of it.
01:16:42:14 - 01:17:07:14
Sam Rashkin: And then you had Integra was had a I thought a very good product. But they didn't they didn't reduce friction and they didn't have a whole product solutions. I had to rely on getting individual builders to change their process and their break their long earned agreements with framing contractors to do their work. It was, you know, I think in this country, we.
01:17:07:17 - 01:17:28:22
Sam Rashkin: You know, it's going to be harder. But I think we know what to do from the framework I just laid out. And if you don't check every one of those boxes, cost and value, friction and uncertainty. If you don't check every one of those boxes, then probably you're going to have a tough time scaling, and that always is not the wrong thing.
01:17:28:22 - 01:18:02:05
Sam Rashkin: Some I think some of the some of the systems built players are happy with their niche market business. The SIPs guys sell to their SIP buyers, modular builders sell to their modular buyers and they make a decent living. And so you have to want to really grow the industry. My point is that for the larger mainstream home buyer, I don't think they can afford traditional built homes anymore, just by the numbers.
01:18:02:05 - 01:18:15:21
Sam Rashkin: And the only way to extract cost savings for that part of the market is with the system building. And I think, like I said, I think we know what to do. That's the points I laid out.
01:18:15:23 - 01:18:45:03
Mike Collignon: So we've got a question from Kim because modular factories are the hub in a spoke model. How can modular factories entice builders at the end of those spokes to become site prep contractors? And then, you know, setters and stitchers and warranty providers, especially for those who maybe are building one off homes.
01:18:45:05 - 01:19:22:01
Sam Rashkin: Yeah, that's a good question. You know, by not owning the site part of the equation, that's where a lot of uncertainty enters into systems built world. For most products that aren't very small, except for very small panels, you have to have a perfect foundation. And by that it's going to be dead level. You can't drop a module or a big panel, and the foundation have dimensional variance.
01:19:22:03 - 01:19:49:11
Sam Rashkin: That's very significant. And expect to set that panel properly or module. So by not owning that process and having absolute control, which you can get the quality, you just have to be committed to it. And by relying on a contractor who's not being held to that kind of quality control to come in for your modular product or big panel product and expect them to change is sometimes a big ask.
01:19:49:11 - 01:20:17:29
Sam Rashkin: So it is tough when, and I think almost most of your effort has to be dedicated to to getting the builder who's basically providing the foundation for the modular to build a dead level foundation, and also be responsible in the field for knowing how to make sure the marriage joints between the modules are very airtight. That's the one issue that's tougher with modules.
01:20:17:29 - 01:20:38:03
Sam Rashkin: You can't lift them in place without a thick cable because I'm so much heavier than a panel. So you have a thicker gap between the scene between the two marriage, the marriage scene between the two modules. And so it's a much more difficult air skill than a panel can. But right up next to it to sit panels are right next to each other airtight.
01:20:38:06 - 01:20:55:01
Sam Rashkin: And so you have to get all those details figured out with the with the crew that you're selling it to, even though the homes built in the plant and finish on the plant, it's not like you don't have things to worry about. And how do you get them motivated to do that is basically that they can build homes without trades, except for the concrete.
01:20:55:03 - 01:21:23:02
Sam Rashkin: They only have to have the concrete trade and some basic waistlines put in an electric power put in. But in terms of wiring the house and plumbing the house itself, I mean, all the trades are done for you with many modular products. So you have to have a builder who's who loves that kind of business model, doesn't have to hunt down all the dozen or so different trades, and can just have the house dropped on and benefit from the cycle time advantage to degree that you can get it.
01:21:23:03 - 01:21:39:24
Sam Rashkin: You know, some some of the times the factories with modular homes can be backed up as well. So it's a tough question. I don't know, I know a perfect answer to it, but they have to be motivated by that business model, not wanting to work with the trades.
01:21:39:27 - 01:21:44:24
Mike Collignon: All right. And do we have time for one more or do we have to wrap it up here.
01:21:44:29 - 01:21:48:13
Sam Rashkin: Do one more and we'll wrap up after that okay.
01:21:48:14 - 01:22:11:27
Mike Collignon: All right. So we do have one more. And I apologize to those that we were not able to get to your questions. I'll make sure to get those down and email those to Sam so you can follow up with you. So if homes built on metal chassis with axles were built to codes instead of HUD codes, could that possibly overcome mainstream market resistance?
01:22:11:29 - 01:22:40:27
Sam Rashkin: What a great comment, and I think it's a big part of it. There are a number of issues. You know, local jurisdictions are pretty much convinced that a manufactured house will be very limited value and reduce the tax revenues and might have issues during disaster events. Now, a lot of the problems with disaster events is not fair, a reputation for that industry.
01:22:41:03 - 01:23:11:08
Sam Rashkin: So many of the homes are located in the absolute worst locations that low flood levels, flood based flood elevation levels, the not the not built with better foundations. So it's not the manufactured house problem, it's that the foundations and or the siding of the homes often leads to them optically having more issues, maybe during disasters. And so so one having parity with the between manufactured and site built.
01:23:11:08 - 01:23:46:23
Sam Rashkin: Yeah, I think that would be a huge, huge advantage to getting local jurisdictions to see manufactured housing as an amazing solution for attainable housing. But then there might be other factors. And they want to have homes that visually do not undermine property values. So they want maybe a more permanent looking foundation than just skirting. And they may also ask for certain architectural capabilities that, you know, maybe a higher pitched roof might be an example of something that might be a requirement.
01:23:46:23 - 01:24:20:02
Sam Rashkin: But but yeah, I think that would go a long way. If you could get manufactured housing built to the Iraq and local codes, we could have certainty about that that would be used. There's so many problems because hardcode housing and and site built housing don't even use the same metrics. No 1st May use pounds per square inch, and another one is using a total overall some value that's completely different from from that.
01:24:20:02 - 01:24:25:20
Sam Rashkin: And and the building departments doesn't even know how to.
01:24:25:23 - 01:24:53:08
Sam Rashkin: Even evaluate the manufactured housing option. So we have to reduce the uncertainty. If we expect manufactured housing to be embraced by local jurisdictions. So it's a great question, and it's a very insightful. In fact, the priority would be a big, big way to start building that kind of acceptance. So thanks, Mike. It was a great another great day.
01:24:53:10 - 01:25:18:27
Mike Collignon: Yep. Thank you Sam. And that does conclude today's seminar. Like I said I will get these questions that were unanswered. Over to Sam. But thank you all so much for attending today. Thank you once again to Panasonic Healthy Indoor Living Solutions and LG for their generous sponsorships. The next GB I'm sorry, GBM is shorthand, but the next Greenville the media webinar is going to take place in just six days.
01:25:18:28 - 01:25:35:00
Mike Collignon: That's right. I'm going to be joined by Darren Wash. And our topic is going to be water efficiency in the water energy nexus. That will start at 2 p.m. eastern time. That's going to be next Wednesday until next week. Stay safe, stay healthy and take care of everyone so long.