In Defense of Stick Framing, Part 1: Dumpster Divers

Someday robot carpenters will frame homes in minutes with materials 3D-printed on site or teleported from the lumberyard. This four-part series examines some of the issues we should probably deal with while we're waiting.

If expectations of success were a measure of actual success, carpentry would be as dead as a handmade doornail by now. Not even the dot-com boom of the 1990s (remember BuildNet?) generated more excitement than offsite construction is generating today.

Especially among people with money to spend. As of January 3rd, AngelList’s database included 2,406 construction-related startup companies with a combined valuation of more than $10 billion. “During the first half of 2018,” says the San Francisco Business Times, “investors pumped a record $1.05 billion in contech startups.”

The Times divvies up contech—construction technology—into 17 categories. Of those 17, offsite construction was the second-largest recipient of VC cash last year.

Analysts and the media are...well, smitten is not an overstatement. They say offsite is a “game-changing home construction model” (Builder) that will mean “houses can be built like iPhones” (Wall Street Journal), which will “make housing cheaper” (Bloomberg Businessweek), “upend the multi-trillion dollar construction industry” (Fortune), and “shake up the supply chain” (Builder again; editorial director John McManus is really excited about offsite).

Within the industry, some are a little puzzled. Building homes in a factory is nothing new. The Aladdin Co. was selling precut home packages in 1906. Modular homes and stud wall panels date back to the early 1930s. Plated roof trusses hit the market in 1952.

Only roof trusses are commonplace today. Modular homes have never held more than 3% market share and are currently stuck around 1.5%. You can buy precut framing packages from BMC (Ready-Frame) or Builders FirstSource (Better Framing Systems), and builders who use them seem to like them. But precut packages are hardly stealing food out of the mouths of competitors' babies.

Panelization has been gaining ground lately. One plate manufacturer estimates that 15% to 20% of residential projects are panelized these days. But wall panels have always captured market share whenever framers are hard to find. So far at least, they have always given it back when the market turns soft and labor gets cheap.

“The housing market is finally getting its own ‘Model T’ moment.” Forest Economic Advisors, Oct. 2018

The curious part is that no one seems to care that Americans have been building homes in factories for over a century. By contrast, the European approach to offsite pioneered and popularized by Monaghan, Ireland-based Century Homes (now owned by multinational megabuilder Kingspan Group) has inspired a near cult-like following.

Craig Webb of Webb Analytics saw it first-hand in October when he attended the inaugural Industrialized Wood-Based Construction Conference, organized by Littleton, Mass.-based Forest Economic Advisors (FEA). His first impression: “Conventions can become reality distortion devices when all the participants sound like true believers.”

So what's the difference? From a practical standpoint, it's mostly scope. When American panelizers engineer a building, they typically limit their focus to the structure. Europeans take a “holistic point of view,” as Gerry McCaughey, CEO of Ripon, Calif.-based Entekra and a co-founder of Century Homes, describes it. Entekra’s engineers address structural integrity plus manufacturing efficiency, energy detailing, potential conflicts between systems (e.g., how HVAC ducts or plumbing pipe are routed), and overall “buildability.”

At the other end of the process, European offsite providers also install the components they build. Some American component manufacturers offer turnkey installation, but the practice is far from universal.

Either the American or the European method will minimize waste and save time. The European approach is a little faster—two or three days to erect a 2,500 sq. ft. home vs. four or five with the American method. But McCaughey admits that's only because Europeans panelize the floors as well as the walls.

Setting a floor cassette. Photo: Entekra

More important, the European approach relieves builders' headaches. On the front end, it eliminates the need for an engineer (and in some cases, an architect). On the back end, it eliminates the need to find and manage framers.

It's a good approach—hopefully American component manufacturers are paying attention. But holistic design and turnkey installation aren't the reasons observers are so fired up about European offsite.

Instead, the fervor is all about technology. “The housing market is finally getting its own ‘Model T’ moment,” declares FEA in an Oct 2018 blog post titled Mass Production of Homes the Panacea to the Housing Crisis. "Mass production of housing isn’t a new concept, but it usually meant that customers had no power to customize the house plans to suit their family’s needs. This prevented mass production from gaining a foothold in the construction industry.”

Never mind that mass customization is the exact opposite of a “Model T moment.” The hallmark feature of a Model T was that you could get any color you wanted as long as you wanted black.

The point is that European offsite is a BFD (as Joe Biden might say). The companies are all backed by equity investors, and if the San Francisco Business Times is any indicator, no one is thinking small. They've all spent massive amounts of cash on state-of-the-art automated manufacturing equipment from Germany or Sweden, plus the very latest BIM, production, and logistics software.

And they are presumably frog-marching the construction industry into the 21st century. Says FEA, “Thanks to advances in automation and design software, architects can create unique homes and input them into the factory system. Roof, wall, and floor elements are created precisely to plan, and then shipped to the building site where they are assembled. This vastly reduces build times, costs, pollution, and waste, and makes housing affordable.”

That's a tall order. If European offsite can do all that, stick framing deserves to go the way of blacksmithing. But a lot of legacy suppliers will be out of business if the outcomes live up to expectations, and that makes it worth a closer look.

DOWN IN THE DUMPS(TER)

Claim No. 1: Offsite construction vastly reduces construction waste.

Menlo Park, Calif.-based Katerra is the largest and most famous of the new breed of offsite companies by virtue of the fact that it has hoovered up close to $2 billion in VC funding (so far). In a Feb 2018 interview, Trevor Schick, the company’s supply chain guru and a former Hewlett-Packard executive, shared the results of his research into the wastefulness of stick framing:

“Whenever I walk by a construction site, I look in their dumpster,” Schick told ProSales. “15% of the wood from a jobsite is thrown away! In a factory, if we’re not down to 2%, you’d get a better guy to run that factory.”

You may be wondering how Schick can walk by a dumpster and determine what percentage of the lumber delivery is in it. Don't worry about it; we've got bigger fish to fry.

A few months after Schick shared his insights, prominent investment advisor Margaret Whelan of Whelan Advisory, LLC went double or nothing. In an Oct 2018 podcast with Dean Wehrli of John Burns Real Estate Consulting, Whelan told Wehrli, “It’s estimated that on our jobsites we waste about 30% of the materials, and in Europe and Asia it’s closer to 2% or 3%.”

Okay, that’s vast. One question: Estimated by whom?

Whoever it was, it wasn't NAHB. In 2003, the NAHB Research Center (now Home Innovation Labs) published a detailed study of construction waste in single-family new construction. Researchers found that the typical 2,000 sq. ft. stick-framed home produced about four tons of scrap. Solid wood, engineered wood, and metal—i.e., no cladding, drywall, or other materials an offsite construction firm doesn't touch—accounted for 3,150 lbs. of the total.

A 2,000 sq. ft. home contains roughly 16,000 bd. ft. of lumber plus 6,000 sq. ft. of structural panels. That works out to about 62,000 lbs., so 3,150 lbs. of waste is 5%, not 30%.

It wasn't totally clear in the podcast whether Whelan was talking about waste from the dried-in shell only, or from the completed building. If she was talking about the entire building, house movers say a 2,000 sq. ft. home typically weighs about 120,000 lbs. On that basis, 8,000 lbs. of waste comes to 6.7%.

Unless NAHB is smoking crack, 30% (or even 15%) wildly overstates the amount of waste generated by stick framing. That’s not to say some crews don’t waste that much (or even more). But if the average framing crew wastes 5%, an experienced, conscientious crew probably throws away not much more than a component plant.

Yes, the average is the number that matters and yes, it's still double the amount of waste produced by components. But it is possible if not provable that 5% doesn't reflect normal conditions.

The study was conducted during a period when the housing bubble was inflating. New homes for sale were in short supply and builders were scrambling to keep up with demand. They were hard-pressed to find labor and hiring immigrants en masse to fill the gap.

The composition of the typical framing crew was changing as a result: no longer multiple journeymen with one or two unskilled laborers, but rather a single journeyman with multiple laborers. If those laborers were immigrants, more often than not they came from a region where wood frame construction is mostly unknown. Of course there was a learning curve.

Even experienced framers will waste a lot of material if you force them to hurry too much. Throw in a bunch of laborers with no experience building wood-frame houses—and often a limited knowledge of English—and it only makes sense that the amount of material wasted would be abnormally high.

If component plants in Europe and Japan have squeezed waste down to 2% or 3%, that's good. But there is a lower limit to the amount of waste produced by a construction project simply because of the difference between building dimensions and standard material sizes.

That difference is a function of design. European homes may produce less waste than their American counterparts just because the designs tend to be simpler. To whatever degree an offsite provider like Entekra can tweak an American floor plan to fit two-foot increments, chances are they can shave another percentage point or two from the total.

That's good, too. But there is no reason why that same process wouldn't produce the same benefits when you stick frame.

If you have an experienced framing crew with an incentive to reduce waste plus adequate supervision, there is at least a reasonable chance that the waste gap between stick framing and components would be negligible.

Coming in Part 2: Asking whether offsite construction reduces cycle time is like asking someone whether they're in a relationship. The options are Yes, No, and It's Complicated. CLICK HERE to be notified when Part 2 is published.

Greg Brooks is editor of LBM Executive and moderator of the Executive Council on Construction Supply. He is a steering committee member at the Harvard University Joint Center for Housing Studies and a 49-year veteran of the construction supply industry. 303 845 4880