Financing the future of housing
Martin Cattach
Working Capital Strategist | Founder of Finance for Business | Call me when the banks say NO.
We live in a world of nearly 8 billion people – and there’s a massive and growing housing shortage. With a forecast global population of 10 billion, it’s not a problem that’s going away any time soon.
People and materials - two key construction challenges
At the same time that housing demand is set to sky-rocket,? there are increasing global shortages.? Materials supply issues are so bad they make the nightly news - as the availability of traditional construction materials like structural steel, timber and bricks plummets.
A further stress on residential construction is an increasing shortage of tradespeople.? It’s not just that there’s more work - there are also less tradespeople.? The older ones are retiring but not being replaced, a problem of both lack of interest and lack of trades training investment.
Materials are scarce, skilled workers are scarce AND demand is accelerating.
The challenge isn’t just about shortages and demand
It’s not just a problem in supply of people or materials - the problems faced in residential construction are much bigger than that.
The housing industry business models operating today are still operating like it’s the 1950s.? Most of the materials used in construction have benefited from industrial innovation (from plasterboard to laminated timber). However the current construction process blocks a whole range of innovative products and approaches.
Current architectural designs might be done using 3D CAD (sometimes) -? but the construction technology hasn’t changed much since the 1950s.? And even in the 1950s the problems were so obvious that futurist and science fiction Robert Heinlein forecast a construction revolution within 10 years. There have been minor improvements - such as power tools - but the basic models have stayed the same.
While many in the housing industry recognize that there are problems, the industry as a whole is not geared for substantive innovation.? There are few players on the fringes who are trying to get the industry to adopt even the simplest of manufacturing methods - but the industry as a whole has been locked in the past.??
There are multiple pressures building that indicate this is about to change.?
The housing industry is broken
We’re well into the third decade of the 21st century – and yet we still cycle individual trades through building sites multiple times.? They come and go through all the phases of construction – plying substantially the same trades that they did in the 1950s.
The subcontractor-based, lowest-cost, fixed price system is on its last legs, as the supply chain and labour disruptions induced by war and pandemic. break the lowest-cost, fixed Builders and subcontractors held to fixed-price contracts are going broke.
In the past, governments at state or federal level have used cash injections into the sector as an instrument to bail the industry out, especially during elections when all kinds of construction grants get the green light. But this time it's different.?
This is a post covid world where we can't afford to keep throwing public money at an industry without addressing its problems. While Australia is relatively cushioned from recession, today’s sky-high prices for? raw materials won’t go down anytime soon. And this will take a lot of players out of the industry.
So today, we are seeing an incremental acknowledgement that change must happen - an acknowledgement from across the industry as a whole, as more and more voices call for the industry to upskill and automate.
But there are more fundamental issues that the industry must address that go deeper than skills and automation.
The housing industry faces major sustainability challenges
The industry has a massive environmental footprint
The housing industry as it stands today has a massive environmental footprint. ? The? majority of the materials it uses - steel, cement, bricks, PVC have massive carbon overheads.? Even “natural” materials like timber have substantial carbon footprints because they’re made long distances from where they’re used. ? And the environmental footprint of the waste from the construction industry - while largely unseen - is equally massive.
The houses that this old-time industry produces have their own ongoing environmental costs - because the thermal performance of their design locks in owners to high energy bills for heating and cooling.
The environmental and economic impacts also have social costs
The dependence of traditional residential construction on costly materials, centralised time-consuming subcontracting models from carpentry to air conditioning has bad social consequences as well as.
The poorest and most remote communities are left to struggle with substandard housing that doesn’t meet their basic comfort needs, let alone cultural and social needs.
So what’s the GOOD news?
The good news is that “we have the technology” - we can rebuild the housing industry.? We can make it better, stronger, faster.???
The same technology revolution that’s brought us smartphones and EVs has evolved commercial solutions that make residential construction:
than ever before.
Imagine this:
You drive a truck into a remote community, you mix a key, 21st century building material with local materials and water, and you 3D print a house. In just one day – or maybe 2. Your structure is not only waterproof - it’s pretty much bomb-proof AND an effective carbon sink – because many of the materials its made from are grown, not forged.
And having created your building, you then render it, roof it with pre-made structural panels and add doors, windows and services – in a single installation process done by a couple of key trades.
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Because you’re 3D printing next generation, low carbon “concrete” with a high local materials component into self-supporting structures, you don’t need expensive scaffolding, long-haul deliveries or a whole lot of OHS overheads.
The people you use are local people – because you don’t need big muscles and skilled, siloed trades – you just need diligent, focussed people who care about the homes they’re building for their community.
Then you print another house, and another. Then you print the water storage tanks to go with the houses.
You involve the people who will live in those houses in the process, and you teach them how to maintain their purpose-designed, purpose-built houses.
Then the truck drives on to the next location.
A fantasy? Not in 2022
It’s no more fantastical than Dick Tracey’s smart watch. It’s technology that’s happening today, and which will spread across Australia and the world over the next 2-5 years.? It’s the next step in “additive manufacturing” - following the commercial adoption of 3D printing in industries from electronics to automobiles.
“We’re at the early stages of a technology-led sustainability revolution, which has the scale of the industrial revolution, and the pace of the digital revolution..? -Al Gore?
A solution that rescues builders and trades
This technology rescues the building industry from the majority of its 20th century constraints – but it’s NOT at th cost of the people working in it.
The smart new solutions:
Because design is done using 3D CAD, all the problems of 2D drawings – the door that opens into nowhere, the bathroom with no sewage access – evaporate.?
Because the building goes up in days instead of months, all the complexities of time delays, scheduling and materials supply drop away.
A construction solution fit for the 21st century
It’s time to upgrade the residential construction industry. It’s time for smarter, cleaner, fairer technology.
That’s what Luyten3D Construction Printing is doing – delivering an upgrade to residential construction so that it's fit for the 21st century. They offer cutting edge,? globally competitive equipment that will reconstruct the residential construction industry - and the costs of building civil infrastructure as well.
What’s different about Luyten products? They’re practical, flexible and mobile – they can go anywhere a 4wd truck can go and there’s sand and water to mix with their “cement”. They can even print with earth materials in remote locations.
Luyten3D offers the construction industry a comprehensive, local single supplier solution. ? The one company delivers the robotics hardware, the software that drives the hardware AND the specialist materials and composites that enable fast, cost-effective? 3D printed building.
The business started on the ground in Australia in December 2021, when they achieved building code compliance and delivered? the first ever 3D printed house in Australia and the southern hemisphere - “the heptapod”.
In 2022 they announced the first 3D printed indigenous housing project in the world. The "Warle Akweke" is a small Granny flat - and it’s just the first phase of a project of 5 housing units in Alice Springs. It is designed and build? specifically for the harsh environment in the centre of continental Australia.
?Luyten3D chose to start in Australia because Australia is a world leader in innovation (despite our tall poppy self-doubt). That means that all their machines and materials are built in Australia, maintained in Australia and continuously improved in Australia. And the rest of the world is watching with interest.? At least two major players in global construction are competing to secure Luyten’s large scale 3D printers.
Do you need residential construction solutions today?
Luyten3D is looking for smart people with big ideas who want to solve big problems. They’re looking for people with:
And what’s this got to do with finance?? Everything!
Firstly, as a Working Capital Strategist, I see the problems of this ageing industry regularly.? My construction clients face them daily.? They need more and more working capital reserves just to cope with today’s delays, shortages and disruptions.?
But more importantly, having seen the same issues again (and again, and again) I am convinced that my clients will need to innovate to survive. ? Business innovators need working capital to finance their process upgrades - and while helping my clients survive today is great, helping them innovate to grow their future is the most fun I have at work.
It’s not the end of an innovative idea when the banks say “NO” to a business plan. You don’t have to put your home on the line or seek family funds to grow your business.
It's just time to talk to a Working Capital Strategist about how to access today’s growing range of smarter finance options. ? (And especially time if you’re looking for a way to thrive in the current construction industry environment.)
I empower construction business owners to achieve financial freedom through profitable business operations and strong cash flow generation.
2 年Great share Martin! Innovation will boost the construction industry to the next level.