How to get the best out of your relationship with Modular Manufacturers, or not
Something I have been meaning to put together for a while despite a daily bombardment of blogs sharing our passion for Off-Site Manufacturing which one a month features on our website.
My own journey in OSM started 3.5 years ago. We previously ran successfully Europes Leading Print Management firm working with suppliers from 27 countries. We sold the company successfully in 2002 to a PLC for ￡42 million pounds who successfully managed dilute the firm in 12 months applying heavy handed tactics to suppliers and upset our loyalty clients, and since gone out of business. Since I have spent 16+ hour days touring the world meeting 50 OSM's and deciding to be based in the Baltic States with easy access to a plethora of robust factories. Culture plays a huge part in trading effectively, understanding for example Soviet times and the effects on how it has shaped a country considering only 30 years ago many former countries have been playing catch up with Western style business. The Baltic States for example have a lot to offer, known for highest quality craftsmanship, lower cost base and high level engineering education and the younger generation becoming more impressive by the day. But let me say right now by the time transport is added overseas OSM is not much cheaper if at all and not all OSM's are perfect by any means. Using MMC is more cost effective based on pre-lims and other obvious reasons including Health & Safety highlighted in my daily rants.
Key problems come to mind with OSM in the UK
Relationships - OSM's overseas are far bigger and more experienced than homegrown start ups appearing the past few years. The lack of investment in to UK industry these decades including poorly delivered apprenticeships is clearly evident with the UK trying to play catch up. Despite investment and huge promises and unrealistic targets the UK is reliant upon international collaboration whether we like it or not. Now Covid has delivered a further huge blow to the world and the UK is suffering way over and above for example the Baltic States who have less people, density but made a faster move to efficiently delivering a tough regime to stop the pandemic accelerating compared to other countries but let's not compare the UK to smaller populated countries - the UK had bad luck also. The problem is that many overseas OSM's have no interest or experience in the UK and those that do are incredibly cautious who they spend time with - we managed to convert a few to see the light willing to deliver their superior product and are working on our own Joint Ventures put off by working with contractors who had no intention of embracing our supply chain using us for pricing. The UK construction industry is outdated as outlined by Mark Farmer's report and we see the biggest problem is the lack of understanding by many architects, project managers, construction and development firms. Albeit technically expert in their field of traditional build without doubt many (not all!) are missing experience in delivery with OSM. More delivery firms such as our partners Modular Connexions are expanding and with the right momentum from investors and planning departments MMC will grow but not nearly at the rate one could expect. There is still a huge sticking point for many potential UK clients who basically just don't understand the market and don't wish to change the way it has always been done. Many OSM's come in blind to the UK employing teams of Export Managers most of which may have not even visited the UK but educated themselves to speak English which doesn't necessarily mean they understand our quirky unique British culture! Talk spreads like wildfire of very few disasters in OSM of which compared to success are tiny however bad news travels fast and is a lot more interesting.
Some get their fingers burnt spending years flying over at huge expense and then find out how brutal the UK construction industry is, sometimes for good reason. Some get it right but then decide to pull out as it is far more profitable with other markets including Scandinavia. Getting it right requires open minds, a willingness to do business and to act professionally and ethically. Consistency in sustainable contracts and commitment from all parties is critical.
Vast contracts have been allocated to UK firms who have never delivered in such scale which is deeply concerning, I hope for their and our nations sake they deliver these homes.
Biggest Mistakes made - attitude towards factories in general can be good to appalling. The OSM market despite the obvious requirements of quality, fit for purpose, assurances and price is all about Production Capacity. The factory holds the cards to who they work with so similar to the Timber Industry right now this is a 'sellers market' - many run out of patience with in-experienced architects etc by the day. Too often uneducated bullying folk demand prices per square metre without giving any information and then expect the factory to spend time ascertaining and guessing on their behalf spending weeks working for free. This is highly unprofessional, disrespectful and at the end of the day not the right way to build relationships. Anybody can make an uneducated guess then ramp up the price on extras which defeats the purpose of OSM where costs can be controlled far more effectively compared to traditional build. Don't try to 'out manoeuvre' a factory, the likelihood is the aggressor will loose, play fair gain friends for life enabling mutual growth with the factory. Yes it's about being Commercial but too many times we experience a lack of respect towards factories here in the Baltic States and other countries. It's unethical and unacceptable. Times have changed and those that do not start to embrace ethical supply chain relationships will regret it. Traditional construction alone will not achieve 300,000+ homes per annum target set out by the Government, it takes a myriad of build technology including MMC: 3D Volumetric, Panels/Elements, Hybrid from a mix of sources homegrown (where applicable) and core overseas factories. This is not about being anti-Britain, this is about being realistic, patriotic and working together internationally accepting our strengths and weaknesses. Our own future plans are to create Academies or at least collaborate to teach young people to understand the merits of MMC and to help towards increasing UK manufacturers successfully. Britain has a hell of a lot to offer and indeed learn with adopting genuinely MMC. Eventually it may come but we need to provide sufficient data analysis on an ongoing basis working with open minds.
Production Capacity - the UK is very slowly indeed moving towards entertaining OSM, still only roughly 8% of new build uses MMC. Why? we all know the answers; lack of experience, existing relationships (some stagnant) and risk- or what they deem is risk when it isn't at all and can be de-risked. Advancement with lender acceptance including BOPAS Accreditation is a big step forwards, we held an event with MACE and invited them to speak in late 2018 and attended their recent Webinar listening in from here in Lithuania. The key outcomes of that particular production were the UK is way behind the times. Lack of data has not helped MMC but now lenders especially the past 2 years have educated themselves in the main and investors of the build are demanding far more effective quicker better quality build to improve ROI, less maintenance and more value for money.
To understand the business one must understand 'production capacity' world-wide and appreciate we need their 'capacity' more than they need us, forget colonial style attitude towards Eastern European or Asian suppliers there to serve us - this is the 21st Century - we underestimated many countries including China and look at their tremendous growth. Let's get building and support the governments intention, despite their disillusion of how. Without investment and modern application the UK will not be any further down the line in the next few years target wise proportionally. Without PEOPLE nothing will be achieved.
Build long lasting trusted relationships where everybody wins, not screwing the hell out of suppliers and expecting loyalty, forget it. Since Covid appeared people are valuing people more so and those that don't radicalise the way they work will surely die in business.
Conclusion
Of course not every UK construction related firm can be accused of inappropriate behaviour towards OSM's by any means but there are far too many that expect too much giving little commitment having no control over a project and demanding the impossible acting like Kings or Queens with no substance. Those that are professional, understanding and appreciative will win - we know plenty and are delighted to work with them. It is all about collaboration and fair trade -mutual respect and achieving delivery together in what is a sellers market.
To find out more about how we help clients inbox me and we shall send you our solution with pleasure. We are looking for joint ventures with local authorities as a priority and have a separate paper to present.
It's all about collaboration!