Opinion: Modular homes far from cookie-cutter: Bruce Firestone

Henry Ford obviously wasn’t present when I recently visited modular homebuilder Guildcrest’s 120,000-square-foot plant in Morewood, about 50 km southeast of Ottawa, but his spirit definitely was.

Watching factory-built homes roll down the company’s assembly line each week in this giant hive of activity with more than 120 employees homes is inspiring. Once assembled, the homes are loaded onto flatbeds, trucked to their new location, placed on footings and a foundation, and voilà, homebuyers have a new dwelling.

Along the way, Guildcrest Homes has found creative solutions to problems such as how to keep load heights to about 13 feet – gang nail roof trusses are hinged so they unfold upwards after delivery and lock in place.

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As my tour guide at the plant, 12-year company veteran George Tierney, notes: “We’re pretty sure that if a wood-frame building comes into contact with a concrete overpass at 100 km/h, well, we know who’d win.”

The company has overcome technical challenges like this through innovation. It also appears to be able to consistently deliver good-quality products on time, an issue that often bedevils the stick-built mainstream homebuilding business.

Indeed, a lot can go wrong when building a new home. It’s a complicated process, and it’s not unusual to have 30 or more unresolved building issues when a new stick-frame house is completed.

But assembling houses in a controlled environment, as Guildcrest does at the rate of about one a day, should mean that they can deliver on time and with fewer problems.

The firm’s record with Tarion, Ontario’s new home warranty program, seems to bear this out.

In 10 years, Guildcrest has sold 418 dwellings in Ontario. Over that time, it has had just one chargeable conciliation, which occurs when Tarion determines that one or more items reported by the homeowner are warranted under the plan and the builder failed to repair or resolve the items during the applicable repair period.

Guildcrest has an interesting history. It started out as Dutch Sash and Door, created by a legend in this part of Ontario – Adrian Huef. It was sold to a Toronto-based company that drove it into bankruptcy within 18 months, whereupon it was purchased by Bob Egan, David Poupor, John Coppens and two others who transitioned it to the Guildcrest brand and name. It’s also been known as Morewood Homes in the past.

Today, Guildcrest is owned by Saint-Apollinaire, Quebec-based modular home manufacturer Pro Fab, which in turn is owned by an enormous private equity firm, Wynnchurch Capital of Chicago.

Wynnchurch has been buying up modular homebuilders across North America with a view to driving down costs and increasing market share. If it succeeds, it could revolutionize an industry that clearly needs updating.

So what’s standing in its way? First, the conservative nature of the industry itself, which suffers from an unwillingness to embrace change in what is a very inefficient system.

Second, what works in Quebec, Michigan, New York or New England doesn’t necessarily work in Ontario and vice versa. A one-size-fits-all-approach to design and construction isn’t always the right way to go.

Third, a significant portion of the traditional new home marketplace mistakenly thinks of modular homes as unimaginative and inflexible in terms of design.

But Guildcrest sales chief Roy Mills dismisses such worries, saying those issues are a thing of the past.

“That stigma is gone,” he says. “We build big homes, small ones, town(homes), side-by-sides, duplexes, triplexes. We fire rate them vertically and stack them side by side. We do in-fill housing now. Plus, from start to finish, we deliver in just four months.”

The firm has three sales channels: retail (sales to consumers who have their own lots), authorized builders (a wholesale channel) and developers (who are bringing an entire subdivision online). Guildcrest is able to do more than just sell a consumer a modular home. It will take charge of a whole project from excavation, footing and foundation to the occupancy permit.

It is also a major exporter to the United States. When the Canuck buck sank to 63 cents, Mr. Mills recalls fondly, “We made a killing, especially in upstate New York, where Guildcrest is a licensed builder.”

Guildcrest also exploits the land-lease recreational market in a big way – its largest customer is Parkbridge, which has about 300 retirement communities, cottage and RV resorts in its portfolio.

One of its main competitive advantages is a stable, experienced workforce. At one point during my tour, Mr. Tierney points out a 75-year-old man walking slowly but purposefully up and down the assembly line in a blue, knee-length winter coat with a safety vest on top.

“I have no idea what (the employee) does here, but he’s never worked anywhere else in his life,” he says.

It’s that kind of loyalty that spawns intense commitment from everyone I met there.

Maybe one day, homes will be built using 3D printers or tiny machines. But until then, Guildcrest and other modular homebuilders are trying to find a better way forward for an archaic, frustratingly hidebound industry.

Bruce M. Firestone is founder of the Ottawa Senators and a broker at Century 21 Explorer Realty. Follow him on Twitter @ProfBruce.

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