Prefab housing is breaking through old stereotypes and, if markets throughout the rest of the world are anything to go by, it looks like it may have a very promising future in Australia.

NEW KIDS ON THE BLOCK
Manufacturing follows the laws of nature – create a vacuum and something will fill it. An example of this can be found in Colchester Road, Kilsyth, in Melbourne’s northeast. Two sheds on a factory site were once a pressed metal manufacturing plant, while another was a pine furniture business. All three fell empty as cheaper imports flooded the market.

But 11 years ago the lights went on again as all sorts of tradespeople moved in – carpenters, steel workers, electricians, boilermakers, plumbers, labourers and glaziers. And in those sheds new houses started going up, then out. The site is home to Prebuilt, one of a small but growing number of Australian prefabricated or modular home building companies.

“We have up to 50 employees and up to 150 sub-contractors at any one time,” said Prebuilt’s founder and managing director Rob Colquhoun, who added his employees ‘love the factory because they work when it rains.’ And so does he. Modular/prefab companies trumpet the time and cost savings of their factory-built homes, and not having to pay tradespeople to sit it out when weather intervenes.

They also spruik safer workplaces.

“It’s a much more controlled environment,” says Colquhoun,

“Because we have a concrete slab and can use access equipment much more safely. And we don’t have mud and rubbish to worry about and we can deal with working at heights and tagging, whereas on sites those things can be really difficult.”

In these economically uncertain times, Rob says companies like his also offer another benefit. “Job security is greater because we’ve been around 11 years and most of the people who work here have been here all or most of that time.” He adds that the sub-contractors also find the arrangement “vastly more cost efficient because we’re a single entity employer.”

IN THE BEGINNING
Modular/prefab homes are nothing new. During the 1600s simple timber cottages were built in England and shipped out to the British Empire’s new colonies in the United States, and again during the 1800s to Australia. When the Queen’s representative Charles La Trobe arrived in the Port Phillip district (now Victoria) in 1839 he had a prefab cottage sent from home, which is now a tourist landmark.

In Coventry Street, South Melbourne there’s a tiny corrugated iron cottage that was once part of dozens built in England to accommodate the then growing village. Overlooking Eastern Beach in Geelong is the ornate iron mansion Corio Villa, built to order in 1855 in Edinburgh, Scotland and assembled here the following year.

Labour shortages following WWII and the reconstruction of cities and villages necessitated modular/prefab housing components in Europe, while returning soldiers and Australia’s postWar immigration program created an urgent demand for low-priced housing in Canberra. The answer was prefab houses with steel sheeting used for walls and roofing. The first such house was built in Melbourne in nine days in April 1947 and the components trucked to the capital.

In recent decades there have been major advances in modular/prefab high-rise apartment building driven by constrictive work sites in densely populated cities of Asia. But down at ground level in Australia the industry is still largely associated with kit homes suitable only for mining communities, or beach huts or rural retreats. Even prefabAUS, the industry network, admits on its website that, “It cannot be denied that some stigma from this [post-war] era still lingers…”

Rob Colquhoun hopes community attitudes will broaden as modular/prefab homes become part of Australia’s suburban landscape.

“We’ve moved from being an industry that was responsive to the early adopters – people who are innovative and creative – to now being more mainstream but still delivering to people who assess an opportunity and consider there’s no risk.”

THE PROCESS
Choosing a modular/prefab home is little different to what a homebuyer experiences with a traditional builder. Colquhoun says Prebuilt has “economised” the design offerings with standard details that don’t have to be reinvented – full height doors, skirting style, bathroom and kitchen styles, with timber type and colour being the few variations. Said Colquhoun, “It’s like seeing a Commodore in a car yard and saying ‘I want that but with metallic paint and a CD stacker’.”

Next step is a site inspection. Some companies include the architect when considering aspect, orientation and any constraints such as planning regulations; others leave those issues up to the buyer. The same applies with arranging service connections. Once design and price are finalised and council permits approved, a 5-10% deposit is paid upon signing the contract before building begins. Further amounts are paid following further stages of construction.

Construction at Prebuilt’s Kilsyth factory begins with steel frames. Rob Colquhoun says, “By using steel we can keep the structure slim as timber would be two to three times the size.” Another reason is that Prebuilt houses are delivered to site by truck, “and we’re trying to get the most out of a truckable dimension [5m x 16m],” said Colquhoun.

For cladding Prebuilt uses sustainable hardwoods like spotted gum, plantation hardwoods for screens, and Australian pine plantation timber for A-framing “because they’re thermally effi  cient, [and] better fornoise,” says Colquhoun.

Building a modular/prefab home takes between 6 to 12 weeks. Colquhoun says because Prebuilt employs its own staff, “They’re doing the jobs we need them to do at the right time.” This means tradesmen can move from one task to the next, which is another house under the same roof. Prebuilt’s houses, including the kitchens and bathrooms, are fully plumbed and wired in the factory, with light fittings and power points in place and ready for connection when installed onsite.

When they’re complete an installation crew delivers the housing modules (or framework or panels), which are lowered in by crane (or assembled on site by the builder). Colquhoun says Prebuilt’s five metre wide sections are designed to cantilever out. “We’ve sent them to Perth and Townsville and there’s only ever been some minor movement, but nothing that’s not fixable.”

WHO ELSE CAN PLAY?
The modular approach to apartment building has taken off in Australia with companies such as Hickory supplying ready-to-be-installed bathroom pods. In Queensland, Pryda, a builder and supplier of trusses and framing for 50 years, has developed a new flooring system. Instead of a concrete foundation, the prefabricated timber floor cassettes are installed in hours (rather than days) atop a steel plate that secures pins in place.

Building steel housing frames to order in a factory in Braemar, west of Wollongong, NSW is AusTruss, who also manufacture fully-fitted bathroom pods, which they install onsite. Other prefabricated builders (Modscape, for example) are expanding their portfolio of commercial buildings such as offices, fast food restaurants and television studios, and public buildings such as railway stations, libraries and schools.

Queensland company Monarch has developed a tougher, more durable external cladding material they’ve patented as Calsonite. Made off-site in a factory in Narangba north of Brisbane, the reinforced concrete composite cladding has a dense surface layer, internal reinforcing and reflective foil backing, and is fastened to a high tensile steel frame.

Monarch claims its Calsonite cladding achieves a 6 star energy rating without bulk insulation in most Queensland situations, can accommodate a degree of slab movement without cracking, and has at least 10 times more deflection before breakage than brick. When complete, the external walls are delivered to the building site and installed in a few days before an acrylic render is applied to the façade, and before tradesmen install the house’s internal fittings.

Monarch’s manager, Karl Schirmer, says their offsite building is a manufacturing rather than construction process. “It’s a highly automated operation, so we’ve invested very heavily in technology for the manufacture of our system. Staff is about 30 directly employed … labour, or job specific skills, but not trade qualified. There’s a combination of floor staff, production staff, detailed design staff and normal logistical procurements and supervision.”

Schirmer says Monarch’s costs are similar to conventional brick veneer or timber framed homes “with the distinct advantage being the speed of construction, a by-product of having less trades on site.” Schirmer says mid-sized builders dealing with higher volumes of work get “greater value and better utilisation of their overheads and resources because they’re able to complete a greater number of homes.”

Also building factory frames is the Melbourne-based company Habitech Systems, founded by Chris Barnett. Habitech works with homebuyers in the design stage then selects a builder to complete the project using structural integrated panels which the company developed and builds in its Bayswater factory.

Barnett says the inner skin of each 3m high by 0.9m wide modular panel is plywood with an insulating foam core that, when cladding is complete, results in a building exterior that is “super sealed, has double the insulation value and carries the structure of the building, which is eight times as strong as a standard building.” Another advantage, says Barnett, is that “We work on a system of hand-liftable wall panels that let us get into almost any site without a crane.” The process is a lot faster, says Barnett, “about three weeks to get from a slab to a locked-up building that’s weather-tight and secure.”

WHAT’S IN IT FOR BOB THE AVERAGE BUILDER?
Truth be told, the start-up costs to become a modular/prefab builder require deep pockets. Firstly there’s the need for a substantial factory. Most of the current businesses have one or more sheds of 4000 to 9000 square metres, and renting or purchasing one of those, and the land they’re plonked on, isn’t cheap. Nor is the electricity required to power such a site. Then there are rates to pay, and insurance. And don’t forget all those qualified tradespeople and apprentices on weekly wages with all that payroll tax and superannuation and annual and sick leave. Oh, and those tradies will need tools and production line equipment – and probably a kitchen. And that’s all before one homebuyer sets foot in the showroom office and likes what he/she sees.

Nonetheless, Colquhoun says there’s a great opportunity for traditional builders to integrate with the modular/prefab industry. For an apartment in inner Melbourne the company engaged a traditional builder to lay the ground floor, carpark area and masonry walls while Prebuilt tradesmen completed the modules in their factory. “We chose builders who are really excited about the technology and are trying to do something that’s new and interesting and fast,” said Colquhoun, “and builders like fast because it enables them to get on with the next job.”

Peter Henry, who runs the Victorian company Henry Netherway, has always been keen on new building systems and has helped complete three projects for Habitech. He says it’s a system he’d happily use more often in the future, especially when the design specifically suits a normal residential site. “It’s definitely quicker than a brick veneer,” he told Building Connection. “Everybody scratches their heads for a bit, but after that you see the walls are up in one day. They’re all cut to size so when they turn up onsite they go up like a big Meccano set and it all just clips together.”

Henry says using Habitech’s modular panels was not difficult to learn, “but with any new system there’s bits and pieces. Chris Barnett [Habitech’s owner] is hands-on and spends a day or two onsite with my carpenter foreman. The more we do and develop our techniques, the quicker we’ll get.”

He says the only new equipment necessary was something to make a hole through Habitech’s panels to run a power point conduit up or down a wall. “We developed a bit of tubing and with a heat gun poke that through the foam. Otherwise it’s screw guns, hammer tools and every other bit of carpentry gear tradespeople use now.” As for safety, Henry says, “It’s as safe as houses, and probably safer because you end up with a solid wall whereas with a brick veneer you’ve got an open frame.”

SELLING POINTS
According to a 2013 report released by the Australian Bureau of Statistics, masonry materials accounted for the greatest percentage of waste generated in Australia in 2009-10. Of that, 19.8 million tonnes – over 71% – was generated by the construction industry, which ends up increasing costs for both builders and buyers.

Most of the modular/prefab builders contacted say that buying material in bulk is one way of reducing waste, as is the use of standardised components. Working undercover also removes the risk of any material loss due to weather damage.

Rob Colquhoun says that in their factory, Prebuilt can accurately analyse their material usage. “We weigh each project every time we lift in on the crane and that is to about one kilogram’s accuracy, and we have the ability to separate waste for recycling in ways you just cannot on a building site. In our factory, even plastic wrappings from materials are being separated out for recycling.”

Rapid construction time is another major advantage. Prebuilt’s website says that once the required services are connected and the site is readied, “it will simply take around eight weeks to build your home in the factory, a day for installation and then it’s just one to two weeks before the keys are yours.”

Hickory recently built 36 apartment modules, which were then installed to create a nine-story block in the inner Melbourne suburb of Moonee Ponds in just five days. Earlier this year Monarch constructed seven single storey residential houses, three to four bedrooms each, in 20 weeks in the Queensland regional town of Bowen.

Modular/prefab builders claim their houses have all the mandatory quality assurances of a traditionally built one. At the basic level, all modular/prefab homes have to comply with industry standards and are covered by the various state’s mandatory warranties. Colquhoun says Prebuilt houses made for Victorian rural areas achieve the Bushfire Attack Level ratings required following 2009’s Black Saturday tragedies.

But it’s attention to detail during the construction phase that prefab builders claim a big advantage. “The real benefit of this approach is that the client [and house] is getting so much supervision during the build,” said Rob Colquhoun. “On a normal house, high-level supervision only occurs occasionally, while here it happens all day, every day. Every day every project will have the foreman looking through it eight times, while on a site it might be once a week.”

The other winner is the industry itself as new construction methods create research into newer, stronger and more adaptable and sustainable building materials, which will in turn lead to more efficient construction methods. Speaking at the launch of a prefabAUS hub in August 2014, Peter Newman, a professor of sustainability at WA’s Curtain University, cited the example of the Stella Orion housing estate in Cockburn, south of Perth, where 76 modular apartments built by the Hickory Group were erected in 11 days. Professor Newman said the building was completed in almost half the time that conventional construction would have taken, and resulted in 50% less waste, which reduced construction costs by 10 to 20%, while the building’s thermal performance was 30% better.

THE FUTURE
The law of nature that requires species to evolve or die is just as brutal on manufacturing. In an interview with the Financial Review in July 2014, Sarah Backhouse, chief executive of prefabAUS said the building sector could lose 75,000 jobs and up to $30 billion a year to offshore competitors if it didn’t move to off-site construction.

Factory-built homes, units and rooms have already gained wide acceptance in many Asian, European and Scandinavian countries. In Finland the modular/prefab market share is 50%, while in Sweden, the home of modular furniture, it’s 74%. Here the market share is little more than 2% to 3%, an estimate Rob Colquhoun says is little more than “a stab in the dark.” Speaking at the prefabAUS hub launch recently, the Victorian manufacturing Minister David Hodgett said the modular/prefab industry should aim to reach 10% of all housing construction by 2020.

Zoran Angelkovski, the managing director of manufacturing conglomerate META, told Building Connection that education was a key to the industry’s future. “If you compare Australia with Japan or Europe there’s a greater level of acceptance there,” he said. “Here the perception of prefab is of shelter sheds we used to have at school.”

However, Angelkovski says Australia shouldn’t adopt the Chinese lowcost approach to modular/prefab construction “where all these containers are fitted out and cheap, but the quality isn’t there. This attitude is one factor holding back the industry.” In the same Financial Review article, Dean Lockhart whose company Probuild is erecting a high-rise apartments in Melbourne said, “They [developers] still see it as shipping containers tarted up. A big education process is needed to get industry backing.”

Rob Colquhoun says the industry’s segments need to be clearly identified so that homebuyers and traditional homebuilders can better understand how to participate. “For example, there’s a few companies that focus on apartments and are highly specialised and world class in what they do. Then there’s the medium to high-end residential providers, a lower range of providers at a lower price, and then the kit homes and granny flat builders.”

To help the education process, Colquhoun says a rotating showroom of modular/prefab houses in the inner city capitals would help expand the industry’s reach, which is currently more accepted in rural and regional Australia. He cites the example of PrefabNZ, which had seven different manufacturers build houses in The Hive, a home innovation village outside Christchurch, following the 2011 earthquake. “That set-up gave people an opportunity to walk through and experience modular/prefab houses, to stamp the floor and look at the designs, and that helped changed the perception in many people of what prefab housing was all about. To do that in inner Australian cities would be hugely beneficial and that’s one thing the government could do that would really help.”

In light of the taxpayer funding that for so long propped up Australia’s vanishing automotive industry, it’s not an unreasonable ask that some of that money be redirected to help develop the modular/prefab housing industry innovate, expand and potentially create thousands of new jobs. Hickory, the Melbourne based modular builder, has employed several former Holden engineers to design and build parts for its bathroom pods, which have become popular in the high-rise construction industry.

In April 2014 the federal government gave the sector $500,000 to help it develop new markets in Australia and abroad. Zoran Angelkovski says, “It’s not about government throwing money at us, but how the industry comes together to create the high value product and the acceptance by consumers and address issues of cost.”

META has helped prefabAUS create the industry hub comprising manufacturers and researchers and Angelkovski says one of the main aims is to “commercialise good ideas quicker and fi nd ways to become more competitive and grow modular/prefab housing’s market share.” This can be done, he says, by creating a collaborative platform of construction companies in the housing industry using research into design and construction by our universities. “It’s really addressing where Australia should position the new manufacturing, which is about mass capitalisation, sustainability and speed…”

When comparing the cost of traditional housing construction to modular/prefab homes, Angelkovski says the modular/prefab industry “is not where it should be at the moment.” He says the industry should aim to get to a point where builders can offer modular/prefab homes of quality quicker and at 30 to 40% less than traditional construction costs. “We have two or three companies that are building in a factory environment but when you look at the way they build them, there’s room for improvement. As the demand and volume increases, they’ll improve their processes and costs will reduce.”

Angelkovski says the industry would also help improve its image by putting its know-how into the “high-value” end of the market. “I’m not talking the Rolls Royce end of modular housing – I’m talking about the Calais, not the Commodore.”