Move out of Modules

Among the bright dreams of better living through technology that were spawned in the 1960s was the vision of assembly-lme housing. There would be mass production in the factory of entire rooms, or modules, which would be shipped to building sites and stacked in place by cranes to create moderately priced homes almost instantaneously The vision bewitched, among others' George Romney, then Secretary of Housing and Urban Development He declared two years ago, that by 1980 at least two-thirds of all housing production will be factory produced."

That goal now seems out of sight Indeed, the modular-housing industry is in a state of shock, a victim of bad luck and slipshod planning. Sales, it is true have been climbing--to 120,000 homes last year, from 81,000 in 1971-- but they still constitute only about 5% of all housing starts. Profits on this low volume have been so thin that modular housing is now being abandoned by many of its would-be pioneers

Two weeks ago Fruehauf Corp the producer of truck trailers, threw in the hammer and joined a long parade of big companies out of the modular-housing field. In the last year or so ITT Levitt, Florida Gas Co., Potlatch Forests Inc., Hercules Inc. and Wickes Corp along with a score of smaller firms, also pulled put of the industry. Last year Florida's Behring Corp. cut its losses and closed down the nation's largest house-building plant. Beset by production and marketing troubles, another industry leader, Stirling Homex, crashed into bankruptcy seven months ago.

Many companies had scooted into the field without much planning in the belief that the Government was going to subsidize a large portion of the building costs, HUD's Operation Breakthrough did underwrite some production, but the department never laid out anywhere near as much money as builders had expected. Says Kenneth D. Campbell, president of Audit Investment Research, which specializes in real estate: "It wasn't really an industry at all. Just a bunch of companies with big hopes.' Some companies like Behring and Potlatch took great pains in design mg and equipping their plants, only to find that they could not generate enough volume to cover their investment and high fixed operating costs.

The sales of many builders of modular houses are effectively restricted to a 300-mile radius of their plants because of the prohibitively high rates of shipping modules, which range up to $1 a mile Also, community zoning and building codes round the country vary wildly, making genuine mass production for a nationwide market all but impossible. In an effort to overcome this problem, 26 states have agreed to uniform codes: yet to protect the highly paid jobs of craft union members, many codes are still fussy in demanding a certain gauge of wire for electric circuits a particular type of weld for pipes and specific widths for studs. The specifications almost force the use of hand labor on the building site.

Competition is also tough. On large development projects with more than 400 units, a sharp local builder of traditional homes can offer houses that look less boxy than the modular kind at close to the average modular price of $22,500. One reason: traditional builders in cold climates can, in effect, hibernate through the winter, in contrast to modular-home builders, who must pay the cost of maintaining a factory and a corps of trained workers. Though modular buildings are often a good buy for the money, they have yet to gain wide enough acceptance from the public, which still remembers the shoddy prefabricated houses of the post-World War II period.

Despite its current travail, modular housing still has great potential. Its advocates commonly say that the housing industry today is in the same state as the auto business in the early 1900s: it is painstakingly building handcrafted products at inflated prices. The other part of the analogy is that no Henry Ford of housing has yet appeared to show conclusively the benefits of assembly-line production at a moderate price.

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