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Can Prefab Help Builders Overcome a Growing Labor Shortage?

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Prefab + Panelization

Can Prefab Help Builders Overcome a Growing Labor Shortage?

Home builders are struggling to maintain a profitable construction pace amid a nationwide labor shortage, but prefab could offer a viable solution

July 25, 2022
Concrete wall slabs in prefab factory
Image: Stock.adobe.com

A growing labor shortage is strengthening the prefab structural component manufacturer industry as builders find innovative ways to keep projects on track with a smaller workforce. Revenue has grown 18% year-over-year for Prefab Structural Component Manufacturers, while component volume is up 14% annually thanks to a growing number of builders who switched to prefab as a labor alternative, John Burns Real Estate Consulting reports.

Still, the prefab industry faced its own challenges amid disrupted supply chains and heightened materials prices, and manufacturers felt that even more progress could have been made in new home construction projects if it hadn’t been for delays and cost overruns over the last several years.

Here’s what we learned in our first survey:

  • Revenue has grown +18% year over year, comprised of 14% volume growth and 4% price growth.
    • Component volume grew +14% year over year, as builders increased their orders with Prefab Structural Component Manufacturers. Even though prefab is a labor shortage solution, prefab manufacturers felt constrained by lack of labor.
    • Cost per component grew only 4%, as manufacturers were not able to pass along all of the cost increases they likely experienced. This may have been partially attributable to cost overruns on projects whose prices were negotiated up front.

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