Ed Hudson Questions Wall Panel Framing?
Ed Hudson, director of market research at the Home Innovation Research Labs (HIRL) recently reached out to SBCA stating, “I regularly have debates about residential market penetration of wood-framed shop and factory-built wall panels. The Census reports the market penetration to be about two percent of new single-family homes in 2018—a similar penetration rate to modular. Our surveys have tended to show wall panelization at six to eight percent penetration over the past decade for open wall panels, and higher for multi-family. What is SBCA’s view on market share for open/closed wall panels in new single-family homes?”
Based on SBCA’s Financial Performance Survey (FPS), wall panels are about eight percent of gross sales for truss manufacturers. Therefore, if the engineered industrial framing market size is $6 billion, the dollar volume of wall panel use in single-family and multifamily construction is roughly $480,000,000 or about $369 per housing start. This seems reasonable in terms of expected market penetration. Based on conversations, there is very little closed wall panelization due to inflexibility on the jobsite and the need for in-plant inspections.
There are hybrid approaches where some wall panelizers are installing windows, and/or affixing exterior water resistive barriers, cladding, foam insulation, etc. This still allows MEP and inspections to be done in the field. These approaches provide value through reduced onsite labor requirements and construction cycle times.
Wall panel use is higher in multifamily than single-family, but still has considerable room to grow. A key wall panel issue is that there may not be enough labor cost reduction to save the cost of shipping air and machine handling and lower install time cost. In addition, framers still like the flexibility of wall framing on site.
One emerging trend is to precut and mark all the wall parts and ship these parts as precut packages. This lowers shipping cost (less air on the trailer), reduces the skill needed to put the walls together and allows the same framing flexibility that the traditional approach provides.
When it comes to wall panels, there are several good approaches to choose from. It all comes down to figuring out what the best economic solution is in your local market so everyone in the supply chain has confidence they can make a reasonable amount of money within the business model they choose to operate with.
It is clear that CMs that talk to their builder/GC and/or framer/installer customers often will find ways to make wall panels valuable to them and create long-term profitable relationships. (Please review Mike Ruede’s podcast for a CM POV on market development) The best outcome is when customers believe you are a key team member because you bring them wall panel knowledge that provides reliable solutions to their problems and leads to both of you being profitable.