With a shared passion for offsite product and manufacturing process improvement, our Head of Building Products, Mark Goldsmith, jumped at the chance to sit down with Darren Richards. With 20+ years in senior manufacturing roles, predominantly in offsite manufacturing sector, Darren now runs Radar Communications (Offsite Magazine, Offsite Hub, Offsite Awards, Built Environment Hub, Structural Timber Magazine and Structural Timber Awards) and Cogent Consulting, a company that focuses on business and manufacturing process improvement within the building technologies arena. Here is what they discussed:
Mark: I suspect you guys are busy at the moment with the rise of offsite technologies now being back on everyone’s agenda. Your recent coverage on the Gabby Logan Radio 5 Live ‘All About Property’ programme and the various press releases with the national newspapers testifies that. Offsite seems to go through waves of exposure, in the early/mid-nineties, from 2000 to the recession of 2009 and now again. How can the industry prevent this being just another one of those fads?
Darren: Medium to long-term certainty of demand is crucial if the offsite manufacturing industry is to make the right levels of investment in order to capitalise on the opportunities presented. We are early enough on in this parliament and the Government is making all of the right noises for companies to make investment decisions (with a degree of certainty) that could see significant payback within a very short period i.e. four to five years. So this is a good thing! The challenge is for the offsite sector to get a decent foothold in the traditional construction market and to ensure that manufacturing volumes hit such levels that mean it is no longer cost competitive to go back to ‘traditional’ construction methods if/when the next recession happens. Only by achieving this foothold, of say greater than 15% market share of construction newbuild activity will the UK offsite manufacturing sector be able to maintain a constant position in the industry and not be seen as a fad. Present market share figures vary widely and are somewhat dependent upon which market sectors are being analysed, but overall the offsite manufacturing sector has in the region of 8-10% market share, so we have a long way to go to reaching that critical foothold position.
Mark: Much has been made of offsite production paving the way to more affordable housing in the UK. In solving the housing crisis, what positive measures do you feel the government has introduced to bolster the popularity of offsite technology amongst investors and manufacturers? (And what key incentives need to be followed through to ensure it does not fade away?)
Darren: The government has made some significant statements in recent months regarding the critical role that offsite manufactured construction technology has to play in solving the ‘housing crisis’. All of the statements, from the Housing Minister, Chancellor of the Exchequer and the Secretary of State for Communities and Local Government point towards ‘accelerated construction’ using ‘advanced manufacturing’ techniques. At last the government appears to have made the connection between construction and manufacturing and we are therefore seeing great potential within the ‘industrial strategy’ for offsite manufactured solutions to play a significant part in delivering infrastructure, schools, healthcare and housing demand, by addressing the skills crisis that has been much discussed following publication of the recent Farmer Review (Modernise or Die), which Ministers appear to have taken seriously. The most significant measure that Government has introduced is raising the profile of offsite construction – putting it on the agenda at the highest level and this has had a significant impact in recent months. The government doesn’t need to do much more, except to remain consistent with this message, as it is now up to the offsite manufacturing industry to pick up the ball and run with it. There is an old adage about ‘taking advantage of the opportunity of a lifetime in the lifetime of the opportunity!’ and I think this is the mantra that the offsite manufacturing sector should now adopt, while the opportunity is greater than we have seen it since the end of the second world war – 70 years ago!
Mark: During your time as Manufacturing Director at Elliott Group in the late nineties, you spent some time in Japan gaining knowledge of how companies out there have embraced offsite construction. What key themes and technologies did you bring back to the UK when developing Elliott eHouse residential system product range?
Darren: Clearly, the Japanese understand manufacturing and manufacturing investment – they pioneered world-class manufacturing techniques and so the short answer to the question is that ‘I learnt a lot’! My time in Japan was truly inspirational, working with Sekisui, Toyota, Daiwa etc. some of the largest modular housing manufacturers in the world. Their volumes are astonishing – producing more modules in one week from one facility than Elliott Group could produce in one month across all of our manufacturing facilities... with incredible levels of automation and an unwavering focus on continuous improvement. The key learning point was that the Japanese housing market is not a good comparison for the UK housing market! Culturally, financially, technically they are poles apart and the models are completely different, so whilst my trips inspired me as to ‘what could be’ we had to take a dose of reality when we started talking to the major housebuilders in the UK and understand that they did not want to build that way and that speed of build then was not the be-all and end-all. If we had had the evolution of the private rental sector then, as we are starting to see now, things would have been completely different and we would have seen high volumes of standardised eHouses hitting the market to fulfil a different residential need, and one which is more reflective of the student accommodation sector or the hotel sector in terms of its financial model and in particular the focus on rate of return! The learning from Japan will never leave me – it is still the benchmark in my eyes – and perhaps this current cycle of offsite manufactured housing demand in the UK will enable me to put more of the learning into practice?!
Mark: A sweeping statement, but manufacturing plants within the industry are still not run as efficiently as other industries. Continuous process improvement has been a hot topic for a few years now. Putting your cogent head on, what common areas for improvement do you see cropping up during manufacturing site tours?
Darren: Yes – this is a polite way of putting it! Many of the offsite technology manufacturing facilities in the UK have been described to me as ‘building sites under a roof’ and in most instances, this statement is hard to argue against. Naturally, there are a number of exceptions to this description, but sadly these are still few and far between because investments have not been made in the manufacturing plant to the scale that is required to achieve real market disruption and to attract manufacturing skills from other sectors. It goes back to the first question about the certainty of demand – if we have this then we will see investment, and with investment, we will see significant cultural changes. On a day-to-day basis, I see lots of great product innovation and product development where boundaries are truly being pushed, but I also see a lot of manufacturing systems that are lacking robustness and scalability, particularly in areas of supply-chain integration and material management. This is a common area for potential improvement in my view as there are plenty of other industries in the UK that have perfected this art and that we can migrate knowledge and learning from, such as the automotive industry, the aerospace industry and the food manufacturing industry – all of which can teach the offsite manufacturing sector a thing or two! We don’t need to baffle businesses with lean manufacturing jargon or world-class manufacturing techniques terminology to make them improve. We need to demonstrate best practice in other sectors and apply a common-sense approach to many of the improvements that are there to be had within the offsite manufacturing sector.
Mark: We have talked about injecting manufacturer senior management teams with fresh talent from other industries. Why do you think there is still a stigma attached to firms looking elsewhere when, often, the manufacturing process is not dissimilar?
Darren: I don’t think that there is a stigma per se – but I know that there is a reticence in bringing in senior personnel from other sectors through fear of frightening them away when they are exposed to some of the inadequacies that I point out above. We need to sell the long term offsite manufacturing sector vision to these people! We have to show them how inspiring it is to see a building come to life and to have a direct effect on transforming communities. We have to convey the dynamic and fast moving pace of the sector and the excitement that can be engendered when delivering truly ground-breaking technology to construction sites – seeing the faces of the site operatives when whole elements of the building arrive on the back of a truck and a weathertight structure is erected in a matter of days/weeks rather than months. The challenges of the construction industry and the offsite manufacturing sector that sits within it are not for the faint hearted and you have got to be made of stern stuff to be part of the sector, but the rewards for building successful offsite manufacturing businesses and delivering quality products/systems to site are incredible. It is time that we shouted louder about the opportunities that exist and make people in other sectors see the real potential that lies in us creating a world-class offsite manufacturing sector in the UK.