In this episode, Julia Hansen interviews Hans Hawrysz, the Director of Product Development at GreenStaxx.
(If you prefer to read, the transcript is below)
Julia
Hello, and welcome back to the GreenStaxx podcast, Thinking Inside the Box. I'm Julia Hansen, your host, and I'm the Director of Business Development and Partnerships at GreenStaxx. Our aim for this mini-series of Thinking Inside the Box is to host conversations to explore how standardized design can be a solution to advancing the modular construction industry, thereby tackling the affordable housing crisis and creating healthier, more sustainable buildings.
So I'm here in our second episode with GreenStaxx Director of Product Development, Hans Hawrysz. Hi, Hans, and welcome.
Hans
Hi Julia, good to see you today.
Julia
It's good to see you. Hans has a long history of working in product development, marketing, and business strategy. He's done this for several Fortune 500 companies and held leadership positions in several technological startups. And Hans, you've worked with the founders of GreenStaxx for quite a number of years, isn't that right?
Hans
Yes, I have.
Julia
Great. Well, Hans is one of our deepest thinkers on the team about the benefits and requirements of using standardized design in the modular context. Today, we will talk about how standardization generally applies to the modular construction industry and hear from Hans where GreenStaxx is going and where the industry can become more efficient.
Why don't we just get right into it? When we talk about standardization, Hans, in the modular construction context or the construction industry generally, what are we really talking about? Can you lay that out for us?
Hans
Okay, sure. Well, I think the place to start is what you started with a significant national concern is that we're in a multifamily housing crisis. We can't produce enough housing fast enough, cheap enough, and with the level of quality that we want. And more importantly, it also needs to be at high performance.
The estimates are that we need to create about five million new housing units to meet the demand. So, to start, standardization fits in because we believe it's about the principles of mass production - the key part of the solution. We think adopting these principles is part of what we need to do.
The starting point is that mass production is based on standardized components, organized processes, assembly lines, and specialized teams. And I think the other essential thing is replication, doing the same thing repeatedly, which moves people up the experience curve and the economies of scale.
The results are higher throughput, consistency and quality, and reduced cost. Now, in our world, a relevant point in the construction world is that standardization is based on the standardization of dimensions and in terms of height, width, and length.
And there are some really interesting examples. Probably one of the greatest inventions ever made was the invention of the shipping container by Malcolm McLean in 1954. He standardized around a 35 x 8 x 11 container, revolutionizing the world. It is now a $14 trillion industry.
Another interesting example of the housing industry back at the end of World War II is Levittown, PA, where a developer created thousands and thousands of houses based on a 60 x 72 grid and was able to ship components to sites. They built thousands of houses, but it was based on a standardized dimension. And, of course, one that's relevant in our industry is the mobile home, which, again, after the end of World War II, was organized around dimensions of 60 x 72 and 12 x 16 feet wide.
Hans
So, all of these are examples of the standardization of dimensions that really led to significant improvements in quality and speed. The other important part about this is all of these were based on dimensions that allowed shipping of components across the road, which is what the modular industry is based on. In fact, the mobile home is the progenitor of what we would like to call the evolving modern multifamily industry.
If we take a quick look at the industry, we can see that the principles of mass production are now being adopted worldwide. In fact, in Europe, modular multifamily represents about 45% of all the new buildings going up, and in the US it’s at about 5 to 6%. There are lots of reasons why that is, and we can talk about that in another session.
I think another important thing is that historically, modular has been thought of as not very attractive and very utilitarian. Now, to dispel this, the new modular multifamily buildings are now winning awards for design and appeal around the world. So the idea that modular doesn't look good, I think has been dispelled.
So, I guess the other question is, how does GSX fit into this picture? I think the starting point, Julia, is that we would like to believe that GSX is a leader in multifamily modular design and production. The important part is how we've applied standardization: We've organized our units around 13 x 62 x 11 blocks.
These blocks can be laid side by side or stacked up to create buildings of various sizes and shapes. And the other important part is that each of these blocks, which then turns into apartments and units, are pre-designed and pre-engineered. So, all of the design elements are completed. All of the engineering is completed.
Hans
And each unit also comes with a complete outline spec. And what that means is that the flooring, the appliances, everything that goes into that unit is completely defined. And the other point is that these units are basically ready to go. So basically, they are on the shelf and ready to go and can be deployed on a site.
The other exciting thing is that we have also created a new product, the Triple Decker, based on a 13 x 54 x 11 grid. It's obviously a three-story building and is ideally suited for urban infill, apartment units, and townhomes. So, we think this combination can fit the market's needs today.
Our innovation of standardized modular units combined with organized design and production processes can provide developers with ready-to-go buildings with increased speed, quality, and cost.
But more importantly, I want to return to the replication principle. We think replication is at the heart of gaining the benefits of standardization. In fact, many industrial studies have demonstrated that with replication and going up the experience curve, you can reduce costs by 50%. So, we think that the principles of mass production, standardization, and replication are critical answers potentially to the challenges of affordable housing. And that's the story.
Julia
That is very well put, Hans. Yes, that is GreenStaxx's stance on how we can insert standardization methods into the multifamily housing process. I want to go back to something you mentioned earlier as a key, maybe more of a human, aspect of industrialized construction and standardization. You mentioned the learning curve of learning how to do each part of the process more efficiently and to higher standards or higher quality as a critical piece of the industrialization of construction. Can you tell me a little more about how the learning curve for discrete parts of the process comes into play when using standardized designs of modular buildings?
Hans
Okay, I think there are basically three components of replication. One is obviously the replication of plans. We spend a lot of time and energy creating plans. And one of the issues in the industry is that, basically, there's actually very little replication. Typically, the industry is based on starting all over with each project, essentially a one-off. So, one of the barriers has been the business model of the design and construction industry. So, the first element is the reuse of plans.
The second element is, when you get to the modular component, ensuring that the specifications for modular are met. One of the issues we've talked about is what makes modular very different from any other method of construction is everything has to be identified upfront.
You're building a product, so you can't go along and make decisions as you go. It has to be defined up front. So, the second part of it is to get to the modular piece: making sure that the modular manufacturer replicates the same plans time and time again. If we think about the difficulty of shop drawings, well, if you can reuse shop drawings, that can significantly speed up the process.
The third element is really about when the modules appear on site, which is really what people typically call the button-up process. How do you ensure that you do it the same way every time you do it? So the important part of that is also around the idea of teams, specialized teams. If we go back to what mass production is, it's really more of an assembly line process.
The implication is that you link together the design, modular, and construction elements into a continuous process. If you do the same thing over and over, you're going to have consistent quality and significant improvements in speed. And as we know, the industry has proven that you can reduce costs significantly.
Julia
Yes. The next conversation on this mini-series will be with our project architect for two of our triple-decker projects. We'll dive deeply into design savings when we have that conversation in a few weeks. So, Hans, it's clear that standardized design is a critical lever that can be pulled when doing modular construction. When I've been to conferences, and I'm assuming the same for you, for example, we go to the World of Modular Conference every year, and that's a convention for many modular manufacturers to come together and share what's working with them. We hear so much about their ability to customize designs and create these bespoke projects, but we don't hear too much about their need or desire to use standardized designs. Why do you think that is?
Hans
Well, I think it goes back to the discussion we had about the industry business model. The industry business model is based on the idea that every project is going to be unique. You assemble a unique group of players to build a building. The problem is that since you're organized around bespoke buildings, it's pretty hard to replicate.
You come back to the barriers to replication, the barriers to the experience curve, it's really a fundamental issue in how the industry is organized. If you think about it, if you're in the engineering or architecture world or whatever, the way you get paid is you create a project every time. If you're replicating plans over and over, it obviously begins to threaten the existing business plan.
So, if you come back to the barriers to moving up the experience curve, the barriers to economies of scale, a fundamental issue is the way the industry is organized. And I think the issue there is to find developers who really understand the savings and benefits that are incumbent in the replication and standardization process.
Julia
So, you see it as a developer-driven approach to the services modular manufacturers offer?
Hans
Yes, because it's only the developer who can then organize the process - again, those developers that are in the process of doing multiple projects. I think that if we go back to the idea of affordable housing, one of the issues is if you actually look at where the construction industry has been for the last couple of years it's been very much focused on high-end.
You know, you're building a Mercedes to satisfy the needs of affordable housing. The industry needs to think about producing Chevys and mass-market products. So it's really the developers who need to organize the process because they're the ones who basically dictate how it works. I think one of the things we're also beginning to see is more vertical integration which has been one way that people have achieved the benefits of replication and economies of scale.
Julia
Right. We often hear that analogy to the automotive industry with Henry Ford creating the assembly line and building so many Model Ts that you can have any color you want as long as it's black. There's a little bit more customization you can do with a modular housing product, though.
Hans
Yeah, exactly right.
Hans
Yeah, well, if you look at the way we look at it, you know, what's standardized is the dimensions of the units, the mechanical systems, the window openings, you know, et cetera. What's customizable is that you can put in various appliances and cabinets as long as they're the correct size. Of course, you can put in whatever kind of flooring you want. So you can customize the appearance to a very high degree.
You can't customize the fundamental dimensions - back to the importance of standardized dimensions.
Julia
You mentioned the dimensions of the shipping container, and they're actually quite similar to the dimensions that modular housing uses, or at least what the GreenStaxx unit designs put forward. Can you talk a little bit more about the importance of transportability or the connection between the shipping container size and how we've established the right dimensions for a modular housing box?
Hans
Yeah, yeah, that's a great point. If you come back to the other key principle of the modular industry, it’s really about offsite construction. You know, the ability to build in factories, build components, and use the assembly line process in a factory all implies that you need to be able to move those products to a construction site.
So, you can leverage the factory's power, but then you've got to get those units to the site. GreenStaxx units are optimized for two things. One is the assembly line in the factory. Secondly, there is the ability to move those units over the road.
So, back to the point you're making is that in our world, whether it's the shipping container, the Levittown homes or the mobile homes, the key ingredient is that all of these must be moved efficiently over the road to get to a site. So all of our units are optimized for both modular construction and for the ability to move them efficiently.
Julia
And I guess there aren't that many different dimensions that work both for optimizing the factory capabilities and for fitting down our standardized road widths across the country.
Julia
Well, Hans, how did you get into it, or how did you develop this interest in standardization and modular housing on a personal level? I'm curious.
Hans
Yeah. Well, I guess I have always had an interest in housing and basically driven by the fact that I moved around a lot and have built houses and have, you know, renovated buildings multiple times. And I find the ability to craft your surroundings to fit your personal needs is something I've always been interested in. And I happened to meet Gwen and Art a number of years ago in Cambridge and they explained the concept to me.
And the other thing is, I would say, in a significant part of my career, I've always been interested in what's new, what's different, and where the world of new products is going. And this issue of affordable housing has always been a critical question. So, I guess the combination of my interest in housing and the promise of basically industrialized production to solve the housing crisis has been something that's for a number of years has always interested me and attracted me to GreenStaxx.
Julia
Great. Well, if you had any guess or any specific suggestion for where the construction industry could go within the next, let's say, year to two years, what would you think or what would you suggest as a concrete next step for the industry?
Hans
Well, I think if you look at all the housing statistics, the luxury market is pretty tapped out. The demand for Class A housing is declining, and there's a huge unmet need for more affordable housing. And the market, we would like to believe, always goes after unmet needs. So I think the combination of governmental pressure and tax incentives and more advanced developers will change the industry.
Julia
Hans, I appreciate you coming onto the podcast to give us an overview of what standardization means in the context of modular construction and how GreenStaxx is approaching it.
Next, we will speak with Gwen Noyes, one of the GreenStaxx designers and the author behind our Passive House triple-decker design. And that does it for our podcast today. Thank you for listening to Thinking Inside the Box. Please remember to like and subscribe or put any questions in the comments.
The future is modular!