Recent data on offsite manufacturing and modern methods of construction
The Australian Bureau of Statistics annual Australian Industry data is now available for the 2022-23 financial year. This data includes output as Industry value added (IVA, in current dollars for the financial year) and employment in June for industries and their sub-divisions. For manufacturing the data is more detailed with output and employment at the level of industry class.
There are 12 construction related manufacturing industry classes, such as those producing paint, cement and structural steel. Two of those classes are Prefabricated wooden structures and Prefabricated metal buildings, and this post first presents the data for those industry classes up to 2023. However, as well as manufacturing, other industries involved in offsite manufacturing (OSM) are construction, design services and business services. Therefore, the second part of the post collects recent information on prefabricated and modular building at the state level to get a wider view on current industry trends, with a focus on prefabricated buildings recently delivered for State Governments, typically under a modern methods of construction (MMC) policy. The third section looks at possible actions by government and industry that would increase the use of MMC in Australia.
The ABS data is limited to the relatively small number of firms that classify themselves as prefabricated building manufacturers, and thus excludes offsite work by firms that are classified as building or trade contractors (e.g. Hickory Building Group), architectural (e.g. Dimension X) or engineering (e.g. James Energies) practices. It also excludes OSM done inhouse by other industries like hotels for tourism, student housing, manufactured housing estates, retirement and aged care accommodation.
Therefore, unfortunately, the actual extent and depth of prefabrication and OSM used in Australian construction cannot not found from ABS data. The lack of accurate and up to date data on how many and what type of prefabricated buildings and components are produced each year in Australia is a significant gap in knowledge and understanding of the industry. Because OSM and prefabrication have an important role to play in increasing housing completions, particularly social housing, and addressing the industry challenges of sustainability, productivity and skills this gap also has important policy implications.
Prefabricated Wooden Structures and Prefabricated Metal Buildings
In June 2023 total employment in the two industry classes was 10,048. The great majority are employed in Prefabricated metal building with 8,636 people, compared to Prefabricated wooden building with 1,412. However, since 2015 employment in Prefabricated wooden building has doubled, increasing by 102%, while Prefabricated metal building employment increased by 59%. While these employment figures are fully representative of the industry, they may be the one of the best indicators available for the growth of OSM in Australia.
Figure 1. Employment in prefabricated building
Source: ABS.
When Prefabricated metal building and Prefabricated wooden building are combined, their percentage in IVA and employment of total construction related manufacturing has been gradually increasing since 2018. As Figure 2 shows, IVA growth dipped in 2017 and 2018 and employment was the same in 2016 and 2017. From 2018 to 2023 there was continual year on year increases in the shares of IVA and employment. Although not spectacular, this growth is indicative of wider industry growth.
Figure 2. Prefabricated building manufacturing industry share
Source: ABS.
There are other, much larger, ABS construction related manufacturing industry classes that produce building components with some unknown proportion of OSM and prefabrication in their output. These other industry classes include Wooden structural fittings and components (employs 27,908 people), Concrete products (employs 8,133 people), Structural steel fabricating (employs 21,521 people), and Architectural aluminium products (employs 16,703 people).
Measured as IVA per person employed (in current dollars), the productivity of the prefabricated building industries is higher other wood and metal manufacturing industries. As Figure 3 shows, Prefabricated wooden building has 60% more IVA per person than Wooden structural fittings and components, and 40% more than Veneer and plywood manufacturing (employs 1,268 people).
Figure 3. Wood product manufacturing productivity
Source: ABS. IVA in current dollars.
There is a similar story for metal products, in Figure 4. Prefabricated metal building has 45% more IVA per person than Architectural aluminium products and around 11% more than both Structural steel and Metal roof and guttering manufacturing (employs 4,162 people).
Figure 4. Metal products manufacturing productivity
Source: ABS. IVA in current dollars.
Queensland
QBuild’s modern methods of construction (MMC) program is building homes in a factory at Eagle Farm in Brisbane, opened in 2022. There is also a Rapid Accommodation and Apprentice Centre that provides training.A second, smaller RAAC operates at Zillmere. A third factory and RAAC in Cairns will open in mid-2024. There are 11 industry partners: Ausco, Fleetwood, Hutchies Modular, Modscape, Blok Modular, Eco Cottages, James Engineering, ModnPods, Saltair Modular, Volo Modular, and WestBuilt Homes.
The government’s Homes for Queenslanders initiative aims to deliver 53,500 new social homes by 2046, with more than 100 modular homes built in 2023 and more than 150 homes expected by mid-2024. The June 2024 budget includes $2.8 billion for up to 600 modular homes in 2024-25, and the medium term goal is to increase social housing production to 2,000 homes by 2027-28, a goal that puts Queensland at the front of housing policy in Australia.
In Hervey Bay, 11 Volo Modular homes manufactured at Volo’s Yatala facility were delivered over two days in November 2023. Volo is also producing seven homes to go to Eidsvold. Also in Hervey Bay, a modular 24-bed medical ward is expected to be completed by the end of 2024 as part of the expansion of the hospital. In Gladstone, six two-bedroom modular homes constructed in Hutchinson Builders’ Toowoomba factory have been completed.
New South Wales
In May the NSW Government and the Building 4.0 CRC committed $2 million each to developing and testing prototypes of medium-density social housing projects that incorporate MMC.
In May forestry company Pentarch group invested in Green Timber technology (GTT), a modular builder fabricating a timber kit of parts of walls, roofs and floors that is setting up a new factory in Orange. GTT has been prequalified for the School Infrastructure NSW scheme that uses a standardised design for buildings.
Through Homes NSW the Government opened an offsite procurement list in April as part of a $10 million MMC development programme. The procurement list covers 3D primary structural systems (volumetric or modular), 2D primary structural systems (kit-of-parts), additive manufacturing, and non-structural assemblies and sub-assemblies like floor and wall cassettes and kitchen and bathroom pods. Applications are to include a description of ‘how your business contributes to the skills development of the MMC workforce, and the NSW Government’s skills and training policy’.
The Manufacturing for Schools program incorporates prefabricated elements to deliver new and upgraded school buildings for School Infrastructure NSW. In February the APP Group was awarded the Manufacturing Partner contract, responsible for connecting the supply chain to deliver the ‘kit of parts’, with partners including Lipman, Ark, MBM, WSP, Woods Bagot, Bennett and Trimble, Richard Crookes Constructions, and Roberts Co.
In November 2023 a modular construction taskforce was set up, with representatives from PreFab Aus, Shelter NSW, Community Housing Industry Association, Local Government NSW, Property Council of Australia, Government Architects, Industry suppliers and union representatives. alongside people with lived experience of social housing. In the 2023-24 NSW budget $10 million was allocated to new social housing supply and innovative solutions to get people off the social housing waitlist.
Victoria
Melbourne-based Modscape opened a new Modbotics division in a 20,000 square metre facility in Essendon Fields in May 2024, after a two year installation and commissioning period. Modbotics was established to manufacture open and closed walls, passive house walls, and floor and roof cassettes, using a Randeck Robotics production system. Randeck are a leading provider of automated production systems and equipment for prefabricated house production.
In March 2024 Homes Victoria announced an Expression of Interest for supply of 250 modular homes in Regional Victoria as part of the Modern Methods of Construction (Modular) Regional Victoria project, aimed at supporting the provision of social housing in the region. The project aims to deliver the homes by no later than 2026-27, with a phased delivery program expected. The Office of Projects Victoria's goal is for all projects to use offsite construction techniques where feasible and efficient.
The first of 25 dwellings for the Homes Victoria and Haven Home Safe social housing project in Horsham, Victoria, built by modular builder, ARKIt, arrived on March 29. The tender process involved both traditional and modular builders, and the ARKit proposal, including all site and civil works, was approximately 8% lower in cost.
In what was the Ford factory in Geelong, Cross Laminated Offsite Solutions (CLOS) is installing an automated production line to produce modular and flat-pack buildings. Their Homag-Weinmann panelised manufacturing wall line can cut a kit of parts for a modular home in a single day or a three-storey townhouse in three days. Homag is a leading automation and timber frame construction company. CLOS have partnered with Geelong’s Gordon TAFE for a Construction Pathways Program, a course for new workers. However, on May 28 CLOS announced it was going into ‘voluntary administration to restructure and stabilise the business and seek investment for future growth’. More capital is needed because of the cost of establishing the new factory. CLOS claims it has a significant order book of future work.
South Australia
Timberlink’s new cross-laminated timber (CLT) and glue-laminated timber (GLT) manufacturing plant in Tarpeena, South Australia, opened in February. The NeXTimber facility is Australia’s only combined CLT and GLT radiata pine mass timber facility, integrated with a structural timber manufacturing plant. Capable of producing CLT panels up to 16 metres long and 3.5 metres wide, and GLT beams up to 12 metres long, the project was supported by a $2 million grant from the South Australian government under the Strategic Business Round 2020 of the Regional Growth Fund.
Fusco Constructions is building a modular construction factory of 4,000m2 at Tonsley Innovation District, a former Mitsubishi car manufacturing site. Fusco Constructions was a plumbing business that expanded into civil, commercial and development projects, and now modular construction.
Western Australia
The Western Australian government took delivery of 19 new social homes in Hamilton Hill, Western Australia in April. The 19 homes were manufactured by Perth-based panelised timber specialist manufacturer, OFFSITE. Their manufacturing process uses Homag-Weinmann timber processing machinery with an integrated ‘digital twin’ software solution by hsbcad that connects the process, from design through to manufacturing and assembly.
Ausco Modular is delivering a $15 million double-storey school building in Kwinana, Western Australia. The modular school building is part of their Progress-ED range, developed by in-house engineers and designers. In March the WA government announced Highgate Primary School will receive a similar two-storey building. Budgeted at $12 million, the building will be constructed using the MMC methods demonstrated with the Kwinana project.
Tasmania
Property developer David Marriner currently owns a factory in Brighton producing concrete segments for Tasmania’s Bridgewater Bridge. Upon the bridge’s completion, he intends converting the factory into an automated facility capable of producing precast panels for 1,700 houses annually. The conversion of the factory will require investment of approximately $30 million, and Marriner is not seeking government funding for the conversion but is looking for government support in housing orders to ensure a stable financial base for the factory.
Bridges
Australian company InQuik has built over 200 bridges using a modular system with prefabricated formwork trays with reinforcing steel that are placed onsite and filled with concrete, reducing construction time. The formwork is made from Magnelis, a corrosion-resistant material from ArcelorMittal Europe, and remains in place after concrete is poured. The system has now been used in the United States, where a 9-metre-long, 8-metre-wide bridge in, Eau Claire County, Wisconsin, was completed in a month, compared to three-to-four-months for a traditional bridge.
Mass timber
In May Cedar Pacific, an Australian property investment firm, and Sumitomo Forestry Co., a Japanese forestry and wood management firm, entered a strategic partnership to develop a $1.2 billion portfolio of build-to-rent apartments, in Australia and New Zealand using mass timber buildings. Sumitomo Forestry will acquire just under 50% equity in the BTR projects, starting with a $375 million development in Brisbane. The joint venture has a pipeline of projects in Melbourne, Canberra, Brisbane, and Auckland.
What Could the Commonwealth Government Do?
In March 2024 Building Ministers ‘agreed to work together to cut red tape and enable further expansion and growth in Australia’s prefabricated and modular construction industry.’ The Australian Building Codes Board is to ‘work closely with industry bodies and jurisdictions to reduce barriers’. The next Building Ministers meeting is in June.
The Commonwealth Government is responsible for the National Construction Code and the Building Code of Australia. Revising and updating these is a slow, consultative process from initial proposal through technical advice, impact analysis, comment and review, and the process would be speeded up with more resources. These would allow the Australian Building Codes Board to develop performance standards for prefabrication and modular construction for inclusion in the NCC, and Standards Australia to review relevant standards and develop a set of ‘deemed to satisfy’ construction solutions for prefabrication and modular construction. A set of standards for MMC would be the basis for a quality assurance scheme like the UK‘s Buildoffsite Property Assurance Scheme (BOPAS) discussed below.
What Could State Governments Do?
State governments could identify unused land or repurpose appropriate sites for housing development with MMC. By specifying the use of prefabrication, modular construction or 3D concrete printing these developments would be demonstration projects for MMC. Access to data on costs of construction for different versions of MMC for researchers should be a contract condition so a credible evaluation of comparable delivery costs can be published. There are also Commonwealth Government sites this applies to.
Technology and training centres like the Queensland RAAC can be established to produce social housing or essential worker housing. A version of this model could also be used for training workers and producing indigenous housing in regional areas.
Institutional projects like hospitals and schools can be built with prefabrication and modular construction, the NSW Schools Infrastructure program is a model for this. Again, these can be used as demonstration projects and data on costs and defects should be published for the finance and insurance industries to assess risk associated with MMC.
What Could Industry do?
The UK Buildoffsite Property Assurance Scheme (BOPAS) was developed to address the risks associated with MMC. It provides firms independent third party accreditation to industry standards and allows access to mortgage financing and insurance for MMC projects. The scheme was developed by MMC industry association Buildoffsite with insurance companies and finance industry associations input, and started in 2013. A similar certification scheme is needed for Australian MMC producers.
Conclusion
The scale and extent of offsite manufacturing and MMC in Australia is not well defined at present. There are many producers, ranging from large contractors like Hutchinson to architectural practices like Dimension X. New factories are being set up in 2024 in NSW and South Australia by builders and contractors, and by government in Queensland. How many producers there are and what type of prefabricated and modular construction (volumetric, panelised, pods etc.) they are producing is not known.
That is because ABS industry data does not include offsite work done by firms classified as building or trade contractors, architectural or engineering practices, or work done inhouse in industries like hotels for tourism, student housing, manufactured housing estates, retirement and aged care accommodation. The ABS problem in measuring the prefabricated building industry is that the industries firms involved come from include manufacturing, construction, professional and design services, and this sort of detailed data spread across different industries is hard for the ABS to collect.
With OSM and prefabrication being seen as important to addressing the industry challenges of providing affordable housing and improving sustainability, productivity and skills, this lack of data is regrettable. The lack of data on how many and what type of prefabricated and modular buildings and components are produced each year in Australia is a problem if an objective of industry policy is to increase the use of prefab and modular construction.
Nevertheless, there is good evidence that MMC is growing strongly in Australia, both from the ABS data and from reports from industry. State governments have started sponsoring prefabricated and modular buildings, although some of these programs are small scale, toe in the water trials where a few buildings have been procured for regional centres. On the other hand, the NSW schools program and Queensland’s housing policy are major policy commitments to MMC. Some state government owned sites should be used for housing developments specifying MMC for demonstration projects, and researchers given access to cost data for evaluation and credible comparisons.
Queensland is leading in promoting MMC. Qbuild has established three factories and training centres, and produced over 100 houses in the last year. There are 11 industry partners in the Homes for Queenslanders MMC program, which has the goal of delivering 53,500 houses by 2034 through a combination of contractor and government production, and the 2024 state budget has funding for 600 prefabricated houses.
Timberlink’s new cross-laminated timber (CLT) and glue-laminated timber (GLT) factory in South Australia joins Xlam in NSW and Cusp in Tasmania as Australian manufacturers. There is also Crosslam Australia manufacturing CLT panels in Perth and Hyne Timber in NSW making GLT beams. The number of high-rise buildings using mass timber is growing with current projects like student accommodation for La Trobe University and the T3 office block in Melbourne, residential tower C6 in Perth, Atlassian’s new Sydney headquarters (the world’s tallest hybrid timber tower), the Sydney Fish markets, and Cedar Pacific’s build-to-rent development in Brisbane.
At the May Building Ministers meeting enabling growth of MMC was agreed. The Commonwealth Government should increase the resources available to the Australian Building Codes Board to develop performance standards for prefabrication and modular construction for inclusion in the Construction Code, and to Standards Australia to review relevant standards and develop a set of ‘deemed to satisfy’ standards for MMC. These would be the basis for an Australian quality assurance scheme like the UK ‘s Buildoffsite Property Assurance Scheme.
