"Our Industry's Future" The President's Message, January 2000 by Linc Moss, Ramtech Building Systems, Inc.

Well, we all survived the turn of the century. Thanks to the tireless efforts of programmers over the past several years and particularly the last eighteen months, Y2K came and went with not so much as a flicker in the lights, no run on banks, no stock market crashes, no inadvertent strategic missile launches, and indoor plumbing continued to work. All in all, life is good. Crossing such a significant calendar date, however, does make one reflect upon our past and what may lie in the future for our industry. The theme of our upcoming annual convention and trade show is just that: "Celebrating our Past, Managing our Present, Engineering our Future."

First off, let me say that I am probably the least qualified individual on the planet to claim to know what the future holds. Realizing this fact, I solicited the opinions of several industry leaders across the country to see what thoughts they held for the future. Since our industry has come into prominence over just the last fifty years, longterm predictions (beyond five years) are extremely presumptuous. The following is a sample of the conversations with these individuals broken down into the three industry councils MBI represents.

Manufacturing Environment
Kim Coates, President of Mark Line Industries, Inc.
Marv Shetler, President of Blazer Industries, Inc.
 

• Labor is the greatest challenge that we face.
  • National unemployment is at its lowest levels in the past half century. The number of qualified blue-collared workers continues to shrink every year as young people seek careers in the information and service sectors of the economy.
  • We must figure out a way to get more productivity from fewer people. Through revised plant layouts or better material handling processes, workers and work areas will have to become more efficient.
  • Manufacturers of all products will be faced with the specter of coming up with creative ways to compensate and retain labor forces.
  • The shortage of qualified workers will place a greater emphasis on training and development of skilled workers.
  • The greatest fear is an inflationary abor market driving up the cost of production.
• Greater dependency on technology.
  • Utilization of the latest generation CAD (computer aided design) programs that allow 3-D solid modeling will become universally accepted.
  • Utilization of ERP (Enterprise Resource Management) programs that tie inventory, purchasing, and pricing systems together will gain momentum. These programs are widely utilized in other forms of manufacturing particularly when product standardization is evident. The diversity of product produced by our industry, however, have slowed acceptance of ERPs. The next several years will show advances in the software and a greater familiarization with the concept and it's benefits both contributing to greater acceptance.
  • Due to the diversity of product manufactured, the indifference we've shown to factory automation will probably continue. Even with the critical labor shortage, robotics, gang-nailers, and laser guided saws driven by CAD programs are not on the immediate horizon.
• Continued if not greater instability in material pricing. Building materials have become extremely commodities related. Every natural disaster resulting in property damage seems to spike material pricing. This trend will continue.
• Code enforcement will become more stringent.
  • National adaptation of the International Building Code will provide a more consistent starting point for plan reviewers and inspectors. Just as with the HUD code, greater familiarization will equate to greater enforcement.
  • Codes will continue to be written towards conventional construction, not factory built. As the codes raise the bar on building performance, many construction and flashing details will not lend themselves into a manufacturing environment, requiring considerable redesign or different manufacturing techniques.
• Currently we are utilizing the Internet for marketing purposes only. A transition to E-Commerce for purchasing of building materials, checking supplier inventories, etc. will come about in the near future. A full transition to E-Commerce (both buying and selling of goods) is inevitable.

Dealer Environment
Ray Tyson, President of Tyson Corp.
Jeff Deutschendorf, Vice President of Mckinney Mobile Modular
 

• Construction as a whole will continue to polarize. Big companies will get bigger, smaller companies with less resources will fade and die.
  • This will present sales opportunities for our industry in the void created by small commercial building contractors falling by the wayside.
• Our industry will continue to mature and legitimize in the way we conduct business. We have recognized that our one true competitor is other forms of construction. This is forcing a reevaluation of all aspects of this industry.
• A trend towards ownership will continue as operating leases appear in decline.
  • Lower interest rates have fueled ownership combined with a more sophisticated customer who recognizes that in many long-term applications ownership is less expensive.
  • Leasing for certain market segments will continue to thrive, particularly larger companies allocating assets in areas other than facilities.
• The trend of industry consolidation through acquisition will continue.
• Pricing sensitivity will place a premium on service and perceived value in the future.
• Sources of supply will continue to tighten. Lead times from the factories will stay at current levels or even go out farther. This will place a premium upon strategic partnership development between dealers and manufacturers.
• E-commerce on sales and rental of standard products will happen within in the next two years.

Integrated Environment
Robert Kullman, President of Kullman Industries, Inc.
Mike Morton, President of Modular Technology, Inc.
 

• The customer has and will continue to become more sophisticated. Evaluating and changing to meets the customer's needs will offer an even greater challenge in the future. The idea of overnight delivery that E-commerce promises will continue to raise the bar for expectation in all other fields of commerce.
• Many customers are looking for total project management or "one stop shopping" for their new construction projects.
  • In the private sector "design/build" will become a significant project delivery system. On public funded projects, many states currently have laws banning the use of a design/build project delivery systems. As these laws are rescinded, design/build will become an even greater factor in commercial construction.
  • Architectural, mechanical, electrical, site improvement, and landscape design combined with fabrication of the building and total construction management will become services that virtually all Integrated Manufacturers provide.
• Finding and employing good management personnel will become an ever increasing problem as manufacturing and construction companies compete against service and information companies. This places a premium on grooming in-house employees for management positions.
• Additional applications for commercial modular buildings will open up through the use of "blended construction" where modular technology is combined with other forms of construction.
• As our economy enjoys the longest and strongest expansion in many years, the environment has crept up everyone's priority list. This will place a greater emphasis on "green building" construction. Building users are becoming more sensitive to the environment both outdoors and indoors. This will force builders to utilize renewable and environmentally friendly materials and research design and construction techniques that render this type of building.

In our conversations, the first issue mentioned by every individual was the challenge of finding and keeping good people. Both in labor and management, our industry is competing against many more glamorous career opportunities for our nation's youth. This challenge is not short-term. Construction and manufacturing as a whole will continue to deal with this problem well into the next decade. On the up side, the outlook continues to be as good as it has ever been for this industry. Factory backlogs are at all time highs and sales activity remains high.

On a personal note, since this is my last President's Message, I would like to take this opportunity to thank the current MBI Board of Directors and Judy Smith, Steven Williams, and Matthew Gunning at MBI Headquarters. All of these individuals have worked extremely hard to make this year a success for our Association. It has been my pleasure to serve as your President over the past year and look forward to seeing everyone in Orlando at the 2000 Millennium Convention & Trade Show. Until then, have a happy, safe, and prosperous New Year.

Copyright © Modular Building Institute, January, 2000.