David Heron - Previously Head of Strategy Development at LafargeHolcim
Talk of offsite & modular manufacturing still triggers thoughts of 1960’s “prefabs” and Soviet era “Plattenbau”. However, the reality is that although absolute levels of output remain low, offsite and modular solutions are beginning to transform construction in several important markets, including the USA, UK, China and Australia.
The implications on volumes and prices, and on the ways in which cement & concrete are used will be profound. In order to avoid being squeezed out by timber and steel solutions, the cement & concrete industries urgently need to take collective and collaborative action to develop a new range of high performance (high margin) products and solutions that meet the evolving needs of offsite manufacturers. For those brave and wise enough, significant opportunities exist.
Introduction
When considering potential impacts upon cement consumption, it is important to differentiate between analogue offsite and digitally enabled manufacturers working with digital models connected to automated manufacturing systems in factories, of which there are still few.
Furthermore, it is equally important to accept that there is enough data to confirm the benefits of offsite manufactured solutions in terms of:
- Reduction in cost;
- Improvements in quality;
- Timeliness of delivery;
- Sustainability of the buildings;
- Reductions in construction waste;
- Improved quality of jobs;
- Improvements in Health & Safety;
- Increases in total industry construction capacity.
In addition to these benefits, the conditions needed to push the industry towards the use of more offsite manufactured solutions are also occurring: housing shortages are reaching critical levels; societies and governments are demanding better value, and more sustainable construction; there is a shortage of qualified workers; digital construction tools are reaching a level of maturity and interconnectivity that is enabling the information exchanges need to make offsite easier.
Taking all of this into consideration, the increased use of offsite & modular manufactured solutions in construction is inevitable. While the transition from traditional construction to offsite manufacturing is likely to be messy and chaotic, it will also create a host of opportunities.
Assessing the impact of digitally enabled offsite & modular manufacturing on cement & concrete
In order to consider the impact on volumes, prices, costs and margins for cement & concrete, the impact from digital, from offsite, and from modular are considered separately.
The impact from digital:
The use of interconnected digital tools used by all actors in the construction ecosystem has several impacts on cement consumption, both for traditional construction solutions, as well as offsite. This includes, but is not limited to:
- Optimisation of building materials along various dimensions, including embedded CO2, lifecycle CO2, as well as speed, cost, and quality of construction. All are likely to reduce building materials usage, including cement & concrete.
- Increasing commoditisation of building materials as their characteristics become more easily compared and prices and costs across suppliers become more transparent, reducing margins.
- Improved supply chain efficiency using digital tools reduces material wastage and volumes.
- Better clash detection during design will reduce rework, waste and construction times.
The impact from offsite manufacturing:
The shift to offsite, non-modular solutions have further implications, including, but not limited to:
- A focus on weight as lifting and moving of offsite manufactured components in the factory to the site and on the site becomes a critical factor in the delivery of the structure. Steel and timber panels are both lighter than the current concrete alternatives.
- Manufacturing tolerances start to become important to ensure that products fit together onsite quickly, and without rework. Steel and timber are perceived to have higher tolerances, leading to a reduction in cement & concrete volumes.
- Speed of assembly where the dry solutions offered by timber and steel panels can be quickly connected, unlike concrete panels which are often supported and then grouted in to place.
- The construction of lighter buildings due to the adoption of timber and steel frame systems reduces the requirement for groundworks, further reducing the need for cement & concrete.
It is worth noting that in some markets building codes and/or cultural preferences continue to support concrete as a preferred material.
The impact from modular manufacturing:
When shifting to modular solutions, weight becomes a critical issue. The largest steel frame modules can be up to 5m wide and 19m long, a size that simply cannot be delivered as a module in concrete. The typical response from the concrete panel industry is that the modular industry is shipping lots of air to site. This is a legitimate argument when comparing the empty structure that a concrete panel solution delivers against an empty module. However, the latest modular manufacturers deliver finished modules, down to the desks, lamps and chairs, for example, CIMC in China can manufacture buildings in China and deliver them to site in the UK at competitive prices.
The consequence of this is that whether it’s Polish companies delivering to New York, Estonian companies to Scandinavia, or Chinese companies to Australia the lower weight of steel and timber modules gives them a competitive advantage, and a larger available market.
“The combined impact could be a 60% reduction in cement demand in new buildings”
The combined impact of all these innovations could lead to a reduction in cement consumption in new buildings of up to 60%. In fact, with the support of LafargeHolcim, the development DFAB House in Switzerland has already been shown that it is possible to reduce cement in a single building by 60% using existing know-how. Furthermore, as know-how is transferred from the automotive and aerospace industries, and the use of robotics in manufacturing increases, the need to optimise weight and the need to maintain dry, clean factories risks pushing manufacturers away from traditional concrete solutions towards steel and timber, reducing volumes – in an extreme scenario – by even more than 60%.
Returning to where we began, levels of offsite and modular manufacturing are still low. There therefore remains a window of opportunity for the development of higher tech, lighter weight, higher performance, higher value, higher margin cement & concrete solutions that meet the needs of this emerging, and rapidly growing, industry.
Given the long lead times to introduce new products to the construction industry and given that steel and timber both have long track records, the cement and concrete industries need to move with urgency to develop new solutions.
What is needed?
For the Cement & Concrete industries, and more broadly for society, to capitalise and benefit on the opportunities presented by offsite & modular manufacturing, the cement & concrete industries need to mobilize themselves to adapt the existing product portfolio for the needs of the factory-based manufacturers. The research needs to be taken out of the laboratory and industrialised and deployed at scale. Identification, Valuation and Management of the risks will require significant collaboration between cement, chemicals, concrete & construction companies, specifiers, insurers and certification bodies, as well as the end customers.
This is a significant challenge for an industry not known for collaboration, and there is therefore no time to waste. However, the rewards will be significant.
David Heron was previously Head of Strategy Development for LafargeHolcim, and recently co-founded tbc Offsite, an independent strategy consultancy, specialising in offsite & modular manufacturing strategy.