Volume 3 Number 8
September 2006

In this Issue
Lean Production Techniques May Advance Factory-Built Housing
Examining Hispanic Homeownership
Homeowners: The Last Defense in Preventing Moisture Damage
When Low-Income and Minority Families Buy Their First Home

Lean Production Techniques May Advance Factory-Built Housing

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Lean production techniques, which first proved successful in streamlining the automotive industry, promise to have far-reaching benefits for both the factory-built housing industry and the consumers it serves. The overall goal of lean production is to build the best product at the lowest price in the shortest possible time - all while maintaining customer satisfaction. For many manufacturers, adopting lean production methods means making a significant departure from traditional mass production procedures to those which support a continuous customer-driven workflow, foster ongoing improvements, empower employees, and eliminate waste. The industry-wide adoption of lean production techniques is one of the top research priorities suggested by business, industry, and government leaders for manufactured housing. [See Factory-Built Housing Roadmap (Including Recommendations for Energy Research) at www.huduser.org/publications/destech/roadmapping.html.]

The Manufactured Housing Research Alliance (MHRA) recently conducted a study for HUD's Office of Policy Development and Research and the Partnership for Advancing Technology in Housing (PATH) that established a baseline for measuring the impact of lean production strategies on factory-built housing plants. Researchers then looked at how a home manufacturer might implement lean production methods.

Manufacturers can improve their production capacity with minimal additional expense by applying lean production techniques to manufactured and modular home construction.

Benchmarking Survey

MHRA surveyed 141 factory-built housing plants in 27 states and Canada to develop a baseline for determining the effect of lean production techniques on home manufacturing. A report of the key findings, Getting Lean: Assessing the Benefits of Lean Production in Factory-Built Housing, describes the highs, lows, and national averages for 11 basic plant metrics and 11 productivity and quality measures. Researchers found wide variations in performance within the factory-built housing industry, which could be attributed to such factors as geographic location and differences in product lines. These performance variations make it difficult to draw industry-wide conclusions from the survey, but researchers concluded that ample opportunities for improving operational performance within the industry do exist.

Applying Lean Techniques

The Capsys Corporation, a modular housing manufacturer based in Brooklyn, New York, was selected as the site where researchers would test the applicability of lean production methods. Capsys' product targets first-time homebuyers seeking affordable housing in urban areas. The company uses a steel-based building system to produce townhome modules that are sold to developers and general contractors. Projects run from 70 to several hundred units in size. The plant works on one project at a time, retools for each job, and delivers its units to the building site, where the company also installs them.

A case study team consisting of industrial engineers, a structural engineer, energy-efficiency specialists, and Capsys managers used a concurrent engineering approach to find ways to apply lean production techniques to the product design and manufacturing operations. The industrial and structural engineers looked to maximize plant performance while using as few resources as possible, whereas the energy analysts' goal was to optimize efficiency through low-cost design changes.

Combining what was learned from the benchmarking survey with detailed observations of the plant's activities, the case study team established performance baselines, identified inefficiencies, and suggested alternatives based on lean production principles. Their recommendations focused on incremental changes to existing practices that had a high rate of return and low cost, required no major capital investment, and were applicable to most Capsys products. The chart below lists the team's top 10 recommendations, provides an estimate of the relative implementation cost, and projects the potential savings to Capsys.

These and other recommendations suggest that Capsys has a significant opportunity to improve production and capacity for only a small amount of additional capital. Still, another kind of investment is necessary, in that making the changes will "demand time and dedication from management and a substantial cultural and operating change."

The plans for the next phase of lean production research have already been drafted. The benchmarking survey and analysis of the Capsys operation have yielded data that suggest expanding the pilot program to six or eight factory-built housing plants is merited. By increasing the number and variety of factory housing manufacturers, the second phase of research activities promises to benefit the entire industry. If the result is higher-quality, more energy-efficient, and more affordable homes, efforts to institutionalize lean production techniques among factory-built housing plants throughout North America are worth pursuing.

Getting Lean: Assessing the Benefits of Lean Production in Factory Built Housing can be downloaded free of charge at www.huduser.org/publications/manufhsg/leanprod.html.

Source: Manufactured Housing Research Alliance, Getting Lean: Assessing the Benefits of Lean Production in Factory-Built Housing. U.S. Department of Housing and Urban Development Affordable Housing Research and Technology Division, December 2005, p. 23.