The construction industry is known for its slim profit margins and erratic market cycles—this despite accounting for $13 trillion in spending worldwide in 2023, or approximately 7 percent of global gross domestic product. Many of the sector’s inefficiencies stem from low gains in productivity, which, according to a report released by McKinsey & Company in August 2024, lags that of other industries. The construction sector saw just a 10 percent improvement in productivity between 2000 and 2022, compared to a 50 percent gain across the entire economy and 90 percent within the manufacturing sector.
Modular construction has long promised to address industry roadblocks such as a decline in skilled workers and the lack of standardization from one project to the next. Successive high-profile construction startups, like Katerra, which filed for bankruptcy in 2021, have seemingly been unable to crack the code of long-term viability. But the fact remains, modular construction—with components manufactured within controlled settings and shipped as either flat-pack assemblies (think IKEA, but with building systems and components), or volumetric forms (fully integrated stacked boxes)—can offer a suite of advantages when compared to traditional modes of building, especially in residential construction.
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