A Virginia Tech-led partnership has received more than $450,000 from the Appalachian Regional Commission to develop a workforce training strategy focused on modular construction.
Modular, or industrialized, construction is being looked at as one potential solution to the concurrent problems of construction industry labor shortages and increasingly unaffordable housing. By manufacturing standardized components and delivering them to a project location, proponents say the process of building houses and apartments could become faster and more efficient while reducing waste.
The Tech-led coalition of more than 40 organizations aims to create a roadmap over the next year for growing this industry across seven states: Virginia, West Virginia, Kentucky, North Carolina, Ohio, Pennsylvania and Tennessee. After that, the partnership could be eligible to apply for up to $10 million from the Appalachian Regional Commission to implement its strategies.
“We’re going to be on the road in all these states, working with industry, working with community colleges and other education partners, figuring out what’s the need, where is the gap, and how do we fill it,” said John Provo, executive director of Virginia Tech’s Center for Economic and Community Engagement, which received the grant in partnership with the university’s Center for Housing Research.
The coalition’s plans include determining what jobs and skills are needed, including by convening regional workshops with industry representatives. It will also analyze strengths and weaknesses of current workforce development programs across Appalachia and introduce middle and high school students to industrialized construction through factory and job site visits.
“We want to meet people where they are and figure out how to help them go on this journey, which is going to be more profitable for the companies, and it’s going to result in greener, cleaner, cheaper construction than we have today,” Provo said.
The coalition’s lead industry partner is San Francisco-based ADL Ventures, which works to help the energy, transportation and construction sectors develop new products and services and which has created an entity dubbed the Industrialized Offsite Construction Engine to support job creation and workforce development in Appalachia.
In a news release from Virginia Tech, ADL Ventures founder Nol Browne said that “industrialization of construction is inevitable” and that the construction sector “cannot sustain itself the way its key factors are trending.”
“This burgeoning gap between the supply and demand is exacerbated by evolving economic and social challenges such as the rising cost of materials, supply chain issues, a skilled-labor shortage, and lack of technology integration — just to name a few,” Browne said.
The Tech-led partnership’s members also include Ohio University’s Voinovich School of Leadership and Public Service, New River Community College, the New River Valley Regional Commission, the LENOWISCO Planning District Commission, the Virginia Coalfield Economic Development Authority, the Virginia Department of Housing and Community Development and Community Colleges of Appalachia, a member association of public community colleges.
Multiple other higher education institutions, industrial housing construction firms and economic development groups have also signed on.
The $453,743 grant announced Thursday comes from the Appalachian Regional Commission’s Appalachian Regional Initiative for Stronger Economies, or ARISE, a program funded by the 2021 federal Infrastructure Investment and Jobs Act. The coalition of partners will contribute $244,279 in matching money, according to the commission.
The commission, founded in 1965, is an economic development partnership among the federal government and 13 states. It focuses on investing in businesses, workforces, infrastructure, culture, tourism and local leaders in more than 400 localities that make up the Appalachian region, which over the past few decades has seen a continual decline in the coal-mining jobs that have been a cornerstone of its communities.
In a 2019 report, the global management consulting firm McKinsey & Company estimated that industrialized construction has the potential to reduce new construction costs by more than 20% by accelerating project schedules and saving on labor expenses, although the company also warned that those savings could potentially be more than offset by the costs of materials or transportation.
McKinsey predicted that the market for modular construction in new real estate could reach $130 billion in Europe and the United States by 2030.
“In many countries, modular construction is still very much an outlier. But there are strong signs of what could be a genuine broad-scale disruption in the making. It is already drawing in new competitors — and it will most likely create new winners and losers across the entire construction ecosystem,” McKinsey said.