Collapse of market halts Whole-House building

David Cohen says he hasn’t given up on his dream of building defect-free houses in a factory and then wheeling them onto foundations in a new urban community. But he has recalibrated the number of houses that his company, Cohen Brothers Homes, must produce if its Whole-House Building System is ever to be economically viable.
He has also decided that if and when Cohen Brothers resumes production, its factory-built houses will be constructed with light-gauge steel framing rather than wood, and will be energy-efficient enough to qualify for LEED Platinum certification.
Cohen was caught in the nationwide housing depression, which arrived earlier in the Denver area and was more severe there than in some other parts of the country.
In 2006, the company built a prototype plant in Newbridge at Tollgate Crossing —  an Aurora, Colorado, subdivision that was being developed by a new urbanist firm, New Town Builders of Denver. The project has elements of traditional neighborhood design, but is single use. Cohen began producing detached and row houses in the factory, where construction techniques could be controlled more tightly than at scattered homesites exposed to rain, snow, wind, and cold. When a dwelling was finished, a self-propelled mechanism transported it to a homesite within Newbridge in 20 minutes or less.
The system’s promising start (reported in the January 2007 New Urban News) was short-lived. “As the economy turned bad in Denver, sales just kind of stopped,” Cohen says. The Denver area at one point “had the highest rate of foreclosure in the nation,” says Gene Myers, New Town’s president. Only 15 of the anticipated 237 factory-built houses at Newbridge were produced before the operation was halted and the factory dismantled.
Cohen Brothers was one of a huge number of builders and developers hurt by the economic crisis. New Town’s sales, which peaked at approximately 200 houses a year about 2005, are now running at about 50 a year. Metropolitan Denver has seen housing starts drop from a peak of 17,000 a year to about 3,500, says Myers. He described himself as “a little shell-shocked” by the announcement late this May that McStain Enterprises, a well-regarded green builder in Denver’s new urban Stapleton development, was filing for Chapter 11 bankruptcy protection.

Lessons learned
“The purpose of the prototype was to answer a few questions,” Myers says. “One was whether you could move a house from the factory to the final site.” The answer was yes.
A second question, Myers says, was “Could you really drive quality and defect-free construction?” By the time the last of the units was completed, says Myers, “a builder told me it was the highest-quality house he’d ever been associated with. … It really does have great promise.”
“The unanswered questions revolved around cost, because we never had the scale to do bulk purchasing from manufacturers” and to master other cost-saving methods, Myers says. Nonetheless, he thinks the experience of the modular housing industry shows that cost can be addressed successfully.
    Cohen now believes that a factory-based system of this kind requires two kinds of volume: The development must consist of 1,000 units or more, and there must be demand for 10 to 20 units a month (probably spread across three to five product families). Myers says those requirements could be met in big master-planned communities such as Stapleton and in large military housing programs — an arena in which new urbanists have been active.
“At a smaller scale, I don’t see how an on-site factory would work,” Myers says. However, a system involving something short of a factory in a subdivision could work, he thinks. A “streamlined supply chain,” avoiding the distribution network of suppliers such as window companies, “has great logic,” he says. A development could amass components in a warehouse and achieve savings. “That’s something we can experiment with in the future,” Myers says.
Myers says Cohen Brothers proved the validity of the overall concept: building a higher-quality house, at lower cost, faster, in controlled conditions.  
Cohen says that since taking the Newbridge factory apart, he has used what was learned in the “unbelievably exciting pilot project” to devise a “Generation 2 program,” including “a new production process, integrated house design, revised plant, new equipment packages, substantially improved process of conveying houses,” and other components.
Shifting to light-gauge steel would allow construction of full subassemblies of floors and two-story walls inside the factory, Cohen says. Steel’s shortcomings, such as energy transfer, can be overcome, he believes. Cohen is talking with prospects who might use the next-generation Whole-House system. Given the depressed state of American homebuilding, he expects it will be two to six years before conditions are right — probably outside of Colorado. “I’ve got patents in place,” he says. Cohen also has an international patent pending on a simple, durable concrete house that he says could be efficiently constructed in various countries, using the Whole-House system.
When demand for new houses rebounds, Cohen thinks conventional methods will be hard put to satisfy it, because “tradespeople have moved on, builders have shrunk, there’s a lack of capacity in the industry.” A more mechanized, on-site building process may be what developers need.