NORTHEAST -- The plant, which carries the strong, sweet stench of paint, is a frenzy of activity -- pneumatic nail pounding, power stapling and painting. Everyone seems in a rush to build the big wooden boxes, modules that will be trucked to home sites and assembled there.
This is not mobile-home building. No, these are virtually the "Home Sweet Home" houses built stick-by-stick in well-heeled suburbs across America, insists Regional Building Systems, the Columbia-based company that runs the Northeast factory and another in Fredericksburg, Va.
These days, the price range of a modular house to the consumer runs from $80,000 to more than $200,000.
"We think that plant-built housing is the wave of the future," says Jim Umland, a vice president of majority shareholder Nagelvoort & Co. The private New York investment banking firm bought an 84 percent stake when the unit, formerly known as Ryland Building Systems, was spun off from the Ryland Group last July.
Already listed by trade journal Automated Builder as the nation's largest modular builder, RBS scored a business coup recently when it won a U.S. Navy
contract for 1,000 modular town houses at the Stapleton Homeport on Staten Island, N.Y. Under the $43 million, two-year contract, RBS will manufacture, assemble and sell the houses to the developer of the "Aspen Knolls" subdivision.
The lingering recession has not made life easy for Regional Building Systems. Revenues fell to $30 million last year, compared to $60 million annually during the homebuilding boom of the late 1980s. Net income has steadily risen, though company officials declined to provide details, noting the company is private.
One reason RBS has weathered the homebuilding recession -- unlike other modular builders -- is that it has stressed affordable housing, including town houses and apartments for low-income buyers in inner-city areas.
RBS has become a major supplier of modules to subsidiaries of the Columbia-based Enterprise Foundation, founded by James Rouse. RBS modules have been used, for instance, in West Baltimore's Nehemiah project, which is designed to encourage homeownership among low- and moderate-income families.
"The market for affordable housing will be insatiable in the next five years because almost no one has serviced that market," says Ann McGee, director of administration at RBS.
The market for modules -- which represent 80 percent of a completed home -- is growing because of domestic demand for low-cost housing and the potential for exports, says Lance Carlson, an executive at Automated Builder.
Gone are the days of pure "stick-built" homes, when virtually every part of a house was created on-site. Today floor and roof trusses, kitchen cabinets, bathroom tub enclosures, staircases and railings are among the components routinely made in a factory. The use of factory-made pre-hung doors and windows has become common, and many builders also buy pre-built walls. About 10 percent of RBS sales are for "panelized" products.
Modular housing has become a realistic alternative to stick building, says Jim Hanna, director of codes administration for Maryland's Department of Housing and Community Development.
For example, he notes that modular builders are no longer limited in terms of the pitch of a home's roof because they've developed hinged roofs that collapse for transport through tunnels and under bridges. "Roof hinges are a great feature that allow builders, for example, to build a Cape Cod."
Still, modular home building accounts for just 6 percent of the residential building market, Mr. Carlson says. Module makers have captured only about 20 percent of the homebuilding market on the East Coast. And modular building is less often used on the West Coast because of the popularity of contemporary homes, which don't lend themselves as easily to modular building techniques as the boxy, traditional homes prevalent in the East.
RBS and other builders believe modular homes will become more popular as the "downscale" stigma vanishes.
RBS routinely provides modules to builders serving America's middle and upper-middle classes. One of its biggest customers is Ryland, which is using the modules in its Meadow Ridge subdivision in Columbia.
And judging from model homes at RBS' Northeast factory, the building technique is as applicable to expensive detached homes as to the small town house units destined for inner-city Baltimore. RBS' more elaborate models are virtually indistinguishable from pricey stick-built homes. The only noticeable difference: Walls within a modular home are thicker where the modules adjoin.
Modular homes needn't be constructed on slabs -- most have basements. And they can easily be higher than one story, because cranes can hoist one module on top of another when the house is assembled. RBS offers 40 different styles of homes to its customers, a network of builders.
But modular construction can't handle irregularly shaped homes. Modular is not used in custom building or for the Southern-type house that sprawls all over," says Ms. McGee.
At the RBS factory in Northeast, housing modules roll through 33 stations on metal wheels, pulled by a portable forklift. Nearly all the necessary construction is done in the factory -- including framing and the building of floors, walls, ceilings and roofs. Most of the plumbing, electrical and heating work is also done at the plant. Windows, kitchen cabinetry and appliances are put in, as are bathroom tubs, vanities and even mirrors. In addition, the modules are painted on the interior and some finishing work is done at the factory.
There are limits. Fearing its modules will be damaged in transport, RBS deliberately avoids installing the exterior siding on the units. Rather, it places the siding, still in its brown paper wrapping, inside the units, ready for installation at the building site.
RBS constructs the units as wide as allowed to move along the roadways (16 feet in Maryland and 14 feet in some other states, such as Virginia).
Once they've gone through "punch out," a careful check of details near the factory's exit, they're jacketed in white plastic, lifted onto flatbed trailers and moved to the building site where finishing work is done.
RBS builds 70 houses a month at its Northeast factory, which employs more than 100 people. Keith Sholos, the company's executive vice president, says the average modular home is sold to a homebuilder for $45,000. In the Baltimore region, the builder is likely to pay $20,000 for the land on which such a home will be situated. After pouring the foundation, adding the driveway, landscaping the lot and otherwise finishing the house, the builder can sell it for $90,000, he estimates.
Although "pre-fab" housing has a reputation for shoddy workmanship, the promoters of RBS contend that the manageable conditions of a factory produce a superior house. They argue that it's logical to use mass production methods for housing, just like cars.
"In the controlled conditions of a factory, people are not bumping into each other and there's a tremendous efficiency in material handling," Ms. McGee says.
Builders who buy from RBS say modular construction offers several advantages over conventional homebuilding techniques.
Vandalism and theft of building materials are becoming serious problems at building sites, but modular housing generally spares the builder such costs, says Manning Klepsig, owner of a small homebuilding firm in Aberdeen. It also spares the builder worry about weather conditions, saves financing costs by speeding the building process, and allows the builder to reduce his work force and manage his overall costs, thereby lowering his level of business risk, he says.
Although most builders and homebuyers have a long way to go before they understand the capabilities of modular building, many builders who become RBS customers typically get hooked on the method.
"I love modular -- it's the only way to build," says Roy Klein, head of Klein Development Corp., a mid-sized builder based in Dover, Del.
"Would you buy a car that was built in your driveway or would you rather have one built in a factory in a controlled environment with highly skilled workmen?"