Modular Construction Summit Focuses on
Innovation, Research and Development

Code Council Senior Vice President of Government Relations represents ICC at the popular Washington event.

Code Council Senior Vice President of Government Relations Sara Yerkes represented ICC at the 2011 Modular Construction Summit held June 16-17 in Washington, D.C. The summit brought together manufacturers, builders, developers, contractors, service and supplies providers, dealers, and Federal agencies. The agenda included presentations from both the private sector as well as from the Federal government. The speakers included professors, federal officials, experts in government contracts and economists.

With the U.S. construction costs up, and the labor force declining, there are both opportunities and challenges for the industry; however, decision makers in the construction industry have not joined other industries in looking at how to advance the construction interests. The modular building industry, according to the speakers, needs to focus on innovation, research and development, as well as look at ways to collaborate more amongst its own and outside its circle. The U.S. lags behind Japan and Europe in research and development and construction innovation occurring in Asia and Europe may impact the U.S. In Japan, robots are building the facilities where they then assemble brick walls, for example, that are transported to the construction site. There is a worldwide demand for a more sustainable built environment. The modular building sector considers itself sustainable and could be "branded" as being the most sustainable approach to construction. An example of a modular 15-story hotel that was completely assembled in China in only six days, is an attractive, earthquake-resistant, sound-proofed, modular high-rise.

The keynote speaker was economist Anirban Basu, Chairman and CEO of Sage Policy Group. Basu provided a global construction analysis that had the audience fascinated from beginning to end. He gave a report on the current state of the economy and a glimpse, as reliable as any economist can predict, into the next year or so.

We remember well and with nostalgia that from 2004 until 2007 the construction industry experienced good years. Starting in 2008 thru 2009, the global economy entered into a recession for the first time since 1970. The estimated growth output in select global areas for 2012 is developing Asia at 8.4 percent; China at 9.5 percent and India at 7.8 percent. The greatest world migration is not happening in North America, it is happening from rural China to suburban China. It is estimated that by 2030, China will be the largest economy in the world, twice the size of the U.S. economy, with India coming in second place.

Here in the U.S. the news is good and bad, and despite all the doom and gloom we hear about the U.S. economy, global investors are still showing confidence in the U.S. corporate world otherwise the NYSE and NASDAQ would not be the leaders in the stock exchange market. All 50 states were hit by the recession, some more than others. The District of Columbia shows up as one of the strongest economies in the U.S. because of the Federal government; Minneapolis with its phenomenal regional economy with major corporations headquartered in that city comes in second place; Boston, Baltimore, Dallas-Ft Worth, Houston, Philadelphia and New York are on the top of the list. The state with the highest unemployment is Nevada; the lowest unemployment is North Dakota (of course, it is a state with a small population). The weakest real estate economies right now are Nevada, California, Rhode Island, Florida and Mississippi. Loss of confidence and the loss of credit affected every consumer and when consumers are angry or scared they go out to drink, eat and shop, so in contrast to the construction industry, the U.S. retail and food services sales are up. Chain stores showed profits of 12.3 percent and luxury department stores up 10.4 percent.

Since 2006, house values have fallen 33 percent. The low demand for new mortgages is a cause of the housing market plunge. Young people are being compelled to rent, not buy, and homeowners are not buying new homes because they don't want to sell their current homes at a loss. On the commercial construction side, the real estate loans are starting to grow. Another factor is the depletion of money for publicly financed construction. The private sector is not ready to take over the financing. The largest U.S. banks are over capitalized and are not lending. It is not just about demand, it is about the lack of capital. Globally speaking, the U.S. dollar has been declining for a while and is predicted to continue a gradual decline. One of the strongest currencies right now is the Canadian dollar. And, the Canadian banks are known to be strong and some of the best in the world.

The sectors that have shown growth in construction includes the Federal government by 4.6 percent; health care by 2.4 percent; power companies by 2.4 percent and communications by 0.2 percent. The sectors showing losses are lodging, manufacturing, public safety (police, fire), office space, transportation, sewage, amusement and recreation, education, and commercial facilities.

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