Modular Construction Market: Mitigating Labor Shortages

Modular Construction Market - Inkwood Research

The construction industry is facing a significant predicament- a shrinking labor force. Recent data indicate that nearly 200,000 construction jobs in the United States are vacant, with projections indicating that this number will rise in the future [Source: U.S. Bureau of Labor Statistics]. The repercussions of this labor shortage are vast and multifaceted, affecting not just project timelines but also the quality of the work and the cost of projects.

Amid this crisis, one innovative approach is gaining traction- modular construction. This technique could offer a practical solution to the labor shortage problem plaguing the construction industry. According to Inkwood Research, the global modular construction market is set to accelerate with a 6.68% CAGR, generating an estimated $73.10 billion during the forecast period 2023-2032.

Understanding the Power of Modular Construction in Mitigating Labor Shortage

Modular construction involves manufacturing parts of a structure (modules) in factories, which are then transported to the job site for assembly. This method offers several potential benefits that can help mitigate the labor shortage issues:

  • Efficient Use of Labor: Workers must be present at various job sites in traditional construction methods, often leading to inefficient labor use. Modular construction allows work to happen where the workers are – in factories. This can ensure a consistent flow of projects, keeping workers busy, with a single facility capable of employing an average of 100 or more workers per shift [Source: Z Modular].
  • Tandem Work: With modular construction, work at the factory and on-site can occur simultaneously [Source: Modular Building Institute]. This concurrent process effectively utilizes two labor pools simultaneously, significantly expediting project completion times. According to the S. Department of Energy, this parallel construction approach can potentially reduce construction time. This time efficiency contributes to financial efficiency by minimizing overhead costs and allows for quicker project delivery, enabling businesses to capitalize on their investment sooner [Source: NREL- The U.S. Department of Energy]. According to the Modular Building Institute, facilities employing modular construction methods can reduce construction time by 30% to 50% [Source: Modular Building Institute].
  • Reduced Transportation Costs: The cost of transporting modules to job sites is typically less expensive than relocating teams of workers. Savings on labor can thus vary by up to 25% on construction costs [Source: RealProjectives]. Moreover, facilities that produce these modules are usually strategically located near major transportation networks (highways, railways, or waterways) for ease of transit [Source: National Institutes of Standards and Technology]. This strategic placement could lead to significant savings in project costs.
  • Efficiency and Quality: Modular construction reduces labor needs and addresses issues of project delays and quality control commonly associated with traditional construction [Source: McKinsey]. By applying lean principles and automation, modular construction can produce the same amount of work with approximately 10% fewer workers [Source: Z Modular]. This optimized efficiency can lead to significant cost savings. A study by McKinsey found that modular construction can boost productivity up to ten times while reducing costs by 20% [Source: McKinsey].
  • Worker Satisfaction: Modular construction offers an appealing work environment, unlike traditional construction work. Workers enjoy regular paychecks, opportunities for career advancement, a climate-controlled work environment, ensured job safety, less travel or relocation for work, and technically sophisticated work, including high-value insurance coverage [Source: Panel Built Incorporated]. These benefits make modular construction more attractive to younger generations entering the job market.

Future with Modular Construction

The labor shortage crisis in the construction industry presents substantial challenges, but innovative solutions like modular construction offer promising potential for resolving these issues. By ensuring efficient use of labor, reducing costs, and improving quality, modular construction addresses labor shortages and enhances the construction industry’s overall productivity and profitability.

However, to unlock the full potential of modular construction, significant investment in technology, training, and policy reforms is necessary. Government policies, like those advocated by the National Association of Home Builders, that support modular construction can create a conducive environment for this method to thrive.

Moreover, modular construction presents a beacon of hope in an era characterized by rapid urbanization and demand for sustainable building solutions. Its ability to effectively address labor shortage issues revolutionizes the global modular construction market growth prospects, thereby contributing to a sustainable future.

By Akhil Nair


What are the latest trends in the global modular construction market?

Growing demand for spaces with lower environmental impact, improvements in building information modeling (BIM) create opportunities for the market, and the application of 3D printing in modular construction are the latest trends in the global modular construction market.

What are the key growth restraining factors of the global modular construction market?

Higher costs and logistical complexities, high initial costs for constructing manufacturing facilities, and low awareness are the key growth restraining factors of the global modular construction market.