News

Innovation Economy: This New House

November 16, 2009

As some prefab companies fold, others jump on a down market

By Scott Kirsner, Globe Columnist , Boston Sunday Globe

November 15, 2009 - Inside a cavernous factory in Littleton, where the MBTA's new fleet of Green Line trains was assembled, a crew of construction workers is now building houses. It's the sort of vast space where the ceilings seem high enough to spawn their own weather systems.

The two steel-and-wood houses being built this month in Blu Homes Inc.'s facility here are the company's first "factory-built" homes (the company prefers that term to "prefab" or "modular") destined for customers in New England. Later this year, they'll be folded up, lifted onto a flatbed truck, and driven to construction sites in New Hampshire and Rhode Island. In a matter of days, not weeks, they'll be ready for occupancy.

Blu Homes, founded two years ago by Bill Haney and Maura McCarthy, is only the latest company to try to build a business around stylish, compact, energy-efficient, and easy-to-install houses. The company's designs include the 408-square-foot Origin model (starting at $75,000) and the Evolution, which has three bedrooms, two bathrooms, and costs about $225,000 installed; each model looks like it was plucked from the pages of Dwell Magazine, the home design publication.

But creating an assembly line to crank out high-style homes turns out to be every bit as hard as scoring a seat on the Green Line during rush hour. Several companies, some local, have tried and failed in recent years. Most prominently, Acton-based Empyrean International LLC went bankrupt last year after a half-century of creating standardized components used to assemble houses under the Deck House brand name. That company is now being revived by a new owner, who paid $4.5 million in August for the company's assets, including a 54,000-square-foot manufacturing facility.

The idea of using mass-produced components to reduce the cost and complexity of home-building goes at least as far back as the 18th century, according to McCarthy. She notes that Sears, Roebuck & Co. popularized the idea in the United States with its low-cost catalog houses in the early 1900s. These cost as little as $650, and were shipped to buyers in a railroad boxcar.

Haney says that contemporary catalogs from companies like Design Within Reach and IKEA are sparking a new appreciation for elegant design. (IKEA sells its own line of prefab homes in Scandinavia and England, starting at about $165,000.) And as the smoke from the mortgage meltdown clears, Haney says Americans are looking for more affordable housing options.

"The average American couldn't afford the average American house,"referring to the recent housing bubble, he says. Blu's homes range in price from $75,000 to $350,000 (which includes typical installation costs, but not the price of the land), and Haney reckons they may be as much as 50 percent more energy-efficient than the typical home.

Haney and McCarthy say that they're addressing two of the major problems that have vexed other companies in their industry. They try to reduce the issues that can crop up on the construction site by building the entire house in their factory, (including cabinets, flooring, and the other interior elements), then folding up part of the walls and roof to fit it onto a standard-size trailer. Most of what happens on-site is the links to utilities and some interior finishing work. And by not using a wide-load truck, they keep their transportation costs down.

"We can ship a house to southern California for about $5,000, which is less than other companies would charge you to ship it from northern California," Haney says. If a customer has the proper building permits in hand, he says it can take as little as 12 weeks from order to occupancy. Blu also sends a crew of installers out, so they don't have to rely on local contractors who may not be familiar with their product.

Last summer, the company shipped four of its Origin structures to Los Angeles to be used as dressing rooms and green rooms for the new "Lopez Tonight" show on cable, which stars comedian George Lopez. And in July, the company acquired some assets from Michelle Kaufmann Designs, a California company that had built 51 homes over the past five years before hitting a wall in May. Architect Michelle Kaufmann explains that two key manufacturing partners went out of business, and suddenly her customers encountered trouble finding financing.

"It was heartbreaking," says Kaufmann, who started her career working for famed architects Frank Gehry and Michael Graves.

In August, as Blu Homes was bringing its Littleton factory online, builder Tom Trudeau was acquiring the assets of Empyrean, which had 60 employees when it ceased operations last year. "The bankruptcy was a combination of management and the economy," says Trudeau.

He adds that Empyrean had focused most of its marketing on a new line of homes it had launched in partnership with Dwell Magazine, neglecting its two more established lines.

And the attorney who handled the sale says that Empyrean's homes weren't quite standardized enough: "If you wanted to change the size of a window, they'd just throw out the old window, replace it, and never charge you for the change," says Stewart F. Grossman.

Trudeau says he has 17 people working for what is now called Acorn Deck House Co., many of them former employees of Empyrean.

He says that while the company's ownership was changing hands, nearly 800 inquiries came in from prospective customers. And a significant slice of the resuscitated company's business will be providing replacement parts for the houses it has built over the decades.

Blu will ship about nine homes this year; the company has been funded thus far by angel investors. A key to its success, says Quincy Vale, will be widget-izing the home-building process, and not permitting too much variation.

"Whenever you're dealing with the homeowner, everything always winds up being a custom project, especially since every site is unique," says Vale, who has run his own modular building business, Powerhouse Enterprises Inc., since 2004.

And at Blu, McCarthy acknowledges that the firm has been doing some custom work, but "only if people are willing to pay for it."

"You've seen a lot of innovators in this field run into challenges," says Kaufmann, who is based in Sausalito and is now consulting with Blu on several new designs.

"It's no longer a question of if people want green and well-designed homes, but they need to be easy, and they can't cost more, or take more time."

Scott Kirsner can be reached at kirsner@pobox.com.