PLANT PRE­FAB MAKES CUS­TOM HOUSES FOR UR­BAN MAR­KET

The Gulf Today - Business - - FRONT PAGE -

Los An­ge­les: On a mid-septem­ber morn­ing, six trucks pulled into an al­ley­way of Oak­land’s fast-gen­tri­fy­ing Golden Gate neigh­bor­hood, their over­size load wrapped in white plas­tic sheets — each truck car­ry­ing a piece of Jeff Stone’s pre­fab­ri­cated home.

As the blocks were lifted by a crane and an­chored in place by a small crew of con­struc­tion work­ers, Stone, an as­sis­tant edi­tor at Pixar An­i­ma­tion Stu­dios, his wife, the cou­ple’s friends and neigh­bors stood watch­ing. Mod­ule af­ter mod­ule, the red barn house that the Stones had first sketched on a piece of pa­per a few years back — a nod to Oak­land’s farm­ing past — be­gan to take shape.

By the end of the work­day, the 1,741-square-foot du­plex still needed work. Plumb­ing, wiring and gas had to be con­nected, and fin­ish ma­te­ri­als had to be ap­plied where the blocks came to­gether. But an en­tire house was stand­ing in place of an empty back­yard.

The res­i­dence had been con­structed in just a frac­tion of the time it typ­i­cally takes for a cus­tom home to be de­signed and rise from its foun­da­tions. And while not quite a magic trick, the stream­lined process de­vel­oped by Plant Pre­fab has drawn the kind of no­tice most young com­pa­nies can only dream of — from Amazon.

Last month, the gi­ant on­line re­tailer’s Alexa Fund contributed to the Rialto-based start-up’s $6.7-mil­lion Se­ries A fund­ing round. The fund pro­motes the de­vel­op­ment of ap­pli­ca­tions for its Alexa voice-ac­ti­vated tech­nol­ogy, in­clud­ing “smart homes” that would con­trol all as­pects of the res­i­den­tial environment — door­bells, lights and any­thing else you can imag­ine.

It’s a huge busi­ness op­por­tu­nity. With more than 600,000 new homes sold in the U.S. alone last year, there are bil­lions of dol­lars to be made by any­one who can get a head start in drag­ging the in­dus­try into the tech age — some­thing Amazon has ac­com­plished in mul­ti­ple busi­nesses.

“The in­dus­try is ripe for dis­rup­tion,” said John Burns, an Irvine-based real es­tate con­sul­tant. “There’s a huge com­pet­i­tive ad­van­tage for some­one who has the cap­i­tal.”

Ever since in­tro­duc­ing its Echo de­vice in 2015, Amazon has dom­i­nated the U.S. mar­ket for ar­ti­fi­cial in­tel­li­gence-pow­ered speak­ers — the nerve cen­ter of an in­ter­con­nected home. The tech gi­ant con­trols 70 per­cent of the smart-speaker mar­ket, ac­cord­ing to one es­ti­mate, with its next-clos­est com­peti­tor, Google, at 24 per­cent and Ap­ple at 6 per­cent. But pressure has been grow­ing on the Seat­tle com­pany.

Ear­lier this year, Google sur­passed Amazon in global smart­s­peaker sales, ac­cord­ing to re­search firm Canalys. Google and Ap­ple have also an­nounced col­lab­o­ra­tions with home builders to in­cor­po­rate Google As­sis­tant and Siri in se­lect res­i­den­tial com­mu­ni­ties.

AMAZON

To stay com­pet­i­tive, Amazon an­nounced new home ap­pli­ances and gad­gets, in­clud­ing smart clocks and mi­crowaves. Now, its in­vest­ment in the pre­fab mar­ket is a chance to se­cure long-term rel­e­vance for its de­vices by in­flu­enc­ing the way houses are built.

Pre­fab­ri­cated homes aren’t new. Tra­di­tion­ally, they’ve been as­so­ci­ated with trail­ers and other low-cost ac­com­mo­da­tion built with cheap ma­te­ri­als for peo­ple who can’t af­ford to live any­where else. Plant Pre­fab has gone up­scale with the con­cept, and while it isn’t the first to do so, its fo­cus on stream­lin­ing pro­duc­tion for cus­tom homes that can fit on small lots in ur­ban ar­eas is a promis­ing niche.

It took Plant Pre­fab less than two months to man­u­fac­ture the Stones’ Oak­land house, and crane op­er­a­tors and con­trac­tors worked less than nine hours at the site to in­stall the six com­po­nents mak­ing up the barn. By con­trast, it took the av­er­age con­trac­tor nearly 12 months last year to build a cus­tom home from the ground up, ac­cord­ing to govern­ment sta­tis­tics.

To bring down costs, Plant Pre­fab lo­cated its fac­tory in sub­ur­ban Rialto, 50 miles east of Los An­ge­les, where land and la­bor costs are lower. The start-up also re­lies on 35 full-time em­ploy­ees rather than a num­ber of sub­con­trac­tors so it can bet­ter con­trol the process. The com­pany says it’s able to not only sharply re­duce con­struc­tion times but also shave costs by 10 per­cent to 25 per­cent.

“When you’re build­ing in ci­ties, you’re deal­ing with some of the big­gest chal­lenges: higher la­bor costs, higher land costs and a higher cost of ma­te­ri­als,” said Plant Pre­fab Chief Ex­ec­u­tive Steve Glenn. “We can’t do much about land and ma­te­ri­als, but we can fo­cus on re­duc­ing con­struc­tion times and la­bor costs.”

Glenn could not com­ment on the specifics of the Amazon in­vest­ment but said he’s look­ing for­ward to spend­ing some time with the com­pany “to see how to in­te­grate smart tech­nol­ogy in homes.”

Com­pa­nies re­ceiv­ing Alexa fund­ing gain ac­cess to sev­eral non-mone­tary ser­vices such as de­vel­op­ment sup­port, mar­ket­ing as­sis­tance and “other re­sources that help them build suc­cess­ful busi­nesses with Alexa,” ac­cord­ing to an Amazon rep­re­sen­ta­tive, who de­clined to pro­vide more de­tails.

One of the coun­try’s largest home builders, Len­nar Corp., has a part­ner­ship with Amazon that could shed light on how Plant Pre­fab’s col­lab­o­ra­tion with the tech gi­ant might look.

Ear­lier this year, a se­ries of Len­nar model homes were spruced up with smart speak­ers, in­tel­li­gent video door­bells and other gad­gets. They were dubbed Amazon Ex­pe­ri­ence Cen­ters, where visi­tors could in­ter­act with Alexa to con­trol TVS, lights, ther­mostats and shades, and gen­er­ally test out liv­ing in an in­ter­con­nected home.

David Kais­er­man, pres­i­dent of Len­nar Ven­tures, said Amazon ap­proached the home builder af­ter a part­ner­ship with Sun­ny­vale, Calif.-based Ruckus Wire­less to de­velop a wire­less home with no dead spots — where de­vices work seam­lessly to­gether and can be con­trolled via the owner’s voice in Alexa’s nat­u­ral habi­tat.

For now, only a se­lect num­ber of Len­nar model homes in­cor­po­rate the wire­less tech­nol­ogy. Buy­ers who choose to in­vest in one re­ceive Alex­aen­abled prod­ucts and other smart de­vices as part of the pack­age.

“The in­fra­struc­ture is su­per­crit­i­cal,” said Kais­er­man, who ex­pressed lit­tle sur­prise over Amazon’s in­vest­ment in Plant Pre­fab.

“Pre­fab is a form of tech­nol­ogy used across the in­dus­try to some ex­tent, and it’s in­creas­ingly looked at as we face af­ford­abil­ity is­sues and la­bor short­ages,” he said, not­ing that Len­nar pre­fab­ri­cates roof and wall com­po­nents.

Other es­tab­lished home builders and start-ups are mov­ing into pre­fab­ri­ca­tion too.

Katerra, a Menlo Park, Calif.based start-up that man­u­fac­tures mod­ules in fac­to­ries for its mul­ti­fam­ily and com­mer­cial build­ings, re­ceived $865 mil­lion this year in a Se­ries D fund­ing round led by the Softbank Vi­sion Fund.

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