Multi-billionaire Warren Buffett’s Berkshire Hathaway goes “all in” with tens of millions of dollars to bring modular construction into the mainstream of construction within 10 years.
Labor Rising would like to thank Brother CD for tracking this for 2 years. It is with his research & guidance that we wrote the blogs on OS2, modulization & miniaturization. The internationals by all accounts have been ambushed – but LR has not. Unfortunately, your careers as tradespersons rest with the trades. They are just that clueless.
Meanwhile back to Mr. Buffett who is not known for shooting from the hip and betting on longshots, as some other disruptors may be.
Here are just a few links for your review. Warning: Not reading them may result in a short career.
The Berkshire Hathaway portfolio has returned approximately 13% annually for the last decade, slightly less than the S&P 500 index. Not bad for an actively managed portfolio.
The largest listed construction companies hover around 1.7% and no one buys them. Heck, a Roth IRA can return triple that in average annual returns, so why would you own construction companies?
With blockchain underpinning a new operating system, transactional costs will be cut from 40% to 4% and deliver jobs in days vs. many months and years, which is now the norm. And with a manufactured system of modular construction, construction will become a profit center if Warren has his way about it. And if Warren sees modular construction as a core position in his future portfolio – then the trades are in a very precarious position. Since construction typically is in the top 3 drivers of the economy, the likelihood that modular is a core position is real. As a result, Buffett’s “all in” entrance to modular construction will open the floodgates to numerous players and disruptors.
According to multiple sources, sectors of construction that will change with the Berkshire investment are large multi-family housing complexes, low-income housing, condos, residential towers and hotels up to approximately 30 floors as of this blog. What else? Senior living complexes, student housing for universities and colleges, healthcare across most sectors and office buildings along with deployable structures of numerous types.
Millions of union hours and tens of thousands of members in the cross hairs!
So, pay attention International Presidents of the painters, plumbers, sheeters, laborers, carpenters, insulators, roofers, masons, bricklayers & electricians, as well as iron workers concerned about mesh and rods. Your work is in the crosshairs. In addition, the iron workers and operators will take big hits in erection hours – assuming that it is done union at all. The work classification may be that of installer and not erector. By and large, only the boilermakers’ hours will not be affected in these initial sectors of modular construction.
The industrial side of the ledger is already moving forward with modularization and miniaturization. Engineering hurdles left in a few sectors, once solved, will erase many Building Trades’ hours in the next decade and will coincide with a transformation of construction paralleling the above timeline. ALL trades are hit here!
What are you going to do Brother Presidents?
You can probably meet with those driving this initiative, but to what end? Much of construction will be done in a manufactured and/or fabrication facility and shipped to the job for installment. It will take far fewer skills than are needed today, minus a select few such as welding. It will crush total hours even in a hot construction market.
The clock is ticking, as this has been on the radar screen for a while on the business side of the ledger. Disruptors, such as Berkshire et al, have the resources to clear away most, if not all, obstacles including zoning and bureaucratic red tape, etc.
Berkshire et al want to generate a return on investments by the end of this decade. Any further delays by the trades put the trades and their pensions at increasing risks. So, what is the trades strategy?
The trades’ IPs are driving a 55 Chevy Belair right off a cliff while the drivers of change in construction on the business side are building a C8 ZO6!
Next blog will discuss solutions, as Labor Rising is a solution driven organization.
We feel confident that we can clearly lay out solutions in lieu of the failure of the trades senior leaders to do so.
This would be an unbelievable situation except for the fact that the trades’ senior leaders have a record of losing market share since the early 70’s which is measurable and verifiable in their LM-2’s NET!
To those senior leaders not in the presidency, as well as all rank & file –
“if you see a good fight – get in it”
Danny L Caliendo
Organizer
Labor Rising
