Wildfire-Resilient Factory-Built Homes | AskFBH
Discover why wildfire-resilient factory-built homes could reduce manufacturing costs, simplify purchasing, improve safety, and strengthen future demand.
INDUSTRY INSIGHTS
The Business Case for Making Wildfire-Resilient Construction Standard in HUD Manufactured and IRC Modular Housing
By Lance Duke | Factory-Built Housing Consultants
Why Are We Still Treating Wildfire Resilience as a Special Order?
For decades, the factory-built housing industry has promoted the advantages of standardized construction, volume purchasing, controlled production environments, reduced material waste, and improved manufacturing efficiency.
Yet many factories continue to treat wildfire-resistant construction as a special-order upgrade rather than a standard building specification.
Why?
As wildfire exposure, building requirements, and insurance challenges affect more American housing markets, I believe the factory-built housing industry needs to reconsider its approach.
The question is no longer whether factories can build homes with enhanced wildfire protection. We know they can.
The question is whether making wildfire-resilient construction standard could actually reduce overall operating costs, improve production efficiency, expand market opportunities, and help secure a factory's future production pipeline.
Having spent more than four decades in factory-built housing, approximately half as a supplier of construction materials and the other half working inside HUD manufactured and IRC modular housing factories in sales, engineering, and related operations, I've experienced this issue from both sides of the ledger.
And I believe our industry is overlooking an opportunity.
The Hidden Cost of Maintaining Dual Inventories
Consider what happens when a factory offers conventional construction as its standard product and wildfire-resistant construction as an optional upgrade.
The purchasing department suddenly needs to manage different specifications for many of the same building components.
Standard windows and windows meeting additional wildfire requirements. Conventional roof vents and ember-resistant vents. Different siding, trim, exterior doors, decking materials, and related products.
Each additional product specification can create another inventory requirement, purchasing decision, storage location, and opportunity for error.
From my years supplying construction materials to manufactured housing factories, I can tell you that maintaining separate inventories comes with costs that are not always apparent to the factory.
Suppliers and wholesale distributors must purchase the products, finance the inventory, store it, manage it, and accept the risk that specialized materials may remain on their shelves for extended periods.
And because special-order products generally move in smaller volumes, they frequently carry higher prices or margins.
The factory pays more because the supplier has higher inventory costs, lower purchasing volumes, and additional administrative expenses.
The additional cost isn't necessarily because the product itself is dramatically more expensive to manufacture.
Sometimes the entire purchasing and distribution process is simply less efficient.
Now multiply that situation across windows, vents, siding, trim, doors, and other wildfire-resistant products.
The cumulative costs can become substantial.
Vendor-Managed Inventory Doesn't Eliminate the Cost
Over the years, purchasing managers have suggested putting specialized building products into vendor-managed inventory, commonly referred to as VMI.
I've been involved in exactly those arrangements.
Under VMI, the supplier manages agreed-upon inventory levels, replenishment, and product availability.
For the factory purchasing manager, this can make life considerably easier.
Instead of worrying about lead times, special-order minimums, or whether enough materials are available for the next production run, the supplier handles much of that responsibility.
But there is another side to the arrangement.
Vendors don't finance, store, manage, and replenish specialized inventory for free.
Whether that supplier is a manufacturer or wholesale distributor, the costs must be recovered somewhere.
They may be included in product pricing, service fees, or contractual arrangements.
Vendor-managed inventory can provide real benefits. But it doesn't eliminate the costs associated with maintaining multiple construction specifications.
In many cases, it simply changes who carries the inventory and how the factory pays for it.
The better question is whether the factory needs separate inventories in the first place.
What Happens When Wildfire-Resilient Construction Becomes Standard?
Imagine a factory that decides to incorporate selected wildfire-resilient building components into its standard construction specifications.
Instead of maintaining separate inventories, it purchases one approved standard window specification, one designated roof-vent specification, and consistent exterior siding, trim, and door assemblies.
The same products move through purchasing, receiving, inventory storage, production, and quality control every day.
Consider the potential advantages:
Increased purchasing volumes for fewer products.
Improved supplier pricing and negotiating power.
Fewer individual inventory items and SKUs.
Reduced inventory carrying costs.
Fewer special orders and purchasing emergencies.
Reduced opportunities for incorrect material selection.
More consistent installation procedures.
Simpler engineering documentation and quality-control processes.
Less working capital tied up in slow-moving specialty inventory.
For factory-built housing manufacturers, working capital is always a concern.
Every dollar tied up in unnecessary inventory is a dollar unavailable for another operating requirement.
Standardization doesn't eliminate customization. It eliminates unnecessary complexity in building components that could be standardized without sacrificing the home's design or functionality.
That is an important distinction.
Fewer Factory Mistakes Mean Lower Operating Costs
Anyone who has worked inside a manufactured or modular housing factory understands how special construction requirements can create production problems.
A home moving down the assembly line might require different windows, specialized roof vents, or particular siding assemblies because of its destination.
Those requirements must be correctly identified during order entry, transferred into engineering documents, included in purchasing, delivered to production, installed correctly, and verified through quality control.
Every additional exception creates another opportunity for something to go wrong.
What happens when a conventional roof vent is installed where an approved ember-resistant vent was specified?
Or when the wrong exterior material is installed before the mistake is discovered?
The correction may require removing completed work, ordering replacement materials, interrupting production, or delaying shipment.
The expense is not simply the difference between two products.
It can include labor, supervision, administration, rework, material damage, and lost production time.
A factory earns its living by moving completed homes through production efficiently—not by correcting avoidable mistakes caused by special-order construction requirements.
Making appropriate wildfire-resistant components standard could reduce those opportunities for error.
The Actual Factory Cost May Surprise You
Approximately ten years ago, while working inside a factory-built housing operation, we reduced the additional factory cost of our wildfire-related construction package to approximately $1,800–$2,000 per home.
Those were actual costs from our operation at that time, not a national industry average.
For purposes of illustrating today's potential economics, I would conservatively double those historical figures and use an estimated $3,600–$4,000 per home.
This is an illustrative estimate, not a current supplier quotation or the verified cost of satisfying every wildfire construction requirement in every jurisdiction.
Now compare that amount with factory-built homes ranging from approximately $75,000 to $450,000 or more in factory selling price.
At a $4,000 additional construction cost:
A $75,000 home represents approximately a 5.3% increase.
A $150,000 home represents approximately a 2.7% increase.
A $250,000 home represents approximately a 1.6% increase.
A $350,000 home represents approximately a 1.1% increase.
A $450,000 home represents less than a 0.9% increase.
Now consider what could happen when those components stop being special-order products and become standard factory inventory.
Higher purchase volumes may improve supplier pricing. Fewer inventories may reduce carrying costs. More consistent production procedures may reduce installation errors and rework.
Could those operational savings offset part of the initial premium?
In some factories, they might offset a meaningful portion. The answer depends on the products, purchasing volumes, factory processes, and applicable construction requirements.
The cost of wildfire-resilient construction should not be measured solely by the price difference between two windows, two vents, or two siding products.
It should be evaluated against the total cost of purchasing, stocking, managing, installing, inspecting, and correcting two different construction specifications.
The Insurance Problem Is Already Affecting Homeowners
Recently, I spoke with friends in California about their homeowners insurance.
Their experience illustrates why wildfire resilience is no longer simply a building-code discussion.
They live approximately 910 feet from an area their insurer considers a wildfire exposure. In this particular case, the nearby property is an undeveloped field awaiting future development.
They told me that a typical annual homeowners insurance premium of approximately $1,800 has become approximately $4,700.
That represents an additional $2,900 per year.
But the problems didn't stop there.
To obtain coverage, they reported having to move their automobile insurance to the same carrier and purchase an umbrella liability policy.
Their combined annual insurance expenses are now approaching $9,000.
When I spoke with them again, they told me they had contacted six additional insurance companies.
According to their account, none would offer the fire coverage they needed because of the property's proximity to an area identified as a wildfire risk.
And that is not the only example.
Another friend of mine, an architect whose residence is located in a high wildfire-risk area, experienced an even more alarming situation.
After being unable to obtain the fire coverage he needed through conventional insurance carriers, he obtained coverage through the California FAIR Plan.
He is now paying more than $14,000 annually for fire coverage alone.
That amount does not include every protection typically associated with a conventional homeowners insurance policy.
The California FAIR Plan provides basic property coverage for specified perils. Homeowners may need separate insurance for theft, liability, and other losses. Flood insurance generally requires separate coverage as well.
Think about that for a moment.
More than $14,000 every year for fire-related coverage, before accounting for the costs of other necessary insurance protection.
These are two personal examples, not representative statewide insurance averages. They do not establish a universal distance requirement or prove that particular construction upgrades would have changed either property's insurance eligibility.
But they demonstrate an important problem facing today's residential housing market.
The cost and availability of insurance can directly influence whether someone can afford to purchase a home, continue owning it, qualify for financing, or successfully sell it.
A buyer may qualify for a mortgage but reconsider the purchase after discovering the annual insurance expense.
A homeowner may find that rising premiums substantially affect the cost of remaining in the property.
And a seller may discover that prospective purchasers hesitate because insurance is difficult to obtain or prohibitively expensive.
Although these examples involve California, wildfire exposure and insurance challenges are concerns in other states, including Colorado, Arizona, Idaho, Montana, Oregon, Washington, and elsewhere.
For manufacturers of HUD manufactured and IRC modular homes, the question becomes increasingly important:
If the homes we build today are expected to remain in service for decades, shouldn't we be doing everything economically and technically practical to improve their wildfire resilience before they ever leave the factory?
A One-Time Construction Expense Versus Recurring Insurance Costs
Consider the difference between a one-time factory construction upgrade and an annual insurance expense that can continue for decades.
Using our illustrative $4,000 construction upgrade, compare that with the first California homeowner's reported $2,900 annual increase in homeowners insurance premiums.
The construction upgrade is a one-time expense.
The increased insurance premium may recur every year.
These costs are not directly interchangeable, and wildfire-resilient construction does not guarantee lower insurance premiums or insurance availability.
Nevertheless, the comparison demonstrates why the industry must examine long-term homeownership costs rather than focusing exclusively on the initial factory selling price.
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Graphic note: The insurance amounts shown are illustrative scenarios rather than measured premiums for each home value. The percentages represent annual insurance cost divided by the example home value.
A relatively modest construction investment may be worth considering if it meaningfully reduces vulnerability to wildfire damage.
Research-based programs such as the Insurance Institute for Business & Home Safety's Wildfire Prepared Home initiative demonstrate the growing importance of building-level and property-level wildfire mitigation.
We cannot promise that a wildfire-resilient home will automatically qualify for affordable insurance. But we can build a home that is better prepared for recognized wildfire hazards.
That distinction matters to homeowners, lenders, builders, dealers, and manufacturers.
What Should a Standard Wildfire-Resilient Factory Package Include?
Manufacturers should evaluate a baseline specification of products and assemblies intended to reduce vulnerability to wildfire-related ignition.
Depending on the applicable codes and approved designs, that package could include:
Appropriate fire-classified roof assemblies.
Ember-resistant ventilation products.
Windows and glazing meeting relevant wildfire-exposure requirements.
Noncombustible or approved ignition-resistant exterior siding assemblies.
Suitable exterior trim, soffits, and eave construction.
Exterior doors and assemblies suited to applicable fire exposure.
Compatible decking and attachment details where provided by the factory.
Documented product approvals, installation instructions, and quality-control procedures.
The objective is not merely to purchase products advertised as wildfire-resistant.
Manufacturers must evaluate complete building assemblies, approved installation methods, and applicable requirements.
California's Wildland-Urban Interface construction provisions are not necessarily identical to requirements adopted in other states.
There is no single nationwide product package that automatically satisfies every applicable WUI provision.
And factories cannot control everything that happens after delivery.
Site-installed decks, landscaping, combustible materials near the home, vegetation management, defensible space, and neighboring structures also influence wildfire exposure.
But manufacturers can address many important construction details before the home leaves the factory.
HUD Manufactured and IRC Modular Homes Require Different Regulatory Approaches
It is important to distinguish the systems governing HUD manufactured housing and IRC modular housing.
HUD manufactured homes are constructed under federal Manufactured Home Construction and Safety Standards.
Federal preemption limits the ability of state and local governments to impose nonidentical construction and safety standards addressing aspects already governed by the federal standards.
Manufacturers considering enhanced wildfire-resistant components must ensure that those products and assemblies are compatible with applicable HUD requirements, approved designs, and compliance procedures.
IRC modular homes generally follow state and locally adopted building codes, often based on the International Residential Code, under applicable state factory-approval and inspection systems.
Additional wildfire provisions may apply depending on the installation location.
Making wildfire-resilient construction standard does not eliminate engineering review, local permitting, product documentation, or site-specific approvals.
The goal should be to incorporate as much practical wildfire resilience as possible into the factory's standard product while maintaining compliance with the applicable regulatory system.
Protecting the Factory's Future Production Pipeline
There is another financial consideration manufacturers should not overlook.
Future production volume.
Factories require consistent orders to maintain employment, support overhead, purchase materials efficiently, and keep production lines operating.
We have seen what happens when incoming orders decline while factory overhead continues.
A manufacturing plant cannot remain financially healthy indefinitely without a dependable flow of homes moving through production.
That was one of the central lessons in my earlier Industry Insights article, Why Do Modular Housing Factories Keep Failing?
Now consider the opportunities associated with making wildfire-resilient construction part of the factory's standard product.
A manufacturer that already incorporates appropriate wildfire-resistant components may be better positioned to serve projects in areas with demanding wildfire requirements, subject to the necessary approvals and site-specific considerations.
The factory may be able to respond more quickly to inquiries, simplify quotations, reduce special-order lead times, and compete for projects that might otherwise require additional engineering or procurement changes.
These opportunities extend beyond individual homebuyers.
Builders, developers, dealers, workforce housing providers, and organizations planning residential projects in wildfire-exposed regions may increasingly consider wildfire resilience when choosing manufacturing partners.
Every additional market a factory can serve represents another opportunity to fill its production schedule.
And every dependable order helps support the workforce, purchasing volume, and manufacturing efficiency necessary for long-term financial stability.
Building wildfire-resilient homes may therefore be more than a construction decision.
It may also be a business-development strategy.
Wildfire Resilience Should Be a Factory Standard, Not an Exception
A factory that standardizes wildfire-resilient construction isn't simply building a better-protected home.
It may also be creating a more efficient, competitive, and financially sustainable manufacturing operation.
Fewer inventories. Fewer special orders. Fewer purchasing complications. Fewer production mistakes.
Better opportunities for volume purchasing, simpler material management, and improved control over working capital.
But there is another benefit manufacturers should not overlook:
Protecting their future production pipeline.
As wildfire exposure, building requirements, and insurance challenges affect more housing markets, factories that incorporate appropriate resilient construction into their standard products may be better positioned to compete for future orders.
Instead of delaying production while waiting for specialized components, manufacturers could have more of the necessary products and procedures incorporated into everyday operations.
Instead of treating wildfire resilience as an exception, they could make it part of their standard manufacturing philosophy.
For an industry that has witnessed too many factory closures, maintaining a dependable pipeline of future orders should be just as important as reducing today's construction costs.
The factory-built housing industry cannot control wildfire exposure or insurance underwriting decisions.
But it can control many of the materials, assemblies, and construction practices incorporated into the homes it produces.
Those decisions may influence not only how well a home withstands wildfire exposure, but also its long-term marketability and the manufacturer's ability to compete for tomorrow's housing orders.
Factory-built housing has always promoted the economic advantages of standardization.
Perhaps it's time to apply those same principles to wildfire resilience.
If we can build homes that are better prepared for wildfire exposure, simplify factory operations, reduce unnecessary costs, expand our potential markets, and strengthen our future production pipeline, why are we still treating wildfire-resistant construction as a special order?
About the Author
Lance Duke has more than four decades of experience in factory-built housing, including construction-materials supply, manufacturing, engineering, sales, and marketing involving HUD manufactured and IRC modular housing.
Through Factory-Built Housing Consultants, he provides independent industry analysis, resources, and guidance for manufacturers, builders, dealers, homebuyers, and industry professionals.
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