Whelan Shares CMs’ Opportunity for Innovation & Disruption

Originally published by the following source: SBC MagazineAugust 20, 2020
by Karlee Wegehaupt

   

In a recent SBCA Component Connection podcast, Margaret Whelan offers listeners a unique perspective on consumer demand, the risk of disruption, and opportunities of innovation in the component manufacturing (CM) industry. 

Margaret Whelan

A native of Ireland living in New York, for the past 25 years Margaret has worked in global positions with both homebuilders and construction companies alike. Following a 20-year career on Wall Street, Margaret founded Whelan Advisory LLC, a boutique investment firm that has provided strategic and financial services to several of the industry’s leaders of innovation, such as Entekra, Raney, Trumark, ResiBuilt, and Innovative Construction Group. 

“In terms of what’s happening with components, it’s great to see an acceleration in the availability of components, and how many of these companies are pivoting towards being solution-oriented versus commodity-oriented,” a business model that she explains as being key for responding to consumer demand for more affordable homes. 

She notes a troubling statistic: that up to a third of building materials end up in the trash. “I think the opportunity to take waste out of the cycle, days out of the cycle, and offer a really high quality, affordable home: that’s my idea of an ideal business model, because then it addresses the big pressing issues in our industry. ‘Well housing isn’t affordable!’ Well, it might be affordable if we didn’t put so much of the material we pay for in a dumpster, or so much of the labor wasn’t reworked.”

Along with excessive waste, Margaret illustrates another area of potential concern as risk of industry disruption. She cites companies that have dramatically disrupted their own industries, such as Amazon, Uber, and Airbnb. The CM industry could be next, she warns, if companies fail to streamline their manufacturing processes, which could ultimately yield more convenient and affordable homes for consumers.

“When you look at industries that have been completely disrupted in the last 15, 20 years, it’s all about getting directly from B to C, getting from business to the consumer… In our industry, it’s B to B to B to B because it’s a relay race, and there’s so many ways that these houses can get delayed… that the consumer is paying for waste that they don’t necessarily need to be paying for.” 

So how can CMs continue to add value to their customers, make it less about the bottom dollar, and combat potential disruption? Margaret thinks expanding into new materials and manufacturing of a fully finished product--such as a modular home-- is a step in the right direction.

“I do believe that modular is the way to go. Modular doesn’t have to be mobile, it doesn’t have to be low-end,” she explains, as more and more consumers are shifting their focus to both convenient and economical housing solutions.  

Listen in to the podcast

“Any of these component-type companies that are starting to pivot away from just being lumber--from the commodity--are already adding a huge amount of value,” she says. “Then the question is: what’s next? I think it’s the kit...it’s the whole thing.”  

Margaret’s interview offers her insight on a diverse array of topics, which you can listen to at any time by tuning into SBCA’s Component Connection.