Modular homes

  • 2000-01-20
  • By Joseph Enge
While driving down an American highway, it is not uncommon to see an
18-wheeler hauling half of a living room. In Estonia, however, it
could well cause a double-take. But, as Joseph Enge reports from
Tartu, the modular home industry here is on an upswing. Combining the
assets of native timber and a skilled workforce, Estonia's housing
construction industry has been breaking into the European market. The
export of log home packages, pre-fabricated homes and modular homes
from Estonia amounted to 286 million kroons ($19 million) in 1998,
according to the Estonian Ministry of Economic Affairs.

1998 Economy Ministry figures show that thirty-one firms, with about
27 employees each, exported on average over 90 percent of their
sales. The size, sophistication and cost of these homes varies
greatly. They can run from a simple "bare-bones" log home package
costing 2,500 kroons per square meter to a two-story modular home
built in sections at the factory with a price tag of roughly 10,000
kroons per square meter. These sophisticated modular units can come
complete with all electrical work, plumbing, heating, tiles and even
a sauna.

Two of Estonia's leading firms in the modular home industry are
Kodumajatehase AS in Tartu, founded in 1996, and Matek in Parnu,
founded in 1988.

Kodumaja's marketing director, Toomas Lust, reported a turnover of
54 million kroons in 1999, 96 percent of which was in exports. Of
Kodumaja's exports, over 50 percent went to Norway, followed by
Finland and Germany.

"Matek's 1999 turnover was 40 million kroons" said marketing
director Mart Agur. The firm exported 86 percent of their product,
with 36 percent going to Norway, 19 percent to Germany, 14 percent to
Russia, 7 percent to Sweden and 6 percent to Denmark.

"The low percentage of domestic sales reflects the lower per capita
income and a less developed financing system in Estonia than in
Western Europe", Lust said. The focus for growth and expansion
throughout the industry will be the export market, that is, until
people are earning more and can afford more in Estonia.

To be competitive in the European market, the firms have designed
their products to European standards and sought to establish and
expand their niche in the export countries by maintaining working
relationships with developers abroad. Estonia has an advantage of a
good supply of native timber, as well as a skilled, and less costly
workforce. Not all materials are homegrown however. The firms look to
other countries for some of their building products, such as gypsum
boards, fixtures and windows.

Kodumaja and Matek have taken two different approaches to production.
Matek produces their homes as a kit to be assembled in pieces
on-site. They can produce the homes in complete modular sections in
their factory, but only do so a few times a year per customer request.

Kodumaja, on the other hand, produces the homes in complete sections
with flooring, walls, and roof in their Tartu factory. These sections
are made with all the wiring, plumbing, heating, counters, toilet,
shower, and tiles before shipping. Homes assembled for the Estonian
or Finnish customer can even include a sauna. The components are made
to 5-by-13 meter dimensions

The Kodumaja houses are then hauled by truck to Tallinn and shipped
abroad. Normally, about four or five houses are shipped at a time to
save on costs. Once the homes are delivered, they are lifted by crane
onto a foundation, where the final connections are made. In Norway,
Kodumaja has produced four-storey apartment complexes in this manner.

Faster construction time, a controlled environment that protects
materials from weather damage, and greater engineering precision are
some of the advantages to the modular home industry versus
traditional on-site construction, say industry supporters in Europe
and the United States. However, according to the U.S.-based National
Association of Home Builders, these homes typically use 20 to 30
percent more material in the framing to insure a safe and secure trip
to their destination. Both Kodumaja and Matek expect a sizeable
growth in export sales for 2000. Matek's Agur foresees Estonia's
membership in the EU as a benefit to their export position because as
part of the bloc, Estonia's businesses will attain a more respected

Lust, however, doesn't see the EU as an answer to breaking through
the red tape of doing business internationally.

"These nations are straight forward protectionists. The EU won't
change this. They tend to lose you in the bureaucracy if you are from
another country, even another EU country," Lust said.