Precast vs Modular Construction: What Precast Manufacturers Should Learn from the Modular Collapse
Over the past decade, volumetric modular construction looked like the answer to Britain’s housing shortage. Whole homes, or close to it, came out of factories. They went up faster than site-built work, they were made to tight tolerances, and the work was cleaner. Investors backed it heavily. The government supported it through Homes England. Trade bodies called it the future of housebuilding.
Then several of the biggest names went under.
For precast concrete manufacturers, the obvious question is whether those failures were specific to volumetric modular or whether they serve as a warning for the wider offsite sector. After two decades in precast manufacturing, my answer is that they are both. Volumetric modular had structural weaknesses that precast does not share. But some of the causes were not specific to any one method. They were industry-wide, and ignoring that would be the same wishful thinking that got modular into trouble in the first place.
What went wrong with volumetric modular construction
Ilke Homes, Legal & General Modular, House by Urban Splash and Modulous all failed within a short period. Projects stalled, public money went unrecovered, and some residents faced legal uncertainty over unfinished homes. The House of Lords Built Environment Committee opened a formal inquiry in late 2023 titled ‘Modern Methods of Construction: What’s Gone Wrong?‘. Its conclusion, published in January 2024, was blunt: government investment in the sector had been undirected and non-strategic, with no measurable objectives, and an MMC Taskforce that had been allocated funding but never met.
High fixed costs need an unbroken pipeline
The core economic weakness of volumetric, or Category 1, MMC is familiar to anyone in manufacturing, though it is often underrated in construction. Large factories incur high fixed costs that do not disappear when the order book empties.
A traditional site can scale labour up and down fairly quickly as work flows in and out. A modular factory cannot. Machinery, tooling, salaried operators, and the factory lease must be paid whether modules are coming off the line or not. Government-commissioned research from Edinburgh Napier University set this out directly: manufacturers need a steady pipeline and consistent throughput to maintain their cash flow, and pausing production between projects while still carrying equipment and wages is a serious financial risk.
Ilke Homes is the clearest case. The company had put a heavy investment into its factory. When the pipeline weakened, that investment turned from an asset into a liability.
Homes England had backed Ilke with public money, and that money is unlikely to come back.
This was not a technological failure. The factory worked. The product was sound. The business model failed because the demand it relied on was never properly secured. That is a different problem, and it needs a different solution.
The pipeline problem starts with housebuilder economics
So why was the pipeline not there? Part of the answer is how the major housebuilders think about cost and value.
For most large developers, construction efficiency is not the main driver of margins. Land value is. Shaving a few thousand pounds off build costs barely registers next to the profit made from land appreciation. That puts innovation in construction methods well down the priority list, in a way it would not be in a sector where production cost is the main battleground.
The Lords’ inquiry found that even housing associations, which you might expect to push harder on cost, told the committee that Category 1 MMC was not cost-effective and ran well above the cost of traditionally built homes. That gap makes it very hard to build a stable commercial pipeline without public funding to close it. When that funding finally came, it arrived without a coherent strategy, exactly as the Lords concluded.
Proprietary skills leave workers stranded
There is another failure mode that gets less attention but matters a great deal: what happens to the workforce when a factory closes.
Volumetric modular factories trained people in proprietary systems built around a single manufacturer’s kit of parts. When a company like Ilke collapsed, those workers were left with skills that did not transfer to other sites. They were not carpenters or bricklayers with recognised trade qualifications. They were specialists in a system that no longer existed.
The Edinburgh Napier research also noted that these factory workforces tend to be highly localised, with most workers living near the plant. This deepens the local impact when a factory shuts. It also leaves any future modular employer without a ready pool of trained, transferable labour to recruit from.
Where precast concrete is genuinely different
Read all that as a precast manufacturer, and some of it will feel distant from your business. On several points, that distance is real.
The cost base is more grounded
Precast concrete production, whether for hollow-core floors, wall panels, or structural frames, is less capital-intensive than fully volumetric modular production. Moulds, reinforcement systems and casting beds are a real investment, but the spend tends to scale with production volume rather than be a single enormous fixed overhead. A precast plant that loses a contract does not necessarily fall off the same cliff as a modular factory when its pipeline thins.
The market is also well established. Precast has been used in major infrastructure and building projects for decades, with a long record in bridges, car parks, industrial buildings, residential blocks and civil structures. This is not a new category trying to prove it deserves to exist. It is a mature manufacturing process that is steadily integrating digital tools to improve work that already functions.
Durability and fire performance are settled
One of the quieter concerns about volumetric modular, raised in warranty and insurance circles and picked up by the Lords’ inquiry, is long-term performance and fire behaviour in complex assembled systems. Evidence to the inquiry flagged the specific problem of modules built in factories and then stored outdoors before reaching the site, with the associated moisture risk and the knock-on effect on warranties.
Precast concrete does not have those problems. Concrete does not burn, rot or degrade in storage. Its structural behaviour is well understood and thoroughly documented. Its reaction-to-fire performance is rated A1, the top Euroclass. The Mineral Products Association describes precast components as designed for a long service life with low maintenance, a claim backed by decades of performance data rather than marketing copy.
Skills are transferable
Precast production relies on established trades and certified processes: reinforcement placement, concrete batching, quality inspection and crane operation. A worker trained at one precast plant can usually move to another. The sector has not fallen into the proprietary-skills trap that caught volumetric modular.
That matters in two ways. For manufacturers, labour continuity is more achievable through project gaps. For workers, investment in their skills holds lasting value rather than evaporating when an employer fails.
Where precast should not get comfortable
Having set out the real differences, I want to be just as direct about where precast is not immune. Some of the same pressures are mounting.
The pipeline problem is not unique to modular
The demand volatility that undermined volumetric modular factories affects every offsite manufacturer. Precast plants also need steady throughput to run well. A plant operating near capacity is a very different business from one running at partial utilisation. When big projects slip, are cancelled, or switch to a different structural system part way through design, precast manufacturers absorb those shocks too.
The answer is not simply to chase more clients. It means thinking carefully about which markets to serve, how to manage the forward order book, and how to build relationships that provide real pipeline visibility rather than hoping for the next tender.
DfMA has to be built in from the start
Design for Manufacture and Assembly is one of those terms that turns up in nearly every off-site presentation. In practice, it is often overlooked at the one stage where it counts: early design.
The point of DfMA is to bring manufacturing and assembly thinking into the design from the very beginning. Not as an afterthought once the architect has finalised the scheme. Not as a value-engineering scramble when the budget tightens. From the outset.
When precast is specified late, after a design has been developed on different assumptions, the result is usually compromised: awkward connection details, non-standard panel sizes, and site tolerances that do not match factory tolerances. Most of the efficiency precast can offer is lost, and at that point, it becomes easy to blame the material rather than the process that preceded it. This is an industry-wide problem, not a precast failing, but it still limits how well the sector can demonstrate its full value. It puts the responsibility on manufacturers to engage in design conversations earlier.
Carbon claims need evidence, not assertions
Modular was not the only part of the construction sector making sustainability claims that the evidence did not fully support. The wider industry, precast included, has a habit of promoting environmental credentials without the rigorous Life Cycle Assessments to substantiate them.
Environmental Product Declarations prepared under EN 15804 are the reliable route here. They require a manufacturer to account for the entire production chain, from raw materials and energy through transport to end-of-life, in a form that can be independently verified. Not every precast manufacturer holds an EPD, and the quality of those that exist varies.
As embodied-carbon requirements are integrated into planning and procurement, manufacturers without verified EPD data will be at a disadvantage. The time to gather that evidence is now, not when a major contract suddenly demands it.
Digital visibility is no longer optional
The modular failures were not about technology, but they expose an uncomfortable truth: a business that cannot measure what it produces cannot improve it systematically and cannot prove its performance to clients. That makes it hard to justify investment.
Many precast manufacturers across the UK and Ireland still have limited digital visibility into their production. Manual data collection, paper-based quality records and planning run-off spreadsheets are common. None of that is an immediate crisis, but it builds into a competitive disadvantage over time.
The manufacturers who do best over the next decade will be those who can provide clients with real data on production schedules, quality records, carbon and delivery, rather than reassurance. That requires investment in the underlying systems, from manufacturing execution and quality monitoring to tools that support defect detection and process control.
What the modular story actually tells us
The collapse of several high-profile modular businesses does not prove that factory-based construction does not work. Japan and Sweden have developed mature, large-scale offsite industries that produce high-quality homes. The problem in the UK was never the concept. It was the conditions around it.
Those conditions include inconsistent public procurement, a land market that steers developer incentives away from building efficiency, a planning system that resists the design standardisation required for factory production, and an insurance and warranty market that has not fully adjusted to non-traditional structures.
Precast manufacturers did not create those conditions and cannot fix them alone. But they can make choices that reduce their exposure: building diverse pipelines rather than relying on a single sector, developing verifiable performance data rather than trading on reputation, investing in design partnerships that begin early rather than late, and treating digital capability as core to operations rather than a project for some day.
The modular story is not a warning that offsite does not work. It is a warning about what happens when commercial ambition, political enthusiasm and genuine technical ability are not underpinned by sound operational foundations.
Precast provides those foundations. The open question is whether the industry builds on them deliberately or waits for the next crisis to force the decision.
Where to start
If you are assessing how exposed your operation is, the practical first steps are those within your control: map your real pipeline visibility, check whether your performance and carbon data would withstand a client’s scrutiny, and look honestly at how early precast enters your design conversations. If you would find it useful to talk through where your plant sits relative to these pressures, get in touch via leanprecast.com and we can work through it together.
