Chinese firm finds success building modern prefab rooms for UK

Firm finds success building modern prefab rooms that are shipped from China to produce hotels in the UK, often for upscale companies

Chinese modular construction techniques are transforming the global construction industry with their environmentally friendly and cost-effective advantages, and CIMC Modular Building Systems Ltd is leading this wave in the United Kingdom.

CIMC MBS is a subsidiary of China International Marine Containers, a Shenzhen-headquartered company founded in 1980. It initially started as a manufacturer of shipping containers, but gradually, expanded into building ships, tank storage facilities and oil rigs, and even financing projects.

The company already has worked on more than 10 projects in the UK, mainly building standard modular units for hotel rooms at its China factory, and then shipping them to construction sites.

Clients include InterContinental Hotels Group, Rezidor Hotel Group, Accor and Hilton. Its first project was the Holiday Inn Express hotel at Gatwick Airport, completed in 2009.

The company says that CIMC MBS, founded in 2004, is the largest provider of modular buildings and modular building systems in the world.

The area that CIMC MBS focuses on is called volumetric modular construction, which means the company ships a box of a certain size to its client and in the box there is a finished room. The rooms are then stacked together to form the final building.

Michael Crane, design manager of CIMC MBS, says modular construction provides about 25 to 30 percent cost savings over conventional construction methods through capital cost savings, time and on-site cost savings.

The capital cost savings come from lower labor and materials costs in China.

Modular construction is especially competitive for buildings around five to seven stories high, or even higher, because the unit costs for the modules are the same, but in conventional construction methods, cost increases with height as the thickness of the steel and concrete frames needs to grow to hold the weight, Crane says.

Second, less time spent on site for a project also cuts costs because the project needs construction equipment for a shorter period of time.

And finally, it means a project can start generating revenue earlier. For a 200-room hotel, traditional construction methods take 12 months, but this can be cut to 10 months with modular building, Crane says.

The expansion of CIMC MBS coincides with a large wave of Chinese investment in UK infrastructure. Crane says these investments are providing the company with great business opportunities.

These infrastructure projects include Beijing Construction Engineering Group's investment and participation in the 800 million pound ($1.2 billion) Manchester Airport City and the 1-billion-pound Asian Business Park in London.

Crane says his colleagues in China are already having talks with Chinese groups including BCEG and ABP, and he says that CIMC MBS' understanding of the Chinese and UK markets puts it in a good position to negotiate such potential partnerships.

CIMC MBS also has a subsidiary in Perth, Australia, with an operating model similar to that in the UK.

In both places, CIMC MBS has recruited a large number of local employees with lots of expertise in construction. An example is Crane himself, who previously worked extensively in the hotel sector as a design manager for a building contractor.

"I used all my experiences in building hotels in the traditional way to help clients understand the advantage of the modular construction system. I understand what risks a contractor would be worried about, and made sure our systems would solve all those problems, so the package we propose to clients leaves them little to be nervous about," he says.

In addition to cost advantages, modular construction also provides certainty, quality and reduces risks. Crane says the two largest risks in construction are how to get a project off the ground and keeping it watertight during construction. Modular units, transported in shipping containers, are guaranteed to be watertight.

Modular building has been popular in the United States since the 1950s. In the UK it has been used since the 1960s but limited in scale and quality.

Since the late 1980s and 1990s, bathrooms have become popular as modular units because they are often the most difficult to construct, with their pipes, tiles and concrete finishing. CIMC MBS has extended the hotel room model to include the whole bedroom.

Crane says there are some UK-based modular construction companies, but they face the challenge of high manufacturing costs and a lack of scale for their projects.

"UK factories are modern, high-tech and expensive to run, so the businesses can't afford to have an empty factory for one day because the overhead is huge and they need to continuously generate money. So they limit the number of modules they build each day," says Crane.

That means a UK modular system factory may take a few months to build a 200-room hotel, but even that became difficult when the recession hit and orders dropped.

But CIMC MBS does not face that problem because its production lines in China mainly focus on shipping containers, so there is continuous work coming in on a large scale, and when a big modular system order is received it can be finished in a short space of time.

CIMC MBS established offices in the UK in 2011 when it acquired the modular system design company Verbus.

Verbus was established in 2005 and has worked with CIMC MBS in transporting modular units. It was hit badly by the recession as clients became conservative and switched to traditional construction.

CIMC MBS saw value in Verbus and felt optimistic about the growth of modular construction in the UK, so it acquired Verbus, which at the time had three employees. The team has grown to 10 staff members, who mainly talk to UK companies and communicate their needs to the Chinese headquarters.

Crane says one big change that has greatly facilitated the company's UK growth is the decision two years ago by CIMC subsidiary CIMC Capital to finance some of the company's projects in Britain.