The federal government just announced a $26 billion bet on manufactured housing.
Their plan: invest in debt and equity financing for Canadian prefab builders, build new factories across the country, and double annual residential construction to 500,000 homes per year.
If it works, it could ease the housing backlog.
But here’s what nobody’s saying out loud: it won’t work. Not the way they think.
And the consequences of getting this wrong go beyond wasted money. We could actually make the housing crisis worse.
The Promise
Here’s the pitch Housing Minister Gregor Robertson is selling:
“Construction is the last major industry to modernize and digitize and fully embrace innovation to build faster and cheaper and more efficiently.”
Factories, they argue, are the answer. They’re weather-proof, standardized, and efficient. Government claims prefab can cut costs by up to 20%.
It’s the modern choice. The future of housing.
I mean, just look at Sweden.
On paper, it makes sense:
- No weather delays – work continues year-round indoors
- Standardized processes – modules stamped out like cars on an assembly line
- Less site disruption – components arrive ready to install
- Potential cost savings – up to 20%, according to government projections
Other countries point to factory-built housing as proof it works at scale.
It sounds great.
There’s just one problem.
Why This Won’t Work Here
Canada isn’t Sweden.
And pretending geography, regulation, and market structure don’t matter is how you waste $26 billion.
🏒 Sweden vs. Canada: Not the Same Game
Clustered demand
Sweden’s population is concentrated in a few cities. Factories stay busy, shipping distances stay short. Canada’s housing demand is scattered across thousands of communities, from Toronto to Timmins to Terrace.
Transport fragility
Shipping large modules a short distance is one thing. Hauling them across frozen highways through long winters adds vibration, weather exposure, and cost. Every kilometer makes the economics worse.
Regulations
Sweden has consistent building codes. Canada has a patchwork of provincial and municipal rules that slow approvals and often require duplicate inspections. Factories can only build what’s approved—if municipalities take 2–5 years to stamp drawings, production lines sit idle.
Those three factors—geography, transport, and regulations—make scaling prefab exponentially harder here.
The Cost Mirage
The government claims prefab can cut costs by up to 20%.
But studies show the opposite can also happen: costs can rise by as much as 10% when labour savings get eaten up by logistics and materials.
What drives those extra costs? The same issues Canada already faces: long distances, scattered demand, and restrictive codes.
The math doesn’t work the way they’re selling it.
The Boom–Bust Trap
Factories only make sense if demand is steady.
But Canada’s housing demand isn’t steady. It’s cyclical and policy-driven. Immigration targets, interest rates, and subsidies swing demand sharply up or down.
That’s why lenders have been cautious. They’ve seen plants rise and fall before, stranded by downturns or shifting government priorities.
Idle plants don’t just mean wasted taxpayer money. They leave behind a workforce trained for factory assembly—skills that don’t transfer easily back into conventional construction, where problem-solving on site is essential.
Real-world example:
A few years ago, we got involved with a pre-manufactured home builder. Their homes were high-end. It was a good idea; they even secured full financial backing from a single investor.
The problem was they had no construction background.
They assumed floor workers would ‘figure it out.’ Costs went sideways, contractors weren’t paid, and we walked away. Within two years, the company folded.
Setting up a manufactured home business isn’t simple. It requires intricate knowledge of the building process and the ability to engineer every aspect. With the government’s push, lots of people will think they can make a go of it. Most will fail unless they come directly from prefab or have a strong construction background and can integrate the extensive engineering requirements.
The Worker Shortage Trap
Here’s where the whole plan falls apart.
Yes, prefab factories need fewer workers per home. Proponents tout this as a benefit—and on the surface, it sounds good.
But fewer workers per home doesn’t mean fewer workers, period.
Those factory workers have to come from somewhere. And right now, Canada doesn’t have them to spare.
Construction vacancy rates are running at 4.2%—well above the national average. Between June and July 2024 alone, 45,000 workers left the industry. We’re facing 700,000 retirements in skilled trades by 2028.
Building new factories means competing for the same scarce labour pool. The workers who could run CNC machines, manage assembly lines, and handle quality control? Those are exactly the skilled trades people already in desperately short supply.
So what happens?
Factories pull workers from traditional construction. Small firms—already struggling with labour shortages—get gutted. Some go under. Housing output from traditional builders drops faster than factory output can ramp up.
Net result: fewer homes, not more. At least in the short term.
And if those factories hit a downturn and shut down? Those workers aren’t easily absorbed back into traditional construction. Factory assembly skills don’t translate to problem-solving on a job site where every house is different.
We’re not expanding the workforce. We’re just shuffling it around—and probably making things worse in the process.
Betting Against the Home Team
Here’s something else nobody’s talking about: Canada’s housing industry doesn’t run on big corporations.
Over 95% of construction firms are small businesses.
Pouring billions into factories risks tilting the market against them.
Instead of helping small firms improve, subsidies could push them further to the margins—or out of business entirely.
These aren’t abstract numbers. These are local builders who employ local workers, know local codes, and have relationships with local suppliers. They’re the backbone of the industry.
If they go under before factories ramp up, we’ll have a gap in capacity that could take years to fill.
The Real Problem: Productivity
Canada’s housing shortage didn’t appear overnight.
The Parliamentary Budget Office estimates a gap of 1.5–3.5 million housing units by 2030–35. That’s the scale of the challenge.
It’s tempting to blame immigration. And yes, record immigration has accelerated demand. But the supply gap has deep roots: housing starts have barely budged in decades, even as the population grew.
Worker shortages play a role. But the real culprit is low productivity.
Construction Productivity Has Been Flat for Decades
This isn’t a new problem. Construction productivity in Canada has been flat or declining for decades.
Today, there are actually more residential construction workers for every home completed than there were twenty years ago.
The National Bank of Canada put it bluntly:
“Productivity in construction is now lower than it was 30 years ago… especially troubling when considering the significant funds governments plan to allocate to housing development.”
If productivity doesn’t improve, pouring more money into the system won’t mean more homes. It will just mean more waste.
Instead of tackling those issues head-on, the government is trying to go around them by building factories.
But productivity isn’t just about where you build. It’s about how you build.
Where Productivity Breaks Down
There are two big culprits:
- Red tape – layers of regulation, permitting delays, fragmented codes across municipalities
- On-site productivity breakdowns – rework, waiting for materials, workforce shortages
Red tape is real—but it’s the government’s job to fix.
On-site productivity, though, is something we can tackle head-on. And it’s so damn bad that fixing it could make a real difference.
One of my recent students, a general contractor with over 40 employees, admitted that at least 10% of his costs come directly from rework. For some companies, that’s their entire profit margin.
And he’s not alone.
Zoom out, and the story is even worse: in 2018 alone, the global construction industry lost $280 billion to rework.
Most Rework Is Preventable
What’s so painful about those numbers is that most of that rework is preventable.
According to the same study, over half was caused by “poor project data and communication.”
From my experience and what my students tell me, I can confidently say that’s true.
What Actually Works
I’ve been an electrician for over thirty years. When I started looking at this problem, I realized there was no training to improve efficiency on actual job sites.
When addressing productivity, most people talk about the worker shortage. Yes, we need more workers. But two other factors get ignored:
- We need more workers to stay (we recruit well, but 40–55% of apprentices leave before completing their program)
- We need the workers we have to be more efficient
To tackle these head-on, I created simple training based on industry best practices. Rather than throwing my apprentices and Red Seals into the deep end, I showed them how to do it right.
Real-world example:
Several years ago, I was brought in to help on a hospital project that was way behind budget. It had taken 20 workers three months to complete a rough-in.
I came in and implemented basic jobsite organization. Nothing fancy.
Drawings were laid out. Materials were prepped and ordered in advance. Everyone from the PM to the foreman to the apprentices knew what was going to happen and were on the same page.
It was nearly an identical phase to the last three months, only this time it took just 6 people a week and a half to complete.
That’s what we mean by productivity.
It’s not rocket science. And it’s easy to train.
What Jobsite Productivity Training Actually Does
1. Reduce rework
Foremen learn to plan jobs properly, prevent mistakes, and cut waste.
2. Increase employee retention
Apprentices—and even Red Seals—are more likely to stay when they’re given direction and mentorship.
3. Boost on-site productivity
Like in my hospital example, we get more done with fewer people when leadership systems are in place.
4. Improve safety and reduce liability
Planning and communication lower the chance of last-minute rushes, unsafe workarounds, and accidents.
5. Professionalize the Foreperson Role
Foremen stop being “the hero who holds it all in their head” and start running jobs systematically. Builds a culture of accountability and respect, raising the reputation of the whole crew.
6. Stronger Relationships with Owners & GCs
Better-managed sites hit milestones more reliably, reducing conflict, delays, and reputation damage.
7. Support Recruitment & Diversity Goals
Structured leadership creates psychologically safer sites, which makes it easier to attract and keep women and underrepresented groups.
The Bottom Line
Canada needs more homes. Fast. Nobody disputes that.
Prefab can play a role—but it isn’t the silver bullet. Yes, factories can reduce rework inside their walls. But productivity is a chain of linked steps, and once those modules hit the ground, the same old problems return: delays, rework, labour shortages, fragmented codes.
If we pour $26 billion into factories without fixing the productivity crisis across the system, we’ll just be building a bigger version of the same broken system.
Imagine if even a fraction of that investment went to the thousands of small firms already building Canada’s homes:
- Train foremen to cut rework
- Give contractors the tools to plan jobs right
- Clear the red tape that drags projects out for years
That’s real modernization. Not as flashy as a ribbon-cutting, but far more impactful.
Canada doesn’t just need more homes. It needs smarter ways to build them. Until we fix productivity where homes actually get built—on the ground, by small firms—no factory can save us.
