Inside Modular: The Podcast of Commercial Modular Construction
Inside Modular is the official podcast of the Modular Building Institute, the Voice of Commercial Modular Construction. This series will highlight industry news and trends, include conversations with industry thought-leaders, and discuss the advantages of modular building construction.
Inside Modular: The Podcast of Commercial Modular Construction
Pioneering New Hybrid Building Solutions to Tackle the Housing Crisis in the UK and Abroad w/ Sano
Can a mix of modular housing and panelized solutions be the key to solving the UK's housing crisis? DJ, co-founder and COO of Sano, a UK-based team of innovators dedicated to rethinking the possibilities of housing technologies, believes they can.
Set against the backdrop of government transition and new UK housing goals, DJ shares how Sano is empowering stakeholders with tools and information to build better housing, as well as how Sano's revolutionary modular construction system, M-DOCK, is designed to create new housing opportunities quickly and affordably, all while prioritizing healthy homes and efficient processes.
Lastly, DJ explores the potential for Sano's global expansion, particularly in the US market, and the crucial need for government clarity on standards and funding.
Hello and welcome to Inside Modular, The Podcast of commercial modular construction brought to you by the Modular Building Institute. Welcome everyone. My name is John McMullen. I'm the Marketing Director here at MBI. Today I'm joined by DJ, co-founder and COO at UK-based Sano. DJ is here to talk about the current housing challenges across the United Kingdom and the potential for his company's systems to make a difference. D welcome.
DJ:Hi, John. It's my pleasure.
John McMullen:So, tell Dm about yourself, dj. What's your background and how did Sano come to?
DJ:Tdefinitely not from this industry. So my background was chemistry, did a degree in chemistry and then a PhD in nuclear chemistry, so very much not from the industry. I then joined a startup looking at vaping and tobacco technologies and that's where I met Sano's co-founder Ross, and between us we had various roles, looking from product design, product development, product innovation, looking at manufacturing. So how do we manufacture devices? How do we manufacture consumables? Where do we manufacture um devices? How do we manufacture consumables? Where do we manufacture them?
DJ:So this involved finding a building um, and it was an ex-pharmaceutical site. So 100,000 square feet, uh, 15 grade d clean rooms. It was all about, you know, understanding about air handling in a pharmaceutical site and how do we switch the building on, and there was a whole raft of ideas. And this startup then got acquired by a big ftse 30 company and then became responsible for the vision team, which was a team that was really looking forward five, ten years ahead into the future to go actually, what does the world look like in terms of products? And from that then working backwards to go what sort of patent and ip should we be filing today so that that in 5-10 years time, when the world has moved on and consumers have moved on, we've got the patent sewn up, ready to go and become market leaders.
DJ:And then there's an opportunity, over this sort of weird COVID period, for me and Ross to escape and we thought, well, what should we do next? And it was about well, we're all at home. At that time as well, we discovered that Ross had a massive mold sensitivity. So we thought, actually this is linked back to some accommodation that he lived in 20 years ago, and then this was just before mold became a big thing in the UK. So we were thinking, actually there's got to be a better way to build and live in houses. So we thought, well, how do we create healthy homes for everyone to live in? From that then, sano sort of started focusing on healthy homes, healthy materials, healthy living, fundamentally looking after how should we be looking after the occupants?
John McMullen:Wow, that's quite a journey. That's amazing. I love your approach to thinking ahead and working backwards and coming up. That's smart. So Sano is trying to build better housing. So tell me about your organization, how it's set up. How are your days spent? What do you do day to day?
DJ:It's all about empowering the construction industry.
DJ:So we sit here, we identify problems, figure out how we fix the problems, but by thinking much more broader than sort of thinking about the problem in isolation.
DJ:So we're all about stepping back, zooming right out, and because we're not from the industry, you know we haven't got any sort of baggage or super constrained views.
DJ:You know so we can be too super holistic, zooming right out, and it's about you know so we can be super holistic, zooming right out. And it's about you know Sano's all about creating high quality, efficient, healthy and sustainable housing for everyone and massive, massive believers that everyone deserves to live in a house that does not impact their health negatively, and I think that's some of the broader challenges that we're trying to fix. And so, as part of sano, it's a small, diverse, multi multidisciplinary team, so less than 10 people, but it's about, you know, the, the collective power of the group of people that makes sano special. You know you don't need big of 40, 50 people to have something. That's really cool, and that, for me, is what Sano is about, and it's about solving these problems. And then the way we protect our solutions is really interesting that we file patents, which is something that happens quite a lot in the construction industry but rarely spoke about.
John McMullen:How would you and I want to get back to those patents in a bit, but how would you describe the housing situation in the UK right now?
DJ:Yeah, it's absolutely, really interesting. So we are a couple of months into a new government now as we're recording this, so it's at a pretty critical turning point. And you know we're well into a well-documented housing crisis and off the back of that there's an unprecedented demand for new housing. But the challenge is the number of new house completions is just stagnating and isn't growing at the same rate, so that demand is just looming far beyond the capacity. So last year, for example, in the UK we built about 220,000 new homes, which on the face of it sounds like a big number, but the target has been about 300,000 new homes. There's always been that lag there. And then of that sort of back in 2017, about 9% were mmc, and back in now in 2023, about 16 percent was mmc.
DJ:And then some of the other challenges that are currently faced in the uk is the temporary housing or temporary accommodation crisis, of which uk government is spending about five million pounds per day temporarily housing people. I just haven't got anywhere to live, which is just an absolutely shocking stat and it just shouldn't be a thing. And then, with that as well, there was a. There's been a few initiatives by local local governments where tenants could purchase their property at a heavily discounted price, which is great, but there's rarely been a plan to replace the stock. So I think there's just a bit of a perfect storm at the minute, in that there's a massive demand, massive need for new housing, and we'll get onto it.
DJ:But MMC for me, or a modular construction, has got a big, big role to play in that. On the flip of that, there's sort of one big watch out. For me is that we need to make sure that we're setting and building to the right standard, because we can very much open a flood case and go we, we need to build, build, build, build, build. But actually building to the wrong or poor standard will only exasperate the problem further down the line.
John McMullen:You mentioned before housing stats from last year. You mentioned local governance initiatives. I know the UK recently went through a larger government transition. What's being done by the new government to generate new housing possibilities and how, if at all, is this different really from the last government?
DJ:Yeah, really, really good question, and it's still early days. But there's loads of positive noise coming from central governments and honestly, I really think that they are trying to do the right thing. But for that to manifest the material itself, the whole industry needs to get behind it and get cracking. You know, we need to get building as soon as possible and there's loads of early initiatives that they've started talking about. So, for example, changes to the planning regulation, which historically in the UK has been a bit of a massive blocker to sites. So these changes, coupled with unlocking more land, should speed up the process, but also should give developers more confidence that actually, by going into a planning application, they'll come out of the other end with a positive outcome, whereas at the minute people are going into a planning process expecting a two, three year, if not longer, journey, whereas you know, quite frankly, there's just not enough time now to go on that process Alongside that.
DJ:So I mentioned the 300,000 targets that's now been increased to 370,000 new homes target to build every year. That's a massive number, right? So compared to the 220,000 that was built last year, it's a 70 odd percent increase and, as you know, you just can't switch that on overnight. So there's a massive growth phase that needs to happen pretty quick now to get us to that target number. Uh, alongside that, local authorities so local, um, local governments have now been given a housing target. So they did have our nuggets, they got taken away. We sort of relaxed the whole thing a little bit, but now they've been given a target again, so that should promote people to get building again.
DJ:And also, local cities or local counties have been given more control and power over what happens locally and also how local funding is spent. So actually historically it was controlled centrally, but now that's being devolved more into local counties. So actually they've got better control over what happens locally. But to sort of get this ball rolling, there does need to be a significant section of cash to get it moving. I think that that's going to be an interesting barrier to overcome. Now to support that, there is some relaxation of some of the financial regulations that should make it easier for local authorities local government-based to sort of borrow funds against some of the assets that they've already disposed. So that might just help bridge that gap a little bit. And what's really exciting is that there is a commitment to new homes being sustainable and affordable and high quality. So they're all the right buzzwords to sort of get mmc and off-site construction integrated into this new housing target, but there's no further detail on that as of yet well, as you said early days, early days.
DJ:right, there's a good journey to go on, and definitely early days, but I think in the over the last few weeks I there's a good journey to go on, and definitely early days, but I think in the last few weeks, I think there's some good, positive noise and it's now just about keeping the momentum on top of that, not only from a government perspective, but also as an industry. Right, we just need to get cracking and go behind it rather than sort of having this sort of infighting, debating over what does this mean, what does that mean? Let's just crack on and get building.
John McMullen:Sano has a tagline that I really like. It's leading global housing innovation from behind the scenes, and you mentioned earlier in the interview forward thinking, working back a lot of patents that you're filing. Tell me about what your tagline means and how your work goes into that. What is what is Sano doing to influence how people live in the UK now?
DJ:Yeah. So Sano is all about empowering other people to make better choices and better decisions, and we're about giving people the right ingredients and giving them, you know, the cake that they should be baking. Yeah, and that, for me, is the really exciting part. So we're not sat here going. We must create the next biggest brand in X, y, z. So that's not what Sano's about.
DJ:Sano's about getting all the bits together, getting all the science sorted, getting all the product development done, getting all the technical information sorted and aligned. Staple that together as a pack that can then go out to the key stakeholders, whether you're a product developer, a manufacturing facility, an architect, a gc, and it's about giving all these people the right information as early as possible in the process. And yeah, there's loads of good examples of products out there that you know have been invented and no one has any idea who came up with that idea? Right, you could be stood right next to them in starbucks and you'd have no invented. And no one has any idea who came up with that idea? Right, you could be stood right next to them in starbucks and you'd have no idea. And that is what's really exciting about sano coming up with all these ideas are not actually being too fussed about the fame and the glory that come of it. We're all about actually. People should be living in healthy homes.
John McMullen:Let's just get there as quickly as possible speaking of of products, I was on your website. One of the most prominent ones on your website is a system called MDOC. Tell me about MDOC. How does it work exactly and how does it differ from typical volumetric modular construction?
DJ:MDOC was one of our very first products. We were initially looking at the US market and also looking at built to rent funds and how could they quickly deploy capital to get a good return and what sort of products would they be building? If I was a built to rent fund and it was all about, actually, I need a product that's of good quality, good specification, because if I'm going to own this asset for 30-40 years, I need to know that I haven't got to go back and fix any problems. And so we started looking at offsite manufacturing, looking at bath and pods and again, not being from the industry, this was all sort of new. A few years ago I thought this is really exciting. But then we sort of quickly realized that actually, especially for a UK market, building fully volumetric single family houses was going to be a bit of a challenge because of various manufacturing reasons transport issues, there's challenging roads in the UK, so there's not many sites that are easily adaptable for a fully volumetric solution. So we thought there's got to be. But manufacturing the factory does make sense. So we thought there's got to be. But manufacturing in a factory does make sense. So we thought there's got to be a better way of doing this. So then we concentrated all of the sort of high service areas your MEP or your air source heat pumps, your heating interfaces, your consumer units, your plumbing bathrooms.
DJ:We thought that actually, as a module or a pair of modules, does make sense to be manufactured in a factory. So we thought actually let's just focus on concentrating that in a factory and then the pure volume of the house your kitchen, living, dining, bedroom spaces actually there's a bit of a misconception actually makes sense for them to happen in a factory? We didn't think it did. So we thought let's just use a panelized system to complement and create them spaces. And so that's where mcom came from. So it's a hybrid building system where it's part modular and part panelized and it's about creating the right product in the right environments. So it's taking a standardized module that can be manufactured in a modular factory and a standardized panelized element that can be manufactured in a modular factory and a standardized panelized element that can be manufactured in a standardized way in a panelized factory, and then these come together on site to create a house that can have flexibility in size. So the same module, for example, could work for a two bed, three bed or a four bed house.
John McMullen:The right ingredients for the right cake. That's exactly it, exactly. I like that. So tell me about your manufacturing process. What is that like? Really interesting question.
DJ:So, as Sano, we haven't got a factory and we have no ambitions to open up a factory. As I said earlier, we're all about empowering the ecosystem. So it's about Sano doing all of the clever and hard thinking and solving all of the problems so that, when it comes to manufacture, the manufacturing facility can focus on manufacturing, which is exactly what they're really good at. So how do they get the process better? How do they improve the quality? How do they get them out faster? And it's just about getting that balance right. And from me and from experience in the UK over the last few years, as we've seen some pretty high profile failures. The challenge has always been factories having to diversify a little bit from their core business to try and keep the factory busy, because the next order is a few months away and, as you know, having a factory that's not manufacturing anything is an absolute nightmare.
John McMullen:It is indeed. So tell me about your affordable housing solutions. How do they work?
DJ:So we developed a standard set of floor plans that are destined for the affordable markets and the idea is developed two core modules and these modules have got all of the complicated bits. So your main entrance, all the MEP downstairs toilets and then your upstairs family bathroom. The idea is we've got some manufacturing partners lined up to manufacture these and we've got a range of panelized partners that can also manufacture the panels, and so the idea is that these are all standardized, all ready to go, all compliant with space standards and building regs in the UK. So it's a super slick copy, paste, drop and go model, and the beauty of the way we've done it is that everything doesn't have to look the same. So, historically, the challenge with modular is everyone wants something different but they all have to fit in that sort of box, whereas we're saying, actually, if you want a house that's slightly wider, that's great, let's order a slightly bigger panel to make it bigger, but the modular bit can always stay the same.
John McMullen:What kind of feedback have you gotten so far about your MDoc solutions? About your MDoc solutions? It's been a really interesting journey.
DJ:So we've started this a few years ago and at the time we started, fully Volumetric was the show in town and everyone was sort of spending a lot of time looking at fully modular houses. But over the last 18 months, as we've sort of seen the challenges with some of the Fully Volumetric factories, we've seen a massive uptake in how many people are talking more of the hybrid language around bringing a pod or a module together on site with a panelized system. Now it started off with bathroom pods and kitchen pods and you know, sano are definitely not the first company to come up with a pod and panel approach. That's been around forever, but I think not the first company to come up with a pod and panel approach. That's been around forever.
DJ:But I think we're the first to come up with it in the way we've done it, so that it's trying to keep a standardized core sitting with a flexible dock, as we call it, which is that site-built structure. So the feedback has been amazing and as we get sort of further and further along, we're hearing more and more positive noise around. Actually, hybrid is the way I want to do hybrid. I can only see single family homes now being built in a hybrid fashion. So, yeah, super positive, and I think it's now time to just supercharge that and get building more houses.
John McMullen:You mentioned developing MDoc in response to the challenges of delivering fully volumetric modular systems in areas of the UK. Do you see a potential for this type of system working in the US, or are you focusing strictly now on UK and Europe?
DJ:Yeah, 100%. So we're to the point now where actually we've got a really good manufacturing supply ecosystem sorted. We've got a number of architects on board that can deliver this. We've got a few main contractors or general contractors that can deliver the system. The whole technical pack, the whole ecosystem is there, ready to go for the UK and, given that UK, with a challenging environment, was a really good test market for us.
DJ:The next plan is to tackle the US, because some of the work that we've done and currently doing with a few smaller developers in the US, actually the system, the hybrid approach, works really well for bigger houses as well. So a lot of the UK is centered around about a thousand square feet, whereas in the US a small house is 1,500, 2,000 square feet, and the work that we've done shows that this works really good. By incorporating some more value into the module, so we can have a slightly bigger entrance hallway, we can now start adding elements of the kitchen or a back entrance into the module. We can include more bathrooms in an upstairs module if it's a two-story dwelling. So there's definitely, definitely value in this in the us. And that's the whole beauty of off-site right. It removes geographic boundaries. The same system can happen globally and, given that the only sort of changes are local standards, local codes, it's purely minor adaptations that need to happen to get us going.
John McMullen:That's very exciting, very exciting. What opportunities do you see for the greater offsite and modular housing industry in the UK?
DJ:Yeah, I think there's still a massive opportunity. 370,000 new homes a year is a big, big number, so I think there's plenty of opportunities for the existing players and also new players in the markets. So there's several high profile volumetric factors that have failed, but it's been clear why they failed and I think a lot of learning has happened. And the challenge with that is that has caused massive instability in the offsite sector in the UK and there's a general nervousness now, especially sort of geared towards single family. What's really interesting is fully volumetric solutions work exceptionally well in other sectors. So health, education, hospitality, students you know, when it's a high rise or a school, fully volumetric is the perfect solution. It's just not quite the right solution today for residential Now.
DJ:In 10 years, 15 years, when the market's settled, there's loads more automation. That's happening. I think. Yeah, fully volumetric will be the way to build new houses and full homes will come out of a factory in the UK. There's no doubt about it. But I think today, as we're balancing where we are in terms of manufacturing capabilities, also, the skill shortage that's a huge, uh huge challenge in the uk now and that's only going to get worse over the next few years. There's not enough people that can install the right mvp. There's not enough people that can do some of the site labor stuff, which is why we're seeing that balance between actually taking some of the labor intensive processes into a factory that changes the ecosystem a little bit. So, yeah, there's definitely a huge opportunity.
John McMullen:For those interested in making an impact on housing in the UK through either building or providing some other form of product or service. What advice would you offer?
DJ:So I think the main thing at the minute is we're still waiting on more clarity from the government, right? So what is this new standard going to be that's hopefully going to be enforceable? What is the funding situation? Is there any more funding? Is there a funding target?
DJ:So there's a few questions that need to land. First, and I think you know, uk is a challenging market, right, it's got probably some of the hardest planning regulations globally, but there needs to be a degree of flexibility that comes with the solution that you're thinking of, Because, yeah, that planning is just a challenge. The exciting part, though, is, as I mentioned, there's a massive, massive, massive demand, but with that, we need to make sure that the new ways of building homes don't devalue what we do as an industry, right? So this can't be a new race to the bottom. This isn't about building. It can't be about building the cheapest house possible, because we're just setting ourselves up to fail in five, 10 years time, when we start seeing quality issues manifesting themselves.
DJ:People are built to the wrong specification, heating costs are going through the roof, so we just need to make sure that we don't trigger that landslide, and, at the minute, the UK is quite distinctive in that there's two hard really too hard really. There's a social housing, affordable and built to rent. Developers who are currently definitely focusing on building higher quality, efficient, healthy homes that they own the assets for 20, 30, 40, 50, 60 years, who are going towards mmc for the benefits of higher quality, higher standardization. And the flip of that is your big volume house builders that are more focused on building to current building regulations and have the challenge of they can only build as fast as they can offload, so as fast as they can sell them, so there's no real incentive for them today to build faster. So speed is not interesting. However, the big benefit for the volume house builders is that there's a massive skill short, as I've just mentioned, and the only way to fix that short term is by using MMC and offsite manufacturing.
John McMullen:So tell me about what's next for you and what's next for Sano.
DJ:Yeah, so it's about keep on empowering the construction industry and, more importantly, governments as well, to help define what this specification is, so that we're building better, sustainable, healthy homes. Everyone deserves to live in a home that is not detrimental to their health, so it's about establishing this manufacturing ecosystem in the US as well. And also, what does the rest of the world look like? So the UK is a big market, the US is a huge market. Actually, this is a global solution. What market should we be challenging next? And then, finally, we're also looking in the next few months to bring in some external funding to support this global rollout post, our sort of really positive UK validation period. Well, very good, you mentioned a global rollout post, our sort of really positive UK validation period.
John McMullen:Well, very good, you mentioned a global rollout. That sets up my next question. Nicely. You may have heard MBI is coming to Europe. It's bringing its World of Modular event to Brussels in October. Are we going to be able to see you there?
DJ:Absolutely. I'm super excited about it. Actually, I think I definitely attended the one that was long ago in Florida and that was hugely popular and gives a really good insight into offsite in the US. But super excited about Brussels, I think there'll be some new partners that we've not spoken to before. There'll be new connections There'll be and I've seen the program and it's looking super exciting.
John McMullen:Well, excellent. I'm excited. Thank you for coming to that event in advance. It's going to be a great event, so we're definitely looking forward to that. DJ, thank you so much for your time. I really appreciate it. You've got a lot of exciting things happening. I'm looking forward to following you and following Sano here in the near future.
John McMullen:Brilliant, thank you, John. Thank you so much for having me on, really appreciate it.
John McMullen:My name is John McMullen and this has been another episode of Inside Modular, the Podcast of Commercial Modular Construction. Until next time..