Goldman Sachs-backed modular manufacturer says it expects to be “building factories for years to come”
The founder of modular manufacturing firm that secured £75m of funding from Goldman Sachs a year ago has set out its ambition to be “building factories for years to come” in an interview with Housing Today.
Jordan Rosenhaus (pictured), chief executive and founder of the timber frame modular builder told Housing Today that the business had been set up with the clear aim of scaling up to manufacture homes at high volumes from many factories.
Speaking after signing its first major corporate customer, part Ikea-owned housing developer BoKlok, Rosenhaus said the money from Goldman Sachs had been used to devise a technology and production platform that could quickly move from producing 100 to 10,000 homes per year.
TopHat, which was set up in 2016 by the American MIT graduate and former investment banker, currently has one production facility in South Derbyshire with capacity to produce more than 1,000 homes per year. Earlier this year a UK-registered subsidiary of the firm, TopHat Communities, recorded a pre-tax loss of £21m for the year to April 2019 which it said at the time reflected “the start-up investment required in the early stages of any manufacturing business”
It has used this factory to supply homes for its exemplar development, Kitchener Barracks in Medway, Kent, but Rosenhaus said the firm is, beyond this, wholly focused on being a supplier rather than developer of modular homes.
Asked about past failures of attempts to move modern methods of construction into the housebuilding mainstream, Rosenhaus said: “I’m not interested in other people’s attempts at the space.
“I do know what it’s going to take for us to succeed, and I know the cost structure we need to hit, the quality control we need to hit, the design variations we need to hit, and when we hit those we’ll get as much volume as we need to get and we’ll be building factories for years to come.”
“Scale is top of the agenda. It’s what most of the investment is going in for us to be able to provide.
“We’re putting ourselves in the position to scale quickly in our platform and drive volume in the years to come. That’s what we’ve been mainly focused on.
“If you’ve got the necessary technological infrastructure to […] go from 100 to 10,000-plus, that’s where the value really is.”
Graeme Culliton, UK managing director at BoKlok, said the firm selected TopHat to be its construction partner because it was “the most technologically advanced” manufacturer in the UK, contrasted with other modular players that were just “traditional construction under a big roof.”
He said: “When you go to TopHat you’ll see a production line you’ll see automation, you’ll see a computerised inventory system supporting the manufacturing process, you’ll see a quality management system […] That’s what we saw and why we decide they were the right partner.”
Culliton said TopHat will start work on the first homes for BoKlok (pictured, below), jointly owned by Ikea and Swedish construction giant Skanska, at the end of this year.
Work on the 29-home second phase of Kitchener Barracks is due to commence shortly, with the 167-home third phase due to start at the beginning of 2021.
Rosenhaus said the firm had sold a small number of homes to both Home Group and Medway Council, and was also in discussions with other build to rent developers, housing associations and councils. He said he was confident its factory will be operating at “close to capacity” in 2021.
Read the full MMC briefing on TopHat here.
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