In the last 100 years, we've seen major progress across almost every industry: everything from chemicals, apparel, manufactured goods, consumer electronics to transportation has generally become cheaper and better, increasing the net wealth of society. And while some industries such as healthcare get critiqued for rising costs, it's at least hard to argue against major improvements there as well, from basic vaccines to advanced genetic therapies.
None of this is true for construction: in almost every possible way, construction has become more expensive (on an inflation-adjusted basis); slower; less durable and less aesthetically pleasing. In most cities around the world, the most expensive and desirable buildings today are also the oldest buildings—something that's hard to imagine in any other industry. Construction feels like the last industry left completely untouched by modern technology.
The relative inefficiency of the construction industry is no secret. Unlike other industries, where advances in technology have continuously increased what a single worker can accomplish, construction remains as labor intensive as ever. Since 1945 in the US, productivity in manufacturing has increased 8.6 times. In the early 1800s, agriculture employed over 80% of us workers - today, it employs less than 2%. But construction productivity has only increased by 10% since 1945 - and construction productivity in the US has actually decreased since the 1960s.
Buildings are built no faster today than in the past. The Empire State Building, completed in 1931, famously took merely 410 days to build. The Chrysler Building, completed in 1930, took 563 days. But 432 Park Avenue, completed in 2015, took over 1500 days. Average time to build a single family house has gone from 4.8 months in 1971 (the earliest year data is available), to 7 months in 2019. Even scaling this by average house size (around 1600 feet in the early 70s, compared to over 2600 square feet today), we're still slower today.
Moreover, construction sits economically upstream of most other activities. It's the machine that creates all of our built environment. It represents 13% of worldwide GDP. It's the source of 11% of global CO2 emissions (plus an additional 28% of annual CO2 emissions from the energy use of those finished buildings.) It will only get more expensive to build due to a secular trend of declining skilled labor. Not enough people are working on these challenges relative to the importance and scale of this industry.
Most people working on solving this problem today are trying to do it off-site, using pre-fab and modular components. This approach has been tried for decades and we believe it will only work in a niche context. In our view, the solution must be to fix things on-site, where the end-product needs to be.