Strategic Review of the Offsite Construction Sector in Scotland ...

A Strategic Review of the Offsite Construction Sector in Scotland 

Strategic Review of the Offsite 

Construction Sector in Scotland 

Summary Report 

Funded by: 

Scottish Government 

Report authors: Prof Sean Smith, Dr Robert Hairstans, Russell 

Macdonald and Fausto Sanna 

Institute for Sustainable Construction 

Edinburgh Napier University 

Institute for Sustainable Construction – Edinburgh Napier 

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EXECUTIVE SUMMARY 

The offsite construction sector covers a wide spectrum of companies and 

supply chains across Scotland. This study primarily involved a review of the 

offsite construction sector for homes and buildings. The following key points 

have been extracted for this summary report: 

A significant proportion of companies interviewed have entered the 

offsite sector during the last 12 years. 

The current value of manufacturing undertaken by this sector (from 

the companies interviewed) is £125 million. 

Within the next five years the offsite manufacturing sector is 

anticipated to grow (without additional manufacturing facilities) to £230 

million. 

Exports via direct supply, license and joint ventures are anticipated to 

grow, from less than £5 million (current), to over £50 million. 

If the market demand was to increase, even without additional new 

premises, this would lead to an increase in 500+ jobs in the offsite 

manufacturing sector 

The majority of offsite construction currently supplied is for the private 

and public housing market. 

The output from offsite construction in 2011/12 due to the economic 

downturn is currently 6,000 houses / apartments. If market demand 

was to increase, with no additional new manufacturing premises and by 

increasing shift patterns within current facilities, there is an annual 

offsite output from Scottish offsite manufacturing facilities of 

16,500 houses/ apartments. 

25% of the current market is for the non-domestic market 

A number of drivers and opportunities were identified by the companies 

interviewed. 

Three future key government incentives to support the growth of offsite sector 

in Scotland would be: 

recognition in the public procurement process of the positive 

impact that offsite construction provides in better quality, reduced 

waste, less emissions from site vehicles and transport and less 

remedial works. 

inclusion of offsite construction within the Section 7 

(Sustainability) of the Buildings Standard`s (Scotland). 


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establishment of an Offsite training academy which would support 

skills training for offsite to deliver sector growth, quality and building 

performance. 

1.0 Scottish Offsite Sector 

1.1 This study covers a range of companies designing, manufacturing and 

supplying offsite construction systems in Scotland. Interviews have been 

undertaken with small, medium and large scale offsite construction 

manufacturers as well as large scale supply chain companies, research 

and development based companies and offsite developer clients where 

all works are subcontracted. 

1.2 The study involved in-depth interviews with staff based in 17 companies. 

1.3 The offsite sector is spread across Scotland involving design, 

manufacturing, and small to large scale product suppliers. Figure 1.3 

shows some of the locations of the offsite companies interviewed. 

Figure 1.3 

Geographic distribution of the companies interviewed 


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Note: The statistics and information provided within the following sections 

were collated from interviews with key personnel and staff based within the 

companies. Whilst not covering the entire offsite sector in Scotland the 

views, feedback and statistical information given provides a useful insight 

to this important manufacturing sector within the Scottish economy. 

1.4 Offsite construction has increased in its importance in recent years within 

the construction sector. Figure 1.4 below shows the period in which the 

companies interviewed had specifically entered into the offsite sector. 

Figure 1.4 

Entry year into offsite construction 

1.5 Of the 10 companies interviewed who specifically have offsite 

manufacturing facilities they collectively provide 15 manufacturing 

business locations across Scotland. 

1.6 The majority of the offsite construction sector in Scotland is currently 2D 

closed panels systems with insulation pre-fitted. In some cases 

companies could provide pre-fitted services (such as in wall system) and 

finishes (one side) to the offsite system. A number of companies 

stipulated their intention to move from current 2D insulated closed 

panels to 2D fitted with services for wall panel systems. The exception 

was for floor structures where this may still be based on site fit out of 

services. 

1.7 The most advanced systems manufactured in Scotland were volumetric, 

modular with pre-fitted insulation, services and finishes (one side or both 

sides). 


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2.0 Value and productivity of Offsite for Scotland 

2.1 Prior to the economic downturn (mid 2008) the Offsite manufacturing 

sector for 2D and 3D constructions supplied only within Scotland (not 

including joist and timber truss manufacturers) was approx £100 million. 

2.2 Scotland current: Currently, taking into account the economic downturn 

during the past 4 years, growth in offsite capabilities by some companies 

and new offsite entrants into the market the offsite manufacturing sector 

of the companies interviewed is £75-80 million. 

2.3 Scotland future: In the future increasing the output, without requiring 

further additional premises over current facilities (i.e. increasing number 

of shifts within the manufacturing plants), the estimated output of the 

manufacturing base supplying to the Scottish market alone would be 

£135 million. (see Figure 2.3 below) 

Figure 2.3 Offsite manufacturing value supplying to the Scottish market 

2.4 Many of the companies supply their offsite systems for systems designs 

across the UK. 

2.5 Scotland and UK current: Currently the companies interviewed supply 

2D and 3D offsite constructions and design works to the value of £125 

million, including Scotland and rest of UK market, of which rest of UK is 

approximately £46 million respectively. 


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2.6 Scotland and UK future: In future increasing output, without requiring 

further additional premises over current facilities (i.e. increasing number 

of shifts within the manufacturing plants) the estimated output of the 

manufacturing base supplying to the Scottish and UK markets would be 

£230 million, of which the rest of the UK market would be £85-100 

million respectively. 

2.7 Note the above figures do not include the separate manufacturing value 

of joists and roof truss systems, manufactured in Scotland, which are an 

additional output value over and above these figures. 

2.8 Internationally: half of the companies currently supply offsite systems to 

markets outside of the UK and this is anticipated to grow significantly in 

future years. 

2.9 Currently in 2011/12 the international market value for offsite systems of 

the companies interviewed was less than £5 million. However, through 

increasing awareness of the offsite capabilities in Scotland, license deals 

and growing niche market exports this is anticipated to grow to over 

£50 million in exports. 

2.10 Figure 2.10 below outlines the current and future markets sectors for 

the offsite manufacturing and design development support for Scotland, 

rest of UK and International markets. 

Figure 2.10 Current and future offsite market values within next 5 years 

3.0 Current and Future Market Sectors 

3.1 Companies interviewed were asked which sectors they operate 

within. Figure 3.1 outlines the range of sectors which are covered by the 

companies. This chart does not reflect the actual size of the market but 

more the cross-range of market sectors which are covered. 


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Figure 3.1 Market sectors covered by companies (not proportional to 

output) 

3.2 The largest output share of offsite construction was for housing, 75% of 

the build output. Figure 3.2 shows example proportions for private 

housing, public housing and non residential buildings for some of the 

companies interviewed. 

I 

E 

B 


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Figure 3.2 Proportion of offsite construction output for some companies 

(A-K) 

3.3 The companies were asked, given future trends, where are the future 

growth markets? Private housing was first followed closely by public 

housing. Other identified market sectors for growth included tourism and 

hotels, retirement homes, offices and data centres. 

3.4 New Build Housing: The number of houses/units built annually in 

Scotland and the UK has fallen significantly due to the economic 

downturn. Prior to the economic downturn the offsite companies 

interviewed reported an annual output of approximately 8,800 units. In 

the current period the number of offsite construction systems for homes 

2011/12 year is 6,000. 

3.5 Whilst output is down across the sector the offsite sector has managed 

to survive generally better than other new build sectors. Some 

companies have expanded or upgraded their offsite facilities during the 

downturn. 

3.6 Future housing output: Offsite companies were asked what output they 

could achieve in the near future using current manufacturing 

facilities. From the responses provided the total annual output (i.e. by 

increasing shift patterns and taking on new staff) would be 16,500 units 

per year. 

3.7 If demand continued and there was a definitive pipeline of supply 

projects then further expansion of facilities would occur and this output 

quantity could increase to well over 20,000 units/per annum. 

3.8 UK and International markets: Companies were asked their current 

geographic distribution of offsite business activities in terms of supply, 

export, license and joint venture. Included with “other” was Germany, 

Canada and China. In addition, two companies had also supplied to the 


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Falkland Islands. 

Figure 3.8 Geographic distribution of business activities 

3.9 Growth markets UK: Figure 3.9 outlines future growth markets indicated 

by the proportion of companies interviewed. Primary growth markets are 

Scotland and England, followed by Wales and N. Ireland. 

Figure 3.9 Future UK growth markets and by method 

3.10 Future international markets include China, North America and Africa via 

a combination of export, license, joint venture and establishment of new 

manufacturing facilities overseas. 

3.11 When comparing direct business to business (B-2-B) versus sourcing 

materials via merchants and distributors, 45% of all business was B-2-B 

and 55% was via merchants / distributors. 


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3.12 Figure 3.12 illustrates the geographic location of B-2-B supply chain 

partners. 

Figure 3.12 Geographic location of B-2-B supply chains 

3.13 The number of Scottish B-2-B supply chain company contracts supplying 

products to the offsite sector companies interviewed was 102. 

3.14 There were 39 supply chain company contracts from the rest of the UK 

and 40 contracts outside the UK. 

3.15 The number of direct employees linked to their offsite manufacturing 

outputs and direct associated support is currently approximately 1,450. 

Some companies have lost large numbers of staff when compared to 

2008. However, the introduction of new companies to this sector and 

greater focus on offsite growth has created less overall impact on the 

sector versus others. In future using current facilities and increasing 

shifts to meet increased demand would result in a 500+ increase in jobs, 

as shown in Figure 3.15. 


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Figure 3.15 Number of employees 

3.16 When asked “what proportion of employees work offsite and on-site” 

94% worked offsite carrying roles in manufacture, design and 

engineering support. 

Figure 3.16 Proportion of employees offsite (red) and on-site (blue) 

3.17 Current economic conditions had affected all companies interviewed. 

Many had lost staff or streamlined processes. Some companies had 

used the opportunity of the quieter workload to refocus on future design 

systems and the most common phrase used by companies during 

interviews was “it had provided breathing time” to relook at designs, 

systems and undertake research and development. 

3.18 Almost all of the companies invested in R&D and staff training. 

Depending on the size of the company the normal range varied from 1 to 

5%. In more applied and larger scale step changes in innovation this 

was greater than 5%. 

3.19 When asked what other products were manufactured within their 

premises other than large offsite construction systems, these included 

door sets, garden offices, stairs, render and cladding systems and 

trusses. 

4.0 Offsite production processes, opportunities and barriers 

4.1 Companies were asked “which category of offsite best described each of 

the systems they manufactured”. Example construction categories for 2D 

and 3D are shown at the end of this document. Figure 4.1 shows the 

breakdown of each of the categories relative to the turnover of the 

companies interviewed. The majority of offsite is 2-D subcategory 0 

(sheathed panels) and 1 (pre-insulated panels). The third largest 


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category is 3-D volumetric/modular sub-cat 3 with pre-insulated walls, 

services and wall linings. 

Figure 4.1 Categorisation of offsite manufacture relative to turnover 

4.2 Companies were asked what they perceived were the main advantages 

of offsite construction. Ranked in priority and grouped across the 

companies interviewed, these were: 

1) Higher levels of quality assurance and predictability 

2) Better control of costs and margins 

3) More stable business process (employees, product component 

supply) 

4) Opportunities for process improvement, innovation and R&D 

4.2 When asked “what were the current main areas of technical 

investments for offsite”, these included: 

Building envelope advancements (structure, acoustic and 

thermal) 

Process improvement and communication technology 

implementation 

Implementation of standardised systems and accredited details 

(e.g. robust details) 

Product certification and European approvals 

4.3 Opportunities and drivers were discussed at length with the 

companies. During the interviews a series of “phrases” were presented 

to the companies and they were asked to provide answers as to 


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whether they agreed or disagreed with the set “phrases”. In rank order 

the following phrases scored “highly agree” 

Offsite construction will increase across the sector 

Additional support investment will be required to assist the 

sector 

Offsite construction should be included within Section 7 

(Scotland) Sustainability standards 

Future housing targets will definitely require increased levels of 

offsite 

4.4 Future Government strategy to support the offsite sector were 

identified by the companies as follows: 

Regulation and Standards - inclusion of Offsite construction 

as a category within Section 7: Sustainability of the Building 

Standards 

Procurement processes which recognise the positive impact of 

offsite construction: better quality control, reduced waste, 

reduced vehicles to site better quality and substantially less 

remedial works 

Grants and support for manufacturing plant and equipment 

and support for innovation, research and development 

Establishment of an offsite training academy which would 

assist future sector delivery growth, low carbon skills, building 

performance and support waste reduction plans. 


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© Crown copyright 2013 

You may re-use this information (excluding logos and images) free of charge in any 

format or medium, under the terms of the Open Government Licence. To view this 

licence, visit http://www.nationalarchives.gov.uk/doc/open-government-licence/ 

or e-mail: psi@nationalarchives.gsi.gov.uk. 

Where we have identified any third party copyright information you will need to 

obtain permission from the copyright holders concerned. 

ISBN: 978-1-78256-394-5 (web only) 

The Scottish Government 

St Andrew’s House 

Edinburgh 

EH1 3DG 

Produced for the Scottish Government by APS Group Scotland 

DPPAS13923 (02/13) 

Published by the Scottish Government, February 2013 

w w w . s c o t l a n d . g o v . u k

Strategic Review of the Offsite Construction Sector in Scotland ...

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