A startup owned by Berkshire Hathaway aims to make the construction industry more like car manufacturing.
2 min
A startup owned by Warren Buffett’s Berkshire Hathaway Inc. aims to shake up the construction industry by making it more like car manufacturing.
MiTek Inc., a Missouri-based construction-technology company, is launching a new modular building venture with New York City-based architect Danny Forster & Architecture. The company plans to build entire rooms for hotels and apartment buildings in factories, and then send them to a construction site to be stacked on top of each other.
MiTek has more than 6,000 employees and sells building components, construction software and services like engineering. The company said it is investing tens of millions of dollars in the modular venture, and plans to start working on its first projects early next year.
Modular construction isn’t new, but companies have struggled to be profitable. Transporting entire rooms to construction sites can be expensive, and some finished buildings have suffered from leaky facades.
Other efforts to streamline the construction process have also had issues. Katerra Inc., a Silicon Valley-based startup, has been looking to move a bigger part of construction work to factories and become a one-stop shop that cuts out middlemen like plumbers and architects. But it has struggled under this model, and its main backer, SoftBank Group Corp., had to bail it out.
MiTek looks to modernize modular construction by requiring assembly by general contractors. Instead of building entire rooms in a factory and driving them to a construction site on a flatbed truck, MiTek wants to ship kits of manufactured building parts along with instructions.
General contractors would then construct rooms from these parts, which would include a steel cage forming the structural support for the room, in a warehouse or other type of industrial building near the construction site.
Shipping the parts, rather than entire rooms, keeps transportation costs low and allows MiTek to supply the country from its factory in Lebanon, Pa., said Todd Ullom, the company’s vice president of modular building solutions.
That companies continue to invest in modular construction despite the challenges speaks to the business model’s promise, proponents say. Construction is a massive industry, plagued by rising costs and inefficiencies. Anyone who manages to automate it the way Henry Ford once changed car manufacturing stands to make a fortune, some industry observers say.
“How come an entire industry is operating on mid-to-late-20th-century mode when we’re a quarter of the way, almost, into the 21st century?” said Barry LePatner, a New York-based construction attorney. “It drives me crazy.”
MiTek’s approach brings its own challenges. Relying on customers to assemble rooms based on written instructions can be tricky. Many general contractors are resistant to change, which could lead to friction and mistakes.
Mr. Ullom, who worked as a general contractor for more than 30 years, said relying on a single supplier instead of numerous subcontractors reduces risk, and the instructions are simple to follow. He said MiTek would offer on-site training.
MiTek also plans to automate much of its 225,000-square-foot factory, for example by using robotic welders, not unlike how auto makers assemble cars. Architect Danny Forster’s firm has designed what could become the world’s tallest modular hotel, a planned 26-story building for Manhattan. He said other modular-construction companies moved work from building sites into factories but failed to make it faster or more efficient.
“A lot of times it has been bringing the chaos of the construction site and just putting a roof over it,” he said.
Reprinted by permission of The Wall Street Journal, Copyright 2021 Dow Jones & Company. Inc. All Rights Reserved Worldwide. Original date of publication: May 18, 2021.
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As Japanese animation and comics go global, opportunities abound for investors
3 min
Move over, Marvel. The next blockbuster entertainment franchise might come from Japan.
Anime is shaping up as the country’s next big export industry, beyond cars and electronics. This once-niche entertainment form is entering the worldwide mainstream , and its growth could light up investors’ portfolios.
The global market for Japanese animation, known as anime, and its related products has more than doubled between 2012 and 2022 to 2.9 trillion yen, equivalent to $20 billion, according to the Association of Japanese Animations. The overseas market has been driving that growth. Markets outside of Japan made up around half of the total in 2022, compared with around 18% a decade earlier.
Streaming companies such as Netflix are certainly taking notice. Its live-action series “One Piece,” based on a Japanese comic, was its most-watched show in the second half of 2023. In fact, anime content on Netflix in the period logged 14% viewing growth from the first half of 2023, compared with a 4% drop overall, according to Jefferies. These streaming platforms will continue to introduce more anime-related content to their global audiences.
Japan’s anime and manga, the Japanese word for comics, have created many well-known characters and franchises over the years, such as Pokémon. And it looks to be getting even more mainstream. The anime market in North America has grown from $1.6 billion in 2018 to $4 billion this year, according to Jefferies. And Asia, which has long been more receptive to anime, will likely continue to grow strongly, especially in China. Anime has also been popular on Chinese streaming platforms such as Bilibili .
Apart from streaming, selling merchandise can be even more lucrative. Sanrio , which owns characters like Hello Kitty , has reported record profits, with its share price rising nearly sixfold over the past five years.
Sony would be another major beneficiary of this trend . The company owns animation streaming service Crunchyroll, which had 15 million subscribers as of June. That compared with around 3 million subscribers when Sony announced the acquisition of the streaming service from AT&T for nearly $1.2 billion in 2020. This contrasts with Sony’s approach in online streaming for other content: It acts more like an “arms dealer,” selling movies and shows to platforms such as Netflix and Amazon.com . That means the company could benefit more directly from the anime boom. And anime also has strong synergies with its movie and game businesses .
Anime maker Toei Animation, which owns popular franchises such as “One Piece” and “Dragon Ball,” is another listed company that would benefit. It makes anime itself, but more important for the overseas markets, it also earns licensing revenue from the copyrights to popular franchises that it owns. Sales outside of Japan accounted for more than half of its total revenue in the latest fiscal year ended in March. Season two for Netflix’s “One Piece” is already in production. Toei stock has nearly tripled since the end of 2019.
Anime has blockbuster potential, not just for audiences but for investors as well.
