A Hit in Sweden, a Bust in the U.S.: What Large-Scale Modular Actually Requires

In short — Sweden prefabricates the majority of its housing and has since the 1940s. The United States tried twice to scale modular — a federal program in the 1960s, a wave of startups recently — and failed twice. New Zealand promised 100,000 homes and delivered about 2,300. As Quebec signs its first large prefab contracts and Ottawa launches Build Canada Homes, a CBC News report is a reminder that what separates these trajectories is one thing: steady demand.

Canada is about to play a card other countries have already played. Build Canada Homes wants to launch 4,000 modular homes on federal land in six cities, with a floated potential of 45,000 — while CMHC puts the country's need at roughly 4.8 million homes by 2030. Before celebrating or doubting, it is worth looking at what happened elsewhere. That is the exercise journalist Jenna Benchetrit performed in a CBC News report published in fall 2025, and the lessons apply directly to Quebec.

Why Sweden succeeded

The Swedish case is no accident: the industry dates to the 1940s and was built on massive post-war demand. Three ingredients stand out from the report.

Sustained demand, not bursts. A prefabrication plant is a beast that must be fed: it only pays for itself when orders arrive continuously. Sweden gave its factories decades of full order books. That is exactly the logic of the SDE's 478-unit contract in eastern Quebec — one pooled portfolio instead of seventeen small projects — and of the FIERH prefab-neighbourhood stream.

Standardization, embraced. The Swedish sector is highly standardized, with supply chains coordinated end to end. Buildings are not redesigned from scratch; proven systems are declined. That is the condition for cost gains — and culturally the hardest step for a construction industry raised on custom work, as we explained in we build cars in factories, why not homes.

Technology that follows, not leads. Swedish automation is now studied worldwide — to the point where Toronto's Assembly Corp bought equipment from Swedish manufacturer Lindbäcks for its own factory. But that automation came after decades of guaranteed volume, not before.

Why the U.S. failed — twice

The American counter-example is rich in lessons. In the 1960s, the federal Operation Breakthrough program, run by the Department of Housing and Urban Development, set out to industrialize affordable construction. It never scaled: several projects ran into cost trouble, to the point of no longer producing genuinely affordable housing.

More recently, a wave of startups promising to revolutionize construction in the U.S. and U.K. ended in bankruptcies — pandemic delays, regulatory weight and negative perceptions of prefab got the better of the promises. That perception is familiar in Quebec too; we documented it in our myths of modular construction.

And there is New Zealand: KiwiBuild, launched in 2018 with a 100,000-home target, had delivered about 2,300 by the end of 2024, before being wound down in October of that year. Promising scale does not create it.

Japan, the other model

The report also recalls the Japanese case: a prefab sector projected to exceed 23 billion US dollars by 2030, built on a very local constraint — earthquake risk, which pushed the industry toward components designed to be replaced. The lesson transfers: prefab wins when it answers a real constraint of the territory. In Quebec, that constraint is winter, labour scarcity and distance — three things a factory neutralizes. Our world tour of modular gives other examples.

What it means for Quebec

The experts CBC News spoke to trace the limits of the reasonable. UQAM professor Carlo Carbone warns that Canada's building culture remains anchored in on-site construction and that rushed programs risk producing boxy, cookie-cutter results. Desjardins economist Randall Bartlett notes that modular is no cure-all for affordability — KiwiBuild being exhibit A. BMO's Douglas Porter cautions against a heavy-handed state crowding out private investment. Add two very Canadian constraints: transport distances and interprovincial trade barriers.

Put together, this gives a simple grid for judging Build Canada Homes, FIERH and regional portfolios like the SDE's: the question is not "how many homes were announced?" but "are the factories' order books guaranteed for years?" That is the one indicator that separated Sweden from everyone else.

Does your organization or municipality want to join this wave while the programs are open? We can prepare a quote request together.