Photo: Gabriel Giacometti
Historical overview of industrial development and technological innovation in wood construction
a. Prior to 1994: emergence of prefab modular and mass timber
The technological innovation process that has made it possible to build multi-storey buildings in wood cannot be presented as a linear train of events. Technological innovation did not begin with legislation change or the adoption of a national strategy. The old legacy of woodworking and industrialisation of the wood industry, particularly in Northern Europe, has accumulated a vast amount of knowledge and skills and resulted in advanced technologies in terms of machinery, building systems, products, and applications. The century-long prohibition on multi-storey wood buildings in Sweden, Finland and most other countries, did not prevent companies from building wooden single-family houses and larger structures, such as barns or event halls. Indeed, by the early 2000s, 80 % of all single-family houses in the Nordic countries were made of wood (Manninen 2014), with 90% in Sweden (Näringsdepartementet, 2004). Engineered wood products or mass timber were also utilised in construction, although on a small scale. Nevertheless, the degree of industrialisation and technological development varied significantly between countries and companies, as well as the type of technologies, materials and building systems used. In addition, the experience of building MSWC was mostly inexistent.
In Sweden, modular construction in wood can be traced back to the 1920s, when a handful of companies started producing modules, mostly as temporary structures (Interviewee 2). Then in the 1940s, modular construction received a sudden boost as a by-product of World War II, with the military seeking for a quick solution to accommodate a large number of soldiers mobilised to guard the national borders. Companies that had so far developed modular construction were urgently requested to mass produce modules to build barracks. This enabled companies to generate the skills and industrial capacity to reach high volumes, which helped them roll out prefab construction into the market in the 1950s with the rapid post-war urbanisation process. A second, even more considerable push for modular construction came with the Million Homes programme (Miljonprogrammet in Swedish), with which the Swedish government set itself the goal of building one million homes within ten years (1965-1975). Although this programme is mostly famous for high-rise concrete apartment blocks, around one-third of its houses were single-family homes. Another third were low-rise buildings, many of which were built in wood with prefab modules or ‘flatpacks’ (Interviewee 2). Continuous urbanisation and expanding markets for holiday homes reaffirmed the development of modular construction in the following decades. The scale of these developments enabled companies to build up capacity and industrialise the production of modular construction. These constituted key preconditions for the development of multi-storey modular buildings after 1994, when regulatory barriers were lifted.
In pre-war Finland, prefabricated building mainly emerged from sporadic experimentation, and industrialisation in construction happened later than in other sectors. During the reconstruction period after the war and the following urbanisation process, there was an urgent need to build more homes. Combined with strengthened industrialisation following the Finnish war reparations to the Soviet Union, these developments led to a surge in prefabricated building from the 1950s onwards. The first experiments in scaling up with the help of prefab techniques happened in the frame of industrial production buildings, followed by office buildings from the 1970s onwards. In apartment buildings, the construction sector has been more reluctant to do expensive experiments, and development has been slower. The breakthrough in prefabricated apartment buildings finally happened due to changes in zoning laws in 1959, which allowed for planning whole residential areas instead of singular blocks, creating favourable conditions for mass production. The 1970s saw a record number of residential homes built in Finland as urbanisation accelerated. From the 1950s onwards, the conventional construction industry also re-organised internally and conducted significant work for creating common standards and reinforcing their strong hold in the market. (SBK säätiö 2009)
Engineered wood products (mass timber)
By the time Sweden, Finland and other EU member countries began to change their building codes, making it possible to build MSWC, engineered wood products were already produced industrially albeit on a small scale. After a few, arguably unsuccessful, attempts to introduce engineered wood products, they regained interest in the 1990s, first in Germany and Austria and then in Sweden, Norway and Finland. The renaissance of mass timber began in Germany and Austria and focused mainly on single-family homes, but soon apartment buildings became the main target in the Nordic Countries. According to an expert opinion, the failed initial attempt to introduce engineered wood products in the 1980s may be connected to the business model which targeted lighthouse projects, such as event halls and stadiums, instead of regular housing (Interviewee 2). Martinsons represents an exception in Sweden as it produced mass timber for the housing market, possibly explaining why it survived while many other companies stopped producing mass timber until recently (Interviewee 2).
b. Post 1994 onwards: A new market for Multi-Storey Wood Construction (MSWC)
Context by 1994: Baseline for MSWC
The long history of the wood industry in Sweden and Finland gave a strong basis for enabling the development of MSWC. However, because of the century-long ban, initially there was nearly no experience in building large multi-storey buildings in wood. Prior to the legislative reforms in 1994, there was nearly no research on using wood as framing material in larger buildings (Nord 2008). The lack of experience pertained to all aspects of construction, from structural engineering and building systems, to achieving standards and regulations for fire safety, ventilation, acoustics, and energy efficiency in MSWC. There was limited knowledge and skilled labour across relevant sectors. There was also no built stock for reference for new buildings and for banks and insurance companies to assess risks. Despite these challenges, the ban lift on MSWC, paired with a policy push for developing wood construction and the decisive steps taken within the wood industry, all led to a rapid process of experimentation, knowledge creation, and technological innovation, followed by a process of systematisation and industrialisation.
Piloting and experimentation
As wood re-emerged as a possible material for large-scale constructions, a handful of pioneering companies began an intensive process of experimentation, piloting, and testing building systems, both modular and traditional systems but using structural wood engineered products or mass timber, i.e. Glulam, CLT, and LVL. During this first phase of development, the companies involved were mostly large with a pre-existing industrial capacity and the financial resources to invest in R&D. in Sweden, Moelven and Lindbäcks, among other companies producing prefab modular houses in wood, invested in knowledge and capacities to develop building systems for high buildings (Interviewee 2). The companies’ experience in producing modules for single-family homes on an industrial scale was a considerable asset for developing modules for multi-storey buildings. Although 90% of prefabricated homes were built of wood in the 1990s, most of them were not modular but ‘flat pack houses,’ which are constructed out of pre-cut components, transported onsite disassembled, and do not include painting, plumbing and fittings. Building multi-storey homes from modules and the extremely efficient assembly processes was therefore a true gamechanger, and the market of modular MSWC grew from 2,5 million EUR in 1994 to a hundredfold more, coming up to c. 125 million EUR (Interviewee 2). However, different companies underwent distinct development paths. While Moelven has targeted private customers and offered a wide range of choices, other companies, such as Boklok, the Skanska-IKEA joint venture, apply a more fixed model comparable to IKEA furniture, with only a narrow selection of options (Interviewee 2). Martinsons’, instead, invested in developing building systems using mass timber frames in multi-storey buildings. This process mobilised a first wave of skilled labour into the wood industry, coming mainly from the construction industry. One interviewee is himself an example of this trend as he was called from his position in the construction sector to work at Moelven to help them develop building systems (Interviewee 2).
Photo: Alberto Giacometti
In Sweden, universities and institutes lacked the infrastructure and programmes for conducting research surrounding wood construction before 1994 (Nord 2008). After discussions with the forest industry, academia and policymakers, significant R&D was mobilised in a ‘triple-helix’ set-up. A major research programme was launched in 1996 aiming at increasing the basic knowledge of using timber in larger structures (ibid.) One project stemming from this programme was the Cross-Laminated-Timber Consortia (Massivträkonsortiet) bringing together representatives from the wood industry, building contractors, consultants and universities. Massivträkonsortiet delivered many successful results for knowledge creation around product properties, how to develop timber frame systems, and solutions around fire-safety, noise reduction and moisture. A number of prototype buildings erected and handbooks for using timber in larger structures also resulted from this programme. As a participant in this consortium, Martinsons “learnt more about process flow and production management for structural elements” (Nord 2008).
Later on, the Lean Wood Engineering programme (2006-2009) was launched, aiming at developing industrialised timber frame construction and industrial wood components and systems. With a budget of 36m SEK, co-funded in equal parts by Vinnova, Sweden’s Innovation Agency, industry partners, and three universities (Linköping University, Luleå University of Technology, and Lund University), the programme aimed at increasing academia-industry cooperation with academic, industry-related, and financial goals. The programme also involved several PhD candidates that developed their research around most topical issues at hand, carrying out calculations and tests to design structurally sound frames, or to examine fire-safety, acoustics and sound insolation, or moisture. Among the expected results were an increase in related research and education, more cooperation between companies, and increased R&D financing. The ‘research’ component of the programme mainly centred around developing business and processes, with less focus products, whereas the ‘development’ part of the programme mainly explored industrial wood construction and manufacturing (Kunskapsförmedlingen 2022; Stehn 2022). Later, similar projects on smaller scale, for example, one launched at the Luleå Technical University, have involved many of the same companies and aimed for increased cooperation between academia and industry (Träbyggnadskansliet 2014).
Industrialisation of wood construction: from onsite to a factory-setting
Once the handful of pioneer companies had succeeded in developing construction systems for multi-storey buildings, a second wave of development began as industries focused more actively on the industrialisation of wood construction by applying lean manufacturing principles to systematise the workflow. In this process, companies invested in the infrastructure and equipment needed for scaling up production. A second wave of skilled labour made its way into the sector, this time coming from the automotive industry (Interviewee 2). Experience in the production line of automobiles was particularly useful, argues one expert, as for example there are many similarities in the way trucks and modules are assembled.
According to several experts, the industrialisation of wood construction is perhaps the most important innovation, enabling the emerging ‘sub-sector’ to move from the piloting-phase and niche market to mass-production and capture a sizable slice of the construction market. Industrialisation also means moving parts of the construction process offsite, to the factory. Offsite construction offers many benefits. As one informant puts it: “offsite construction can lower the construction time and costs, but also change the habits and processes that were less efficient” (Interviewee 1). According to one expert:
“while the technical innovations were developed over a hundred years ago, streamlining the production, the workflow and lean production, to get the volumes needed for a full building offsite, has changed the game” (Interviewee 2).
However, the degree of industrialisation of construction varies depending on the choice of building systems. For instance, mass timber frames (beams, columns, slabs) mimic conventional building frames in concrete and steel, and thus requires no major changes in the architectural design. Modular construction, instead, requires changing the whole building process from architecture and design, to building and assembling, moving a major part of the work offsite (Interviewee 1).
Despite the many benefits of going offsite and increasingly systematising the construction process into factory work, the progress has been slow as the learning process and designing new systems and protocols has required much time, effort, and investment (Interviewee 1). The transition also implies new players entering ‘the game’ challenging the established practices and business relations built over time. Moving offsite radically changes the organisation of work in construction projects, which has led to shifts in the actors involved or the contractual conditions in which they are involved, as well as new collaborations networks, and trust relations (Interviewee 1).
Emergence of a new market: a bumpy road
Despite the initial hype generated from legislative changes and the strategies developed at national and sub-national levels, the market for MSWC did not immediately experience the desired boom. The goals of reaching 30% of all multi-level construction to be built in wood frames in a decade-time in Sweden (2005 strategy) (Lindblad 2020), and 10% in Finland 2015 (2011 programme) (Laapotti 2020) proved too optimistic and underestimated the weight of the structural inertia. Today, 15-20% of new multi-storey buildings are built in wood in Sweden (Interviewees 2, 3) and less than 5% in Finland (but 40% of public buildings) (Paavola 2019; Laapotti 2020). The slower market growth than expected generally points to the strength of a well-established construction sector based on concrete-and-steel, with large investments made in infrastructure for production, and accumulated skills, experience and networks that operate around the established ways. The status quo is also reinforced by clients’ familiarity with concrete construction, including municipalities and other public actors which are responsible for regulating and setting the standards for new developments. However, high expectations also seem to stem from a simplified understanding of industrial transformations, whereas change takes time and requires systemic thinking.
Industrial MSWC has slowly made its way to transcend the structural inertia in the construction sector, but penetrating the market has required new forms of financing, risk-taking and applying different business models. In early stages, pioneer companies circumvented traditional actors including contractors and banks instead of challenging them directly. Lindbäcks, with origins in the construction sector, was the first company to build multistorey residential wood buildings using volumes (modular construction) in 1994 (Nord 2008). Having a real estate sister company, Lindbäcks was able to create demand for itself (interviewee 2).
Moelven instead, with nearly a century of experience building modular single-family homes. First in Norway, then both in Norway and Sweden, developed its own capacities and production system to build multi-story buildings in wood, likewise circumventing construction companies reluctant to take the risk in new solutions. Similarly, Derome AB, dating from 1946 is active along the solid wood value chain and developed a lightweight framing system A-hus and modular construction. The company has built many projects through its own developing and real estate company (Nord 2008).
Martinsons, initiated in 1939 with a sawmill and later began producing glulam. After a dormant period in the mass timber market, Martinsons developed to becoming a supplier of building elements and wood housing company (Nord 2008). Following regulation changes in 1995, Martinsons gradually entered the building industry and created its own construction company, Martinsons Byggsystem AB, taking the whole building process in its own hands. Martinsons went as far as to providing everything needed on the construction site from consulting to plumbing (Interviewee 2). More recently, Martinsons was acquired by Holm, a forestry company, bringing further together parts of the supply chain under a single company. Holm now controls the source of the material, the processing, the fabrication of mass-timber products and building elements and, for many projects, also the design and construction of new buildings (Interviewee 9).
In addition, several companies with origins in the forestry industry, such as Stora Enso, Setra, Södra, amongst others, began the production of timber products and created their own building systems moving prefabrication of building elements further down the supply-chain. For example, Södra Building System developed a truss system that is offered to contractors (Bengtsson, 2003 in Nord 2008).
As wood construction continues to expand its market share, circumventing established contractors is becoming less necessary as many of them have now gained experience in wood building. Instead, the wood industry is working closer to construction companies (Interviewee 2). On the contrary, the many conservative construction companies that have resisted to change are now feeling the pressure and see the need to build own capacities to build in wood. This trend is likely to accelerate as new regulations are on their way to set limit values on emissions of new buildings, making wood a favourable choice (Interviewee 5). Going forward, construction companies will inevitably become part of a larger transformative process by which changes in parts of the system will impact several other parts including the relations with other companies and subcontractors (Interviewee 1).
Market development of engineered wood products (mass timber)
A number of companies began producing glulam in the post-war period in Sweden, of which three still stand today: Martinsons, Setra, and glulam of Sweden AB (Suomen liimapuuyhdistys ry and Puuinfo Oy 2014). However, the market for glulam and mass timber products experienced decline and stagnation in the 1980s and 1990s. Then the market for mass timber products started to boom in the early 2000s, mainly in Austria and in Central Europe, but also in the UK and France and to a smaller degree in Canada and Australia (Manninen 2014). Within a decade, the demand for glulam nearly doubled to ca. three million cubic meters in Europe (globally about 5 mil m3), most of which was produced in Germany, Austria, and Finland (Manninen 2014). The production of CLT began in the early 2000s (Manninen 2014). Stora Enso, the Swedish-Finnish company, established their CLT factories in Austria, whereas Martinsons established the first CLT factory in the Nordic Countries in Sweden in 2003. Soon after, Södra and Setra built their own CLT factories in Sweden. Despite the economic crisis in 2008 and shaky housing markets, the consumption of CLT was not reduced. As demand continued to increase, new factories were established in different countries, e.g. Monnet Seve in France (2013), Cross Lam Kuhmo Ltd in Finland (2014), amongst others. The production of LVL in Finland began in 1981 but took decades to scale up, with notable investments targeted towards MSWC construction only since 2016. The material properties of LVL make it a competitive option for mid-high apartment buildings and office buildings (Lazarevic et al. 2020). Today, there are also several factories in the Baltic countries producing mass timber and modular houses targeting the Nordic market.
Economy and market conditions
The efficient industrialisation process has succeeded in creating a viable market in Sweden to the point that building a multi-storey apartment building from wood can be today c. 15-20% less expensive than using concrete and steel (Laapotti 2020). In Finland, where the market is not yet self-reliant, the situation is often the opposite (ibid.). To make the processes as efficient in Finland as in Sweden so that the price of wood construction would drop, the demand would have to be stronger. However, since there is a lack of expert knowledge and process management know-how of wood construction, the price remains high, keeping the demand low. This in essence is the vicious cycle plaguing the sector in Finland, stemming from the century-long lead that the concrete industry has in the competition, and the resulting tight relations with construction companies (Interviewee 1, Laapotti 2020). The rigidity of the existing system also means that the flow of the process must remain more or less similar in every project even if the product is different. For this reason, customer must have made the decision to build with wood early enough so that the process can be adapted to incorporate it. If the decision is made during the first stage, the process is very efficient but it is difficult for the industry to make a good offer based on plans that have already been made.
Broader market conditions have hit a growing market as well especially in Finland during the 2000s. Notably, the 2008 economic crisis and subsequent prolonged economic downturn slowed the housing market in Finland and previously growing markets export for glulam, for example (Manninen 2014). CLT continued to increase production despite of the crisis, however it was still produced at a much smaller scale than glulam (Manninen 2014). Sweden’s housing market was not significantly affected during the financial crisis in 2008, and on the contrary the housing deficit dragging from previous decades in combination with a growing population meant that demand continued to increase. In Finland, a slower pace of construction and declining population in many regions has also played a role in the slower pace of development of wood construction.
Beyond the role of private actors
The emergence of multi-story wood construction could not have been possible by companies alone challenging the status quo, taking risks, and circumventing tradition industries. There are other important drivers of change, notably the national government, first in its power as regulator and changing the rules of the game, but also as an enabler, by setting strategies and assigning funding to support the development of the sector. Moreover, municipalities have played a major role in pushing the market to adopt wood as a possible alternative but also by itself taking the lead and risks in building public buildings and publicly financed housing blocks. The following chapter focuses on the role of the state, sub-national authorities and institutional innovation.