CHICAGO, IL / ACCESSWIRE / June 25, 2024 / Z Modular, a division of Zekelman Industries, announced today that it will be closing its factory in Kitchener, Ontario. This facility manufactures modular units for multi-family housing in Canada. Moving forward, Z Modular will continue to invest and operate its United States facilities strategically located in growing residential markets.
The company cited multiple contributing factors leading to the closure of the Kitchener factory, all systematic headwinds working against developers in the Canadian housing market. Public sector inefficiency in the permitting and entitlement process reduces the inventory of land available for housing development and renders land costs too expensive for the development of affordable housing. A developer must either choose to pay too much for developable land or wait too long to go through permitting and entitlement. Financing for modular construction in Canada also proved to be an inefficient and costly process. Under the Rental Construction Financing Initiative, all financing is subject to acceptance by the Canada Mortgage and Housing Corporation (CMHC). Z Modular worked diligently to have the first-ever modular construction development approved by CMHC. However, the approval took over a year and was not received until the project was nearly complete. Subsequent projects have experienced similar, significant inefficiencies in financing approval. Finally, inflationary government overspending has driven operating costs to a level that substantially increases project risk. These unfriendly business conditions ultimately led to the company's difficult decision to close the Kitchener factory and the regrettable job loss for teammates at the facility.
"Despite the hard work of our teammates to drive costs down, the Z Modular business in Canada is unsustainable due to high cost of developable land, government overregulation and lack of project financing support," explains Barry Zekelman, executive chairman and CEO of Zekelman Industries. "Despite an obvious housing crisis, Canada has lacked the foresight to enact the changes necessary to encourage investment and enable developers to be successful. Unfortunately, despite our investment of tens of millions of dollars, our teammates have become the victim of the tragic reality of a broken system."
About Zekelman
Zekelman is a family of operating companies that includes Atlas Tube, Picoma, Sharon Tube, Wheatland Tube, Western Tube and Z Modular. With 20 manufacturing locations and 2,900+ teammates across North America, the company is the leading independent manufacturer of hollow structural sections (HSS) and steel pipe and the top producer of electrical conduit and elbows, couplings and nipples in North America. Zekelman-Believe in What You Build. For more information, visit zekelman.com.
For further information, please contact:
Rick Sebok
Chief Marketing Officer
Zekelman Industries
312.275.1600
rick.sebok@zekelman.com
SOURCE: Zekelman Industries
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