Can Australia scale modular construction without building its own manufacturing capability?

Australia’s expanding interest in modular construction is raising a question that extends beyond construction productivity. If more buildings are manufactured offsite, how much of that manufacturing should take place in Australia? (main image: Industry panellists discuss the opportunities and challenges associated with scaling modern methods of construction in Australia at Melbourne Connect.)

This is Part Two of Built Offsite’s coverage of the University of Melbourne’s Scaling MMC in Australia workshop, held on 16 October 2026 at Melbourne Connect. It examines the industry panel discussion that followed Freecity’s presentation on its approach to volumetric modular construction (VMC).

Part One examined Freecity’s delivery model, which draws on established international manufacturing capacity to deliver fully fitted modules for Australian developments, with design coordination, compliance, logistics and installation managed as part of an integrated process. While the approach offers opportunities to accelerate construction and reduce exposure to onsite labour constraints, it also raises questions about

Delivery efficiency versus domestic manufacturing
The panel, chaired by Professor Christhina Candido of the University of Melbourne, brought together Filomena Beshara, Development Manager at Freecity Group; Fraser Paxton, Research Development and Education Manager at Building 4.0; Professor Priyan Mendis from the University of Melbourne’s Infrastructure Engineering discipline; and Associate Professor Patrick Fong from Griffith University’s School of Engineering and Built Environment.

The discussion examined the opportunities and constraints associated with wider adoption of MMC, including the competing commercial priorities of developers, offshore suppliers and Australian manufacturers.

One of the more pointed contributions came from the audience, with James Briggs, Founder and Managing Director of Shepparton-based JMB Modular Buildings, questioning the implications of relying increasingly on overseas manufacturing capacity while Australian modular businesses continue to face difficulties securing consistent demand.

The concern was not simply whether imported modular buildings could be delivered efficiently. It was whether Australia’s pursuit of construction productivity might inadvertently limit investment in the local manufacturing capability needed to support the industry’s longer-term development.

For Australian manufacturers, the challenge is particularly acute. Establishing and operating a modular production facility requires substantial investment in equipment, skilled labour, engineering, quality systems and factory infrastructure.

Unlike conventional building projects, where labour and subcontractor resources can be adjusted according to workload, manufacturing facilities carry significant fixed costs that must be supported by a reasonably predictable production pipeline.

Without that continuity, manufacturers face difficult commercial decisions about capacity, staffing and capital investment.

This creates a structural tension. Developers may be attracted to overseas manufacturers with established facilities, larger production volumes and competitive pricing, while local manufacturers struggle to achieve the scale necessary to compete on similar terms.

Is the door open to Australian manufacturers?
The tension between domestic manufacturing and offshore procurement became a central part of the discussion.

Responding to Briggs’ concerns from the audience, Freecity panellist Filomena Beshara emphasised that the company’s approach did not exclude Australian manufacturers.

“The door is not closed whatsoever,” she said.

Her response highlighted an important distinction between choosing an established international supplier for a particular development and adopting a permanent position against domestic manufacturing.

However, the exchange between Beshara and Briggs also exposed the commercial conditions under which Australian manufacturers might realistically participate.

For developers and construction businesses, supplier selection involves consideration of manufacturing capacity, cost, quality assurance, ESG outcomes, delivery reliability and the ability to meet project schedules.

For domestic manufacturers, demonstrating those capabilities requires investment. Yet that investment is difficult to justify without a credible pipeline of projects.

The resulting problem is familiar across industrialised construction. Manufacturers need committed demand to invest in production capacity, while developers need confidence in that capacity before committing projects.

Breaking that cycle remains one of the industry’s central challenges.

Rather than treating local manufacturing and international procurement as mutually exclusive alternatives, the industry may need to consider how both can contribute to greater adoption of MMC while developing capability within Australia.

Moving risk rather than removing it
Another important theme was the allocation of risk within modular construction projects.

Manufacturing substantial portions of a building offsite changes the sequence of design, procurement, approvals and construction. Decisions that might traditionally be resolved during onsite construction often need to be finalised before factory production begins.

That creates opportunities for greater certainty, but it can also concentrate commercial and technical exposure at different stages of a project.

As one contribution to the workshop observed, modular construction is not necessarily eliminating construction risk. In some cases, it is shifting where that risk sits.

This distinction is particularly relevant to projects involving international manufacturing, where design coordination, Australian regulatory compliance, factory inspections, shipping, customs clearance, transport and onsite installation must be managed across different jurisdictions.

For modular construction to deliver its intended benefits, responsibilities must be clearly allocated between developers, designers, manufacturers, contractors and installation teams.

The consequences of incomplete design information, late changes or unresolved approvals can be more significant where manufacturing is already underway, particularly when production is taking place overseas.

The same principles apply to Australian manufacturers. Industrialised construction requires earlier decisions, more complete documentation and greater coordination between participants than many conventional construction procurement arrangements currently provide.

A manufacturing strategy or a procurement strategy?
The workshop ultimately raised a broader policy question.

Australia’s construction sector is under pressure to increase housing supply, lift productivity and reduce delivery times. Greater adoption of MMC is increasingly being identified as part of the response.

However, increasing the volume of prefabricated buildings delivered in Australia is not necessarily the same as developing an Australian prefabricated building industry.

The distinction matters for employment, skills development, engineering capability, supply chain investment and the long-term resilience of the construction sector.

International manufacturers can provide capacity and expertise that may not currently exist locally at the required scale. Their participation can also expose Australian developers and contractors to more mature industrialised construction methods.

At the same time, a procurement model driven primarily by the immediate cost and availability of offshore production may do little to address the commercial barriers confronting local manufacturers.

For government, the challenge is to develop policy settings that encourage more efficient construction without overlooking the importance of domestic manufacturing capability. That may involve more predictable procurement programmes, clearer regulatory pathways, better integration of manufacturing into project planning and greater certainty around future demand.

The workshop demonstrated that Australia’s MMC transition is not simply a technical question about how buildings are manufactured. It is also a commercial and strategic question about who manufactures them, where investment occurs and how the benefits of industrialised construction are distributed.

Increasing the adoption of factory-built buildings and developing Australia’s domestic manufacturing capability need not be competing objectives. But achieving both will require more than an increasing number of modular projects. It will require sustained investment, dependable project pipelines and procurement arrangements that give Australian manufacturers a realistic opportunity to participate.