Cobouw produced a compelling and detailed account of the downfall of Homes Factory. Based on interviews with seventeen people involved, the article shows how a promising housing factory overextended itself with a complex project in Amsterdam. But this does not tell the whole story, according to Jan Willem van de Groep.
Cobouw’s reconstruction deserves recognition. It reveals what went wrong within the company and the project, how technical setbacks piled up, and how a combination of overconfidence, time pressure, tight margins, and insufficient financial buffers ultimately proved fatal for Homes Factory.
This case can easily be interpreted as the story of a single entrepreneur who took too many risks and didn’t listen closely enough to his advisors. That’s an important part of the story, but by no means the only one. Homes Factory is clearly not an isolated case. If you take a broader view, you’ll see that the rise of industrialized housing construction has been accompanied by a string of companies that started out with grand ambitions but eventually ran aground.
The common thread behind these bankruptcies is not solely poor entrepreneurship or overconfidence. The core of the problem is that young housing factories are treated by the market as if they were already a mature industry, while in reality they are still in the midst of their product development. The Dutch construction sector is trying to achieve industrial mass production within a system that remains fundamentally organized on a project-by-project basis.
Cobouw’s reconstruction therefore serves as an excellent starting point for an in-depth analysis—not to refute the conclusions, but to add a second layer of understanding: why is it so difficult in the construction industry to build an industrial enterprise from the ground up? Why are the same fundamental mistakes repeated? And why does the market provide so little time, continuity, and financial leeway to navigate the inevitable learning curve?
A factory cannot survive on one-off projects
A factory requires standardization, continuity, and predictability. Investments in production lines, specialized personnel, engineering, and facilities only pay off when roughly the same product can be manufactured in sufficient quantities over an extended period. The construction market, on the other hand, operates in virtually the opposite way.
Every location has different urban planning requirements, different housing types, specific architectural styles, varying parking standards, structural conditions, project-specific requirements regarding fire safety, noise, and permitting, and a different client. Even within so-called collaborative construction streams, each project is ultimately developed, designed, permitted, and contracted separately.
As soon as the factory has to re-engineer and redesign for every project, it imperceptibly turns back into a contractor—only this time with the fixed-cost structure of a manufacturer. At Homes Factory, those fixed costs amounted to approximately 450,000 euros per month. At the same time, the company had to pre-finance most of its production, while payment was only received once the modules were ready on the construction site. This created a business model in which a single disappointing project could drag down the entire company. The factory is therefore not a contractor with a covered construction site. It has the fixed costs of a manufacturer, but is often treated by the market as a project organization that can adapt anew for each assignment.
The project was product development, but it was marketed as mass production
Many industrial construction companies start with a clear and repeatable concept. Then the market demands adjustments: a different facade, a non-standard floor plan, an extra story, a unique corner, a stepped volume, or a non-standard building services system.
Every individual customization seems manageable on its own. Moreover, from a commercial standpoint, it’s difficult to say “no”; a factory needs to stay busy, and an order for a non-standard project seems more attractive than having the facility sit idle. Thus, the product imperceptibly shifts from a standardized system to a collection of project-specific solutions.
The building in Brasa Village was eight stories tall, stepped, and structurally much more complex than anything Homes Factory had built before. The original modular system proved fundamentally unsuitable for this application. During the engineering phase, additional columns, more steel, and more connections had to be added. As a result, the project effectively shifted from a repeatable product to a development project.
But it was contracted and priced as if it were a routine factory-made product. The development costs and real risks didn’t disappear; they simply weren’t factored into the contract price—or were factored in far too little. This is a recurring mistake in industrial construction: the client expects the price and speed of mass production, while in reality the manufacturer is still developing a new product.
The factory forces growth before the company is ready for it
In mature industrial production, large-scale capacity ideally comes only after the product and process have been sufficiently tested and stabilized. With housing factories, it often happens the other way around. After one or two successful pilots, a factory is opened, staff are hired, and an ambitious production capacity is announced. From that point on, the company must quickly achieve scale to cover its fixed costs. Capacity then outpaces the proven track record of the product, the organization, and the market.
In 2022, Homes Factory generated 14 million euros in revenue and only 40,000 euros in profit, yet it claimed a capacity of 1,000 homes per year. Without volume, the factory isn’t profitable. Precisely for that reason, a young manufacturer can hardly afford to turn down a large but non-standard project. The factory does not steer the company toward standardization, but rather drives it toward revenue.
Four Flavors of Industrial Struggle
Although the specific outcomes in the market vary, all stalled factory ambitions share the same underlying cause: the pressing tension between industrial fixed costs and project-based, erratic market demand. We can now distinguish four different manifestations:
- Bankruptcy caused by one or a few disastrous projects: Homes Factory is a textbook example of this. A project that was too complex, insufficient buffers, and setbacks that immediately affected the entire company.
- Bankruptcy due to structurally unprofitable production and insufficient demand: Startblock and Ekowood illustrate this harsh reality. Startblock had produced over 250 wooden homes since 2021, but the manufacturing company suffered significant losses every year, and an attempt to restart operations after bankruptcy failed. The director stated that the problem was not the concept itself, but the system surrounding it. Ekowood also went bankrupt in 2025 due to a lack of sufficient, continuous work for the factory in Deventer.
- Scaling back or adapting the original model: Lister Buildings proves that not every ambition ends with a receiver. In 2019, Lister moved into a large production facility in Weert (the former iQ housing factory of Ballast Nedam) with a target capacity of 1,000 homes per year. Because complete 3D CLT modules proved too complex and material-intensive, Lister switched to two-dimensional elements, outsourced more work, and refocused on its core role as a developer and investor.
- Major losses absorbed by a parent company: Even larger manufacturers are not immune. Daiwa House Modular Europe ran into liquidity problems following loss-making projects and the difficult startup of a German factory, but was able to survive thanks to support from its Japanese parent company.
This puts the factory in a constant bind: too little work makes its fixed capacity unprofitable, while taking on non-standard work just to generate revenue can disrupt the product and the company.
Who can afford the learning curve?
Product development is never without setbacks. Even successful industrial companies make design mistakes and underestimate production times. The difference lies in their ability to weather these setbacks financially and organizationally.
Companies such as geWOONhout, part of TBI, and the industrial divisions of Van Wijnen, BAM, and Heijmans are part of larger conglomerates with existing order backlogs and financing options. A conglomerate can finance a learning curve; an independent newcomer often has to pay for it out of the proceeds of just one or two projects.
Industry leader Bouwgroep Dijkstra Draisma is also a relevant example. The company started early in the 2010s, proceeding with due caution, and has gradually built up its industrialization efforts, with a strong focus on engineering, knowledge development, and the step-by-step expansion of the factory. Because this development is embedded within a broad and diversified construction company with a strong project division, the factory did not have to be fully profitable on its own from the very beginning.
Tala demonstrates a different approach by sticking to a recognizable modular and biobased construction system, expanding in a controlled manner to a new location in Raalte, and relying on patient capital that allows room for further development. What these more sustainable examples have in common is not necessarily superior technology, but a combination of patient capital, a stable order backlog, and product discipline.
I know from my own experience with Factory Zero just how complex that learning curve is. A good product and a compelling social business case aren’t enough. At the same time, production, financing, sales, certification, supply chain management, and project execution all need to mature. While the factory incurs fixed costs, the market expects—from the very first project—the price, reliability, and predictability of a system that has been around for decades. That’s precisely when the temptation becomes strong to take on projects that do generate revenue but stretch the product platform ever further.
The RFP rewards optimism
The responsibility clearly extends beyond the manufacturer alone. Housing cooperatives, developers, municipalities, and government agencies demand large-scale innovation, but in practice, they operate in a risk-averse and fragmented manner. Municipalities continue to cling to local urban planning requirements; housing cooperatives want affordable, customized solutions without setting aside a development budget; and while tenders do value quality and innovation, they rarely provide explicit scope for product development, development costs, and shared risks. As a result, the market is effectively demanding the benefits of mass production, while doing little to create the conditions necessary for it.
Homes Factory may have taken on a building project that fell outside its proven scope of application, but the client was no outsider either. A professional client should have been wary given the combination of complexity, speed, and tight margins.
Instead, traditional bidding processes often reward the bidder who promises the lowest price, the shortest timeline, and the greatest flexibility. The bidder who honestly states that a building requires additional engineering and a risk premium loses the contract to a party that claims it can handle everything. Thus, the market does not automatically select the best manufacturer, but rather the most optimistic bid.
The industry lacks a collective memory
After a bankruptcy, an investigation is conducted to determine where things went wrong, but the technical and organizational knowledge is rarely documented industry-wide. The massive production facility in Weert served successively as an iQ housing factory for Ballast Nedam and was later acquired and modified by Lister Buildings. This symbolizes an industry in which factories and concepts can change hands, while the institutional demand side does not industrialize at the same pace: the manufacturer industrializes, but commissioning, permitting, financing, legislation, and contracting remain project-based. Because knowledge is lost in the event of bankruptcies, the same learning curve is paid for over and over again.
An industrial construction system takes years to build, not quarters
The development of geWOONhout, Fijn Wonen, BAM Flow, Heijmans Horizon, Dijkstra Draisma, and Tala demonstrates that industrialized housing construction is possible. Together, these examples show what it takes: perseverance, financial backing, product discipline, and time. We expect young manufacturers to compete from day one with traditional construction methods whose development costs were incurred long ago and whose teething problems were resolved decades ago. We offer one-off and non-standard projects, pay almost nothing explicitly for product development, and place a disproportionately large share of the risks on the manufacturer.
When things go wrong, we conclude that the entrepreneur was too ambitious. In doing so, we miss the most important lesson. As long as we continue to organize industrial housing construction on a project-by-project basis but contract as if every concept were already a fully developed mass-produced product, every new player will have to go through the same learning curve all over again.
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