Monday, September 22, 2014

High hopes for modular: Forest City Ratner's "Opportunity Brief" surfaces

They had very high hopes. The "Opportunity Brief" dated 1//6/12 presented by Forest City Ratner CEO Bruce Ratner to potential construction partners declared a breakthrough, thanks to a "world class team of experts... who have developed a methodology to revolutionize the way we build highly technical buildings today in dense urban environments like New York City."

"Applying this R & D to high-rise construction and other markets creates a business opportunity that provides an unparalleled competitive advantage," states the document, filed in court today by Skanska, Forest City's bitter adversary in the dispute over cost overruns, delays, and the closing--temporary or not--of the modular factory in the Brooklyn Navy Yard.

(There's a hearing tomorrow regarding Forest City's effort to reopen the modular factory.)

"Forest City is committed to building the first residential building at Atlantic Yards by utilizing the solution developed during the two year R&D effort," the document states, adding that Forest City was "engaged in discussions with the Building and Construction Trades Council to create a new union classification of workers who will work in the factory at competitive wage rates."

"We are seeking an additional partner to establish and grow a viable, cost competitive modular factory business... fueled by a robust, built-in local pipeline and a favorable labor agreement, ensuring both long term sustainability and success," the document states.

The B2 module production was supposed to take 16 months, while now it likely will more than double.

However, the pipeline of 6,000 additional Atlantic Yards housing units and 2,000 "Forest City controlled housing units" in the New York area was deemed only "potential." And now one of the reasons for the split is Skanska's frustration that Forest City, steered by its new partner Greenland, has already decided to build the next towers using conventional construction.

1 comment:

  1. Anonymous4:59 PM

    This is a classic standoff, with no way out for FCRC.

    Because of the lawsuits, FCRC must continue maintaining that the "technology" and "IP" was sound and the building could be built substantially as drawn.

    On the other hand Skanska must maintain that the technology was unsound and they had no choice but to back out, because they cant keep spending on a a JV with no future and a building with so many flaws it may never be occupied.

    If FCRC re-start the factory they will be forced to use the "technology" or admit they were wrong and possibly lose the lawsuit. However going forward with the current approach will be a financial disaster. In other words: If FCRC win the factory, they lose.

    Given the foregoing, Skanska did the right thing by making the flaws known through their filings and then walking away. It gave them a chance to tell their side of the story.

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