Tuesday, December 01, 2015

Modular stop? Greenland nixes (?) future pre-fab buildings at Brooklyn site; Forest City warns of layoffs at modular plant

Not long after finally re-staffing the once-closed modular factory at the Brooklyn Navy Yard set up to build units for Atlantic Yards/Pacific Park, developer Forest City Ratner now has given 220 workers the required 90-day notice that the factory may close after completion of modules needed for the B2 tower.

Thus, the 363-unit, 33-story apartment building at Dean Street and Flatbush Avenue, with 50% subsidized units, may stand as the only modular building in Atlantic Yards/Pacific Park.

The Real Deal's Katherine Clarke, in Forest City warns of mass layoffs in modular division, disclosed that Forest City's joint venture partner/overseer in the project, the Shanghai government-owned Greenland Holdings, has pulled the plug on any future modular towers.

(Update: one version of the article said that Greenland won't use modular for the remainder of the project, but the latest version said Greenland "likely won't" use modular.)

Nor has Forest City, which in 2014 was "besieged" (according to Gilmartin) with interest from other developers, been able to attract new business to the modular plant.
B2, Sixth Ave. facade panels missing, Oct. 27, 2015
That must be a blow.

Despite delays, unresolved lawsuits with former partner Skanska USA, and escalating costs regarding B2, Forest City Ratner CEO MaryAnne Gilmartin, ever-protective of her company's investment in both the technology and infrastructure behind modular, had left open the possibility of future Atlantic Yards/Pacific Park modular towers.

B2 as proving ground

“To prove out the model, we need B2 to open up. We need people to walk through and say, ‘This is beautiful, it looks just as good as the building down the street,’” she said last June, according to the Real Deal. “If that happens, then I would say Greenland would be enthusiastic.”

At that same conference, as I reported, Gilmartin said she was "a deep believer” in modular and the problems at the B2 modular tower were "really about the hiccup we had with our partner” Skanska. 

However, as my reporting shows, were more than a hiccup, including significant water damage requiring major interior remodeling.

Rising costs

Costs, too, have risen. Last month, Forest City CFO Bob O'Brien, said a $30 million increase in B2's price tag (which had fluctuated) resulted from not only construction conditions--a euphemism for needed repairs?--but also "greater delay than anticipated and costs related to rehiring, or replacing talent that was let go when our former partner separated from the project."

It might not be easy to re-hire those workers should they be laid off, which would set up a new round of training and costs.

Note that the Real Deal reported that the layoff affects 220 workers, which likely includes management, since the required notice cites 194 union employees.

Warning notice not final

Note that the warning notice is just that, a 90-day notice. By the end of February, things could change.

I wouldn't be surprised if Forest City, using its ties to Mayor Bill de Blasio and Gov. Andrew Cuomo, pushed for a government-assisted "demonstration" project to build modular units elsewhere in Brooklyn, or even to keep the plant open for a while.

But surely any developer, not just Greenland, would actually want to see B2 open before they sign a deal with FC Modular.

The required notice, via the New York State Department of Labor

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