Älvsbyhus

Älvsbyhus is being run by the third generation of the Johansson family, current CEO Kent Johansson, after his father Donald Johansson and his grandfather, founder Göran Johansson. The company builds prefabricated houses and delivers them on a turnkey basis to the buyer’s lot. Manufacturing in Älvsbyn has been fine-tuned for decades, with everything from the production of fitted kitchens, its own sawmill and railway tracks for freight generating a level of cost efficiency that is hard to beat. This is no secret but a well-known and indisputable fact behind the longstanding success of Älvsbyhus.

“This is the reason why we can have the highest profitability in the industry, year after year, while keeping prices lower than our competitors,” says Kent Johansson. “We have control over the entire production chain and are constantly finding new ways to work more intelligently and more efficiently. Due to our in-house production of each component, we also have control over the quality.”

BIGGEST IN THE MARKET – FOR THE 23RD YEAR IN A ROW
The pandemic brought unprecedented demand for single-family homes. The company’s three house factories in Älvsbyn, Bjärnum and Kauhajoki in Finland have been working at full speed since the summer of 2020. Älvsbyhus sells its products in Sweden, Norway and Finland. The Swedish market is the biggest by some margin, selling 500 houses in 2022. This gives Älvsbyhus a market share of just over 11 percent, making it the industry leader – a position it has held for 23 years in a row.

Close to 200 houses were sold during the year in Norway, with higher profitability than in Sweden. Prices in Norway are higher than in Sweden due to different building standards, and also because of Norwegian purchasing power, which is relatively strong. More than 100 houses were sold in Finland. Finnish homebuyers have started to return to Älvsbyhus after a few lean years.

Demand during the pandemic meant that the order book was fully subscribed for almost two years, resulting in increasingly longer lead times. Around 730 houses were delivered in 2022, and the factories are booked to run at the same capacity throughout 2023, provided that order intake picks up before the summer.

LOWER DEMAND TO BE EXPECTED
However, the combination of higher interest rates and inflation is reducing the demand for housing. Inflation also affects the prices of Älvsbyhus’ inputs, forcing price increases.

“We have fixed price lists, so the customer knows what their house will cost, and it doesn’t increase in price while they’re waiting for delivery,” says Kent Johansson.

“We’re proud of that. But when our purchase prices go up while the price to the customer remains unchanged, it affects profitability. We’ve updated our price lists more frequently. Now we adjust them about every four months compared to every six months in the past. The price of a finished house has gone up by around 20 percent since 2021. But this is 20 percent of a lower amount than our competitors, so in monetary terms our price increases are smaller.”

However, Kent Johansson is moderately concerned. He points out that interest rates are expected to peak in 2023 and then stabilize. In addition higher energy prices have provided an incentive to save energy, and a new Älvsbyhus house is extremely energy-efficient after major investments in energy-efficient walls.

“It remains to be seen how new sales will fare in 2023,” says Kent Johansson. “But I’m an optimist. There will be pent-up demand. I think sales will pick up during the year.” It is also a question of fine-tuning the range by introducing new house models. During the year, a new single-story house of 129 square meters was launched which, with its spacious rooms and possibility of a home office, was in demand.

BUILDING PERMIT REGULATIONS A CHALLENGE
One challenge for a manufacturer of standardized houses is the building permit regulations, which can be interpreted differently in different municipalities. One example is a case in Nässjö where the municipality did not grant a building permit for an Älvsbyhus house because the distribution board was placed too high up. The municipality claimed that disabled people would not be able to reach it, even though the board was positioned in accordance with national building permit regulations. However, Älvsbyhus won the case in all instances after the municipality appealed, which will hopefully set a precedent.

“I wish municipalities would stick to the national building permit regulations, which we use as a basis when designing our houses,” says Kent Johansson. “This would save us, the municipalities and, not least, the customers time and money.”