// News Severfield axes modular division after strategic review


Steel engineering giant Severfield has confirmed the shutdown of its modular construction subsidiary, Severfield Modular Solutions, as part of a comprehensive strategic review announced on 29 January 2026. The division, originally acquired as CMF Ltd in 2019 and rebranded in 2021, focused on light-gauge steel framing systems, volumetric modules, and offsite-fabricated components for residential, commercial, and infrastructure sectors.


Severfield’s board determined that the unit no longer aligned with the group’s core competencies in structural steelwork, citing insufficient synergies and persistent challenges in the modular market. The closure comes amid a wave of turbulence in the UK’s offsite construction industry, characterised by high- profile insolvencies and economic headwinds.


Factors such as fluctuating material costs, supply chain disruptions post-Brexit, and slower-than-expected adoption of modern methods of construction (MMC) have strained operations. Severfield highlighted that while modular approaches offer benefits like reduced onsite time and enhanced quality control, the sector’s volatility—exacerbated by interest rate hikes and a slowdown in private housing starts—made continued investment untenable. Approximately 50 employees are impacted, with Severfield pledging to explore redeployment opportunities within its wider operations or provide support packages.


CEO Alan Dunsmore stated: “This difficult decision allows us to concentrate on our strengths in complex steel fabrication, where we have a robust order book exceeding £500m.”


Analysts interpret the move as indicative of broader consolidation trends, where specialist modular firms struggle without scale or diversified revenue streams.For the offsite sector, this development raises concerns about capacity and innovation. Modular construction has been touted as key to addressing the UK’s housing crisis, with government targets for 300,000 homes annually.


£40bn injection boosts government works framework


The UK Government has announced an additional £40bn for its flagship Construction Works and Associated Services Framework, far exceeding initial projections. This expansion, set to run from 2027, opens vast opportunities for offsite specialists in public sector projects.


The framework prioritises modern methods of construction (MMC), encouraging volumetric and panelised systems for schools, hospitals, and infrastructure. Procurement rules now favour sustainable, efficient builds, aligning with net-zero goals. Industry bodies welcome the move, predicting it will stabilise supply chains and attract investment in modular factories. However, concerns over tender processes and SME inclusion persist.


The boost comes amid broader sector recovery, with the S&P Global PMI showing easing contraction in January 2026. For offsite firms, this could mean accelerated adoption, reducing delivery times by up to 50%. Policymakers emphasise social value, including local job creation and carbon reduction, as key criteria. This initiative underscores the government’s commitment to leveraging MMC for national development.


Social housing emerges as catalyst for offsite manufacturing revival


Following a turbulent period marked by business insolvencies in the modular housing market, experts predict a robust rebound driven by increased demand for social housing. Recent analysis suggests that local authorities and housing associations are turning to offsite methods to meet ambitious targets for affordable homes.


The shakeout has streamlined the sector, with surviving firms like TopHat and Legal & General Modular Homes strengthening their positions. Offsite’s advantages—faster delivery, cost predictability, and reduced site disruption—align perfectly with social housing needs, particularly in urban regeneration projects. Government incentives, including grants for MMC adoption, are fuelling this shiſt.


A report highlights that modular construction could deliver up to 20,000 social units annually by 2027, addressing the UK’s chronic shortage. Challenges remain, such as supply chain resilience and skills training, but optimism prevails as developers commit to long-term frameworks. This revival underscores offsite’s potential to transform housing delivery sustainably.


Workforce shortages pose threat to offsite construction


A new industry report forecasts 3-4.5% growth for UK construction in 2026, driven by a £530bn infrastructure pipeline including HS2, Sizewell C, and battery gigafactories. However, a dire workforce shortage—requiring 266,000 additional workers—threatens to derail recovery, particularly in offsite manufacturing.


Modular construction, reliant on skilled factory operatives and digital technicians, faces acute gaps post- Brexit and amid an ageing demographic. The report highlights build-to-rent and data centres as reshaping private investment, where MMC excels in speed and sustainability. Yet, without addressing labour deficits through apprenticeships and immigration reforms, capacity constraints could limit output.


Offsite’s shiſt to factory-based roles offers appeal to Gen Z, with 60% eyeing trades for job security and AI resistance. Training bodies like CITB advocate blended programmes incorporating robotics and BIM. Government policies, including the Industrialising Construction Challenge, aim to foster standardised components. Stakeholders call for urgent action to harness this growth, ensuring modular methods deliver on housing and infrastructure ambitions without bottlenecks.


CPA slashes 2026 growth forecast amid housing slowdown


The Construction Products Association (CPA) has revised its 2026 forecast for UK construction output downward to just 1.7%, a sharp cut from previous estimates. This downgrade reflects weakening in private housing and repair, maintenance, and improvement (RM&I) sectors, exacerbated by economic uncertainty and high interest rates.


Infrastructure remains a bright spot, buoyed by projects like HS2 and Sizewell C, but overall growth is tempered. For offsite construction, this signals caution, as modular firms rely on steady pipelines. The CPA notes that while MMC adoption is rising—projected to comprise 25% of new builds—delays in residential schemes could hinder momentum. Calls for government intervention, including extended funding for affordable housing, are intensifying. Despite the gloom, opportunities in data centres and build-to-rent persist. Industry leaders urge diversified strategies to navigate the slowdown, emphasising innovation in modular techniques to maintain competitiveness.


4 Winter 2026 M38


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