Company closing Kitchener factory, blames cost of development and government overregulation

A modular construction company has decided to close up shop in Kitchener.

Z Modular, a division of Zekelman Industries, announced Tuesday it would be closing its factory on Manitou Drive.

The company makes modular housing units and cited problems in the Canadian housing market as a major factor in their decision to shutter the facility.

A news release from the company reads, in part: “Public sector inefficiency in the permitting and entitlement process reduces the inventory of land available for housing development and renders land costs too expensive for the development of affordable housing. A developer must either choose to pay too much for developable land or wait too long to go through permitting and entitlement. Financing for modular construction in Canada also proved to be an inefficient and costly process. Under the Rental Construction Financing Initiative, all financing is subject to acceptance by the Canada Mortgage and Housing Corporation (CMHC). Z Modular worked diligently to have the first-ever modular construction development approved by CMHC. However, the approval took over a year and was not received until the project was nearly complete. Subsequent projects have experienced similar, significant inefficiencies in financing approval. Finally, inflationary government overspending has driven operating costs to a level that substantially increases project risk. These unfriendly business conditions ultimately led to the company’s difficult decision to close the Kitchener factory and the regrettable job loss for teammates at the facility.”

The release said the company will continue to invest and operate its facilities in the United States, including locations in Arizona, Texas, and Alabama.

Z Modular has completed a multi-family residential space in Lucan, Ontario and will soon begin leasing units at another project in Woodstock. They also built a student residence at St. Clair College in Windsor.

CTV News has reached out to the City of Kitchener for comment.