A $5-million state grant will allow Pacific Wall Systems, a Phoenix-based manufacturer of prefabricated construction components, to increase production, add products, raise a new building, start a second shift and add to its workforce.

Oregon Housing and Community Services awarded the firm and three other modular housing producers a total of $20 million to boost their output and address the scarcity of low- and middle-income homes.

Another goal: the capacity to supply emergency housing in case of disasters like the 2020 Almeda Fire that struck the Rogue Valley.

Pacific Wall Systems was ready to do both and planned to grow over several years, according to Nancy Mansfield, the firm’s marketing director.

“It was pretty much a dream in the back of our minds, but it was going to take us years,” Mansfield said. “We don’t have the capital.”

The grant will accelerate that process, she said.

Much of the plant’s current production is wall systems. The grant will allow the company to start producing complete accessory dwelling units with components that can be stacked for shipping and assembled at building sites.

“We plan to build an additional 20,000-square-foot manufacturing building with 10,000 square feet of lumber storage so we are ready when the state calls,” Mansfield said. There are already three buildings at the site.

Pacific Wall Systems moved to the Phoenix site over the summer from a smaller location in Central Point. With the grant, the firm will buy the 8.5-acre location on Houston Road. Previously, Boise Cascade had used the site as a distribution center for engineered wood products.

Currently, Pacific Wall Systems has 90 employees working at the site, more than it had in Central Point. The firm is closing a smaller operation with 20 employees in Tumwater, Washington, and moving the equipment to Phoenix.

Several new pieces of equipment the grant will fund will be used to manufacture products, which will speed up construction for contractors, said Alex Knecht, the firm’s vice president.

A rail rider in a floor press will be added to allow the construction of open web floor joists. Rather than having solid plywood between the top and bottom pieces of a floor joist, the open web leaves spaces that make it easier for contractors to run duct work, plumbing and other home utility services.

A large jig table will also be purchased to allow for construction of floor cassettes. The cassettes are like wall panels, but for flooring, Knecht said. They incorporate both the flooring and joists, either conventional or open web, into one piece. They come in 8-foot widths, with spans designed for each project, and can be moved into place with cranes.

A new Computer Numerical Control machine, a router that follows a computer-designed pattern, will be used to make pre-built staircases. Other equipment to make operations more efficient will also be purchased.

The new equipment will be used in manufacturing Pacific Wall Systems’ ADUs. Pacific Wall debuted a knock-down ADU a couple of years ago. The firm wasn’t ready to handle the demand for the product and pulled back, but the state grant will help relaunch them, Mansfield said.

The ADU components can be flat-stacked into one shippable package and assembled in a day. Three sizes of ADUs are available: a 364-square-foot studio, a 665-square-foot one-bedroom and a 780-square-foot two-bedroom. Shipping of the ADUs will begin in 2025, Knecht said.

The additional equipment and space will mean adding about 20 to 25 floor workers to the current staff of 40. Most new staff will be working on the floor joists and ADUs. In addition, about a 20% increase is expected in production of the current wall systems.

The grant has very specific requirements that must be met, and all the funding must be spent by June 30, 2025. Seventeen Oregon firms competed for the awards.

“We worked really hard on the application,” Mansfield said. “We devoted most all of our time and resources to the grant for at least a month.”

Grant applications were due Dec. 15 after the opportunity was announced in November. The firm did not have experience with grant writing, so it hired Portland grant writer Stephanie Green to advise.

“Newly trained workers at the factory average between $18 and $20 per hour,” Mansfield said. The firm does little active recruiting; applicants are often referred by current workers.

In the office, more employees will be hired in areas of design, estimating and sales.

The Phoenix property includes a railroad spur; the firm is looking into using that to ship its products. Company representatives recently met with city officials to explore the possibility.

“The city has made it very easy,” Mansfield said of the relocation of the plant. “It has been a hugely positive experience.”

Other firms awarded $5 million grants were Blazer Industries of Aumsville, InteliFab of Klamath Falls, and Zaugg Timber Solutions of Portland. Mansfield said company officials have been in touch with the other firms to collaborate on how to proceed.

OHCS created the Modular Housing Development Fund to distribute money allocated through House Bill 2001 in the 2023 Legislative Session.

“We are very fortunate. It’s not every day that a small town like Phoenix can get a business like this,” City Manager Eric Swanson said. “We are looking forward to further expansion on the site.”

Editor’s note: This story has been corrected to reflect hourly worker pay.