Rad Urban, an Oakland developer seeking to revolutionize housing construction, is laying off 170 employees in its Central Valley factory.

CEO Randy Miller said construction is ongoing on the company’s 204-unit housing project at 5110 Telegraph Ave. in Oakland’s Temescal neighborhood. But work at the factory in Lathrop (San Joaquin County) is nearly finished, so the company is cutting its workforce as it switches to a new tower project.

“We're approaching completion of our production run for our 5110 Telegraph project. Post-completion we have a couple months of re-tooling to prepare for production of our next generation high-rise modules,” Miller said. “The factory is not closing. We will employ a reduced crew to carry out the re-tooling work.”

Rad Urban said the layoffs would be effective Oct. 19 in a state filing. Miller said the firm will have 150 employees after the layoffs.

Rad Urban utilizes modular construction, the practice of assembling portions of a new building in factory and shipping them to the project site. It’s faster and cheaper than traditional construction, according to advocates, and could be a way to help solve the Bay Area’s housing shortage.

Modular construction has had its setbacks. Another company, Zeta Communities, closed its Sacramento factory in 2016. Many construction unions have also opposed the practice, because jobs are located in other jurisdictions, or even overseas. San Francisco is seeking to open its own modular factory.

Rad Urban’s next project is a tower at 1433 Webster St. in Oakland, which is approved and has filed for building permits, according to city records. If built, it would be one of the only highrises in the country that’s used modular construction.

Darin Ranelletti, Oakland policy director for housing security, said 1,000 homes have been proposed or are under construction in Oakland using modular construction. Developers include UrbanCore, Factory OS and Holliday Development.

“We're seeing increased interest and it's growing,” he said. “The city is supportive of ways to deliver housing at a lower cost.”

Roland Li is a Chronicle staff writer. Email: roland.li@sfchronicle.com Twitter: @rolandlisf