A Nelson-based company that helps make prefabricated buildings has invested $35 million in the business, as it anticipates a boom in the market for prefab homes.

XLam is New Zealand's only manufacturer of cross laminated timber (CLT); panels of layered timber boards used to make certain prefab buildings, which are buildings that can be largely constructed off-site.

The company expects a more than 30 per cent increase in domestic capacity as a result of a $5m upgrade at the Tahunanui plant, which is currently capable of producing enough CLT to build more than eight houses a week.

supplied Torea Studio, a prefabricated building in Waimea Inlet, Tasman, made with cross laminated timber from Nelson-based factory, XLam. The building has won several design awards.

A $30m XLam factory opened in Australia in March, would also be able to supply timber for the New Zealand market, chief executive Gary Caulfield said.

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Demand for the company's products and services had risen dramatically in the last 18 months, and the business was investing in anticipation of further growth, he said.

MARTIN DE RUYTER Gary Caulfield chief executive of Nelson-based company XLam, currently the only company to manufacture Cross Laminated Timber (CLT) in New Zealand. CLT are panels made of orthagonal layers of timber, used to make certain prefabricated homes.

"Prefabricated buildings offer the potential to address New Zealand's current housing shortage, providing safer, high quality, faster builds."

"We can manufacture a 12 unit apartment block in four days here, and drop it off on site, and somebody can take three months to fill it in."

Savings from faster build times offset higher material costs, Caulfield said.

MARTIN DE RUYTER Gary Caulfield, chief executive of XLam, at the company's headquarters in Tahunanui, Nelson. The company manufactures cross laminated timber, and has invested $3 million on a cutting machine that is expected to raise productivity at the plant by over 30 per cent.

"We're doing a lot of work with Housing New Zealand at the moment. We've taken the time-scale to build 12,14 apartments from 16 months down to six months. In a commercial sense you pick up a year earlier to market, a year more rental."

New Zealand had been slow to support prefabricated buildings compared to Europe, the US and Australia, he said.

However, Westpac this week announced a pilot scheme to test a mortgage lending system for people wanting to build a prefabricated home, and "all options" were being explored as part of the Government's Kiwibuild scheme, Caulfield said.

"We have a perfect storm within the general construction industry whereby there's a labour shortage, whereby costs are going through the roof, whereby we're focusing on quality and looking at different land options, so the time is kind of right for new materials.

"Prefabrication's not the golden chalice or the silver bullet, but it's part of a solution to us thinking differently."

The company had spent $300,000 in quality testing equipment to make sure "structural integrity" of the panels met international standards.

CLT, an alternative to concrete, was also sustainable, using timber from Sequal Lumber in the North Island for the New Zealand market.

"We only buy wood from Forest Stewardship Council sources, so we can track that it has been harvested sustainably and it's going to be replanted."

While the panels were made mainly of pine, but the company was trialling other species.

"Pine won't be around forever.

"A lot of the forestry is being bought up by overseas entities who are fuelling the fire of Asia and what's needed. They don't grow trees to 25 years, they grow trees to 17 years and they just need the logs now. So we're heading into a period of uncertainty as to the future of forestry."