NEW WINDSOR, MD. -- The scene was not the typical construction site, but what may well represent the future for the American home building industry.

At one end of the Ryland Modular Homes factory here, shirtless workers hauled huge wall panels into place as the occasional loud whacks of their automatic hammer guns rang out. Hustling to keep up with the assembly line pace, the laborers hurriedly completed their tasks, rolled the finished walls along a floor track to the next of the factory's 10 work stations, and began the process again.

Plumbers, carpenters and electricians then took over the emerging house amid the blaring sounds from Top 40 radio stations and buzzing saws and drills, installing the guts of what would become one section of a two-story colonial house.

As the assembled portions began to slowly resemble a house, several workers painted living room walls, while one worker attached aluminum siding to the home's exterior.

Appliances were moved into place, showers were caulked and light fixtures hung.

Atop the structure, a roofer nailed shingles into place.

At any one time, about 100 men and women feverishly worked on 30 different modular pieces that made up portions of what would become 10 homes of various sizes. By the end of the 16-hour, two-shift day, the sprawling factory, about 65 miles north of Washington, would churn out four new houses.

Such are the inner workings of American modular home building, an industry that captures from 5 to 7 percent of the nation's total house construction business and is growing.

Nationwide last year, about 80,000 houses were built in a factory by one of the estimated 100 firms in the modular industry, according to James Birdsong, executive director of the Building Systems Councils, a division of the National Association of Home Builders, a trade group.

Some builders and home buyers are skeptical about the concept of building major portions of a new home under a factory roof, but others see it as an increasing trend that foreign competitors eventually will force American builders to embrace.

One of three Ryland modular factories in Maryland and Virginia, the New Windsor plant is expected to produce about 1,300 houses this year, according to Michael Grant, Ryland's general sales manager. The houses, composed of two to six modular pieces depending on the size of the unit, range in price from about $60,000 to $400,000.

From the factory, the modular units, each weighing up to 15 tons, are shipped on oversized flat-bed trucks to one of about 300 builders who buy the units in an area that stretches from Pennsylvania to South Carolina. Ryland, like most modular manufacturers nationwide, constructs its houses for outside builders who sell the units directly to consumers.

Modular homes are between 75 to 90 percent complete upon leaving a factory, and often contain finished walls, appliances, carpeting, plumbing and other features.

Once on the job site, a modular home's different components are lowered by crane onto a foundation, and the pieces are attached essentially at the seams. When finished, passersby would find it difficult to distinguish whether the modular home was built in a factory or in the traditional fashion.

Proponents of the factory-based home construction market say they can produce houses twice as fast as the on-site, stick-built method. Factory-built homes take about 30 to 60 days to complete, compared with 60 to 100 days for stick-built houses. Consequently, factory-built homes are becoming more popular in the Washington area and other fast-growing communities, particularly on the East Coast, where builders are finding it difficult to build their homes fast enough to meet buyer demand.

Moreover, supporters of factory-built homes said they are of higher quality because stricter controls are in place in a factory setting. What's more, construction is not dictated by weather conditions because assembly takes place under a roof. Materials are cheaper because they are bought in bulk, and builders, whose homes are erected faster on the job site, are able to cut interest payments on construction loans.

Despite these slashed costs for modular home manufacturers and the builders they supply, it is unclear how much of those savings are passed on to consumers. Of the modular builders and experts interviewed, none agreed as to how much a buyer could save by choosing a modular home over a stick-built house. Several said modular homes are comparable in cost to stick-built houses, while others said consumers save up to 30 percent by buying modular.

Nonetheless, modular builders, who stress they are not to be confused with mobile home manufacturers, are confident that they can prod the American public into buying their products. One popular way modular builders are hoping to see increased sales is by persuading consumers that those who buy traditional, stick-built are settling for an inferior product.

"To improve quality of our construction, we're having to go more and more into the factory, because we cannot deliver high quality in the field anymore primarily because the skilled labor is not there," said John Slayter, president of the Modular Building Systems Council, also a part of NAHB. Slayter said that although factories use mostly unskilled laborers to complete tasks, "with proper supervision and tools, we can get quality work out of them."

Slayter, who is also director of research and engineering for the Ryland Group, which includes the modular home division, predicts continued growth in the modular industry, despite reluctance from some American builders to move their operations into the factory.

"Like the farmer of old, builders are slow to change," said Donald O. Carlson, publisher of Automation in Housing & Manufactured Home Dealer and a modular home expert. "The truism has become that building a house on site is building by surprise, but building at a factory is by control."

Stubbornness may not be the only factor holding back builders from joining the growing modular market, which first appeared in various minor forms in the United States about 30 years ago. Investments of several million dollars or more are needed to start a modular factory capable of competing with traditional stick builders, an economic fact of life that shuts out all but the largest of home-building firms.

In addition, most modular builders find that they must be willing to ship their products across state lines if they are to survive. Consequently, they must deal with building codes that vary from state to state and county to county and with transportation costs, two factors most small builders would rather avoid.

"The industry is in an evolutionary stage," said John Cunningham, president of Techno-Craft, a modular company in McElhattan, Pa. "But there's no question that manufactured housing is the only logical approach to take housing construction.

"Stick building is just not practical," said Cunningham, a stick builder for the past 15 years before he opened his $3.5 million factory last April. Techno-Craft, which produces units ranging from small condominiums to $1 million homes, markets its products within a 500-mile range of its central factory. Unlike most American factories, Cunningham's plant is highly computerized, following in the tradition of foreign building companies, particularly those in Sweden and Japan.

If there is a debate within the modular industry, it centers on what aspects American firms can adopt from foreign builders, and to what extent foreign firms present a competitive threat to U.S. builders.

In the past several years, Scandinavian and Japanese firms have begun eyeing the U.S. housing market for an invasion they hope will be as profitable as the foreign automobile market. About 10 or more Swedish firms currently export modular houses to the United States, and several are considering bringing their factory operations across the Atlantic Ocean.

What the foreign builders have as an advantage is a remarkable reputation for building high quality and sturdy homes in the factory. Much like their automobile plants, the foreign home factories are highly automated and employ the latest advances in computers and robotics. Such automation is rare in U.S. home factories.

Scandinavian and Japanese home buyers, for example, are able to go to a factory, sit down at a computer terminal, and select their homes from sometimes thousands of different floor plans and configurations. In addition, Japanese and Swedish builders base their home-building philosophy on a high level of craftsmanship, using skilled workers and top quality products.

Swedish factories, for example, emphasize extremely energy-efficient homes, so air tight that light bulbs and appliances can heat some rooms. Japanese firms put out vast numbers of units much faster than U.S. modular factories.

"We are six or seven years behind the Japanese, and four or so years behind the Swedes," said modular expert Carlson. Using robotics, Japanese factories can construct a frame box, of which about 12 make up a house, in about three minutes.

Carlson said one Japanese housing firm produced 47,000 units last year, representing more than half of the total U.S. modular output. By comparison, the largest U.S. firm produced about 15,000 housing units in all of its factories.

Some builders agreed that Americans lag behind their foreign counterparts. "There's a great deal to learn from both Japan and Sweden," said Cunningham of Techno-Craft. "Dealing with foreign competition is one of my biggest concerns. If we don't move along quickly enough, we'll be in the same position as the American auto industry."

But other American builders said the threat of foreign competition is only perceived.

"We're pretty satisfied with what we have," said Slayter of the NAHB modular trade group. He said that American consumers are not as keenly interested in buying as high a quality home as found in nations such as Sweden.

"We buy homes and only intend to keep them for three to four years. When a Swede buys a house, he intends to leave it to his grandchildren," he said. "It's very long-term quality there."