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In this episode, Pat McGettigan, Vice President of Excellerate Manufacturing, joins us to share his unique insights into modular construction. From UPS data centers to driving innovation in off-site manufacturing, Pat's expertise sheds light on the pivotal role of modular solutions amid labor shortages. Throughout the discussion our guest host, Tom Hughes, Vice President of Genesis AEC, also shares his valuable knowledge, enriching the conversation on the convergence of manufacturing and construction.

We've had on a few guests with leading views about integrating more manufacturing practices with construction. It seems like a relatively new trend to most, but to people like our guest Gerry McCaughey, offsite construction is how things have been for a long time.

Gerry has been building offsite for over 30 years between Europe and the US, and he joins the show to tell us why any other method is a mistake. Join us to hear from a true veteran in a construction space that is gaining traction.

Transcript:

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00:01
Speaker 1
All right, morning huddle time.

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00:02
Speaker 2
Good morning.

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00:03
Speaker 1
I'm not saying it works. I wish you Godspeed with all of that. I think that's really nice. You know, I'm not sure what kind of success you're gonna have with that today because the world, my friend, has changed. Right.

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00:17
Speaker 2
A lot of American construction workers, they have different needs. They have completely different needs.

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00:22
Speaker 3
These awards have a huge like, criteria that you have to fill out. And they usually have a community service or community.

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00:32
Speaker 2
You know, the most productive.

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00:34
Speaker 3
With a high performance value. And you know, sometimes it's 11 o' clock at night.

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00:40
Speaker 1
Funny, isn't that? Yeah, not for me.

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00:43
Speaker 3
Not for me.

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00:44
Speaker 1
At 11 o' clock, I am guaranteed to be snoring.

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00:47
Speaker 2
So.

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00:48
Speaker 3
So.

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00:57
Speaker 1
Good morning. Morning huddle time. I'm Chad Prinkley here with Stacy Holzinger and our guest, Jerry McCaughey with Off Site tech. Jerry, thank you so much for joining us this morning.

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01:09
Speaker 2
Thank you very much. Although when you said the morning huddle, I didn't realize that you meant this early in the morning. Right.

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01:15
Speaker 1
So when we invited Jerry, we said, hey, it starts at nine. He said, perfect. And we said on the east coast. And he was already signed up. There was no kicking out.

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01:25
Speaker 2
Early start this morning, boys. Early smart. I already start.

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01:28
Speaker 1
You're joining us from California by way of Ireland.

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01:32
Speaker 2
That is correct. Well, and it's raining outside in California, which they told me it never rains in Southern California, but not today.

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01:40
Speaker 1
Feels like. Yeah, so it's, it's election day here in the, you know, November 8th. My kids schools are closed. I never had off when I was a kid either. During election Day, my kids can't vote. So I'm not sure why they're off. But you know, it's, hey, get out and vote if you haven't done it already. If you're watching us live, make sure that you get out and vote. Use, use the opportunity to do that. So today we're going to be having a conversation about the, you know, about off site construction.

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02:22
Speaker 1
We're going to be having a, you know, we've had that conversation, I think in two different ways as I look at past episodes and in both of those conversations, really interesting, but in both those conversations were talking about it really from the standpoint of people who aren't, haven't done it, you know, personally and lived in it over the course of time. There were some, you know, people who've been consulting in it, some people who are, you know, in their engineers or think, you know, who are trying to influence more off site construction. But Jerry's lived it and not just recently. Jerry's lived it over the long haul. And that's something that I really want to hear from Jerry about is not only, you know, offsite construction. Okay, we've heard it, we've been talking about it. It's a pretty hot topic right now.

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03:20
Speaker 1
But, but you've got a long history with this. Not just like, you know, trying it in the past 10 years. What's it like, you know, to really run an offsite construction based company? And so that's going to be the nature of our conversation. Stacey, make sure that we get really cool questions from the audience and we'll bring you back here toward the end of the show. Good?

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03:45
Speaker 3
Yep, sounds good.

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03:46
Speaker 1
See you in a bit. So. So Jerry, I want to start off by just kind of hearing your story. We say you're in California now by way of Ireland, but kind of weave it together for us. What, what's the, what's your story in the construction industry?

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04:01
Speaker 2
Well, I mean, you're right. I mean my history in off site construction spans close on 40 years. But my family's involvement in offsite construction literally goes back 60 years. So when people talk about it here, they sort of not talk about, but when people get the impression that it's something that's relatively new, it's far from it, especially on the other side of the world. But there's an interesting story about the connects up the dots between Ireland, the United States and my involvement in offsite construction, which was that my dad was originally a carpenter. And back in the late 50s he left Ireland to emigrate to the US took a boat from Cork and ended up in New York. And that's where he first discovered homes built, you know, houses being built out of wood frame.

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04:49
Speaker 2
Because in those days everything in Ireland was built out of concrete blocks one block on top of another. But he was a carpenter primarily. He was actually a roofer and a finished carpenter. That's what he did. So he goes to America and he discovers these guys building homes out of wood. And as a carpenter, he thought, oh, this is a great idea. And so a couple of years later he emigrated back to Ireland and decided this is what he wanted to do. But it never dawned on him when he went back to stick frame, although that's what he learned. Now don't ask me why I never asked him.

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05:24
Speaker 2
He passed away two years ago why that was the reason Maybe it was the weather, but I think it was more to do with the cultural upbringing of a European is that you would automatically think that if you're going to manufacture or build anything, you'll try and do it indoors under factory controlled conditions. So when he went back, he literally rented a small building and started making wall panels and plywood gusseted roof trusses and designing homes, little single story buildings and going out at the weekend with his brothers and his friends and erecting these. And that effectively became Ireland's and pretty much Ireland and the UK's first off site construction company. And that went on to become very successful in his time.

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06:09
Speaker 2
By 1985 I think he was the largest because he sort of, when you say started a company at that point in time he really started an industry and so other people entered it. And by 1985 he was doing relatively well. I think he had three or four hundred employees and he was the largest offset manufacturer in Britain and Ireland. And I was in college at that point in time doing a marketing degree and I had to write various different reports to get my degree. And I picked the off site industry not because of any particular interest in it, but because, hey, my dad worked on it and I knew you could access the information relatively easy, right? And so I wrote a number of these reports.

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06:53
Speaker 2
I wrote my first report in 1982 and when I went to University College Dublin, I wrote a report which was basically how to set up a international B or an Irish based international off site construction company is as strange as that sounds, and handed it in, got my degree. Apparently I got first in the class for that report, but I mean I had access to colossal amount of information. I went off at that point in time to live in California after I graduated. And unknown to me, my dad was, and I spent a couple of years here. My dad sold out of his business in Ireland and he had been out of it for a couple of years and I think he got bored.

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07:37
Speaker 2
And one day I got a phone call from him saying, would you remember that report you wrote when you were in college about building an international offset company out of Ireland? Did you believe it? And I can remember saying to my dad, I can't barely remember writing the report, let alone what was in it. I was more interested in chasing girls around California at that point in time than remembering what I'd written in college. And anyway, he said, I'm going to send it to you. So he sent it to me and he said, you read it and if you think it's true, Come back here. Those exact words were, put your money where your mouth is and let's have a go at this. And three months later, I got on a plane on December 8, December 9, 1989, and flew back to Ireland.

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08:19
Speaker 2
And myself and my brother and my dad and another guy by the Name of Jim McBride set up a small company in Monaghan town, which is 6,000 population, 6,000 people in 80 miles north of Dublin. We set up a company called Century Homes out of a building that was 5,000 square feet and proud to say 15 years later, that was the largest offset company in Europe. And we had five factories, three in Ireland, two in the uk. We were shipping as far away as Japan and we had 650 to 700 employees. And we had done the world's first six story wood frame building. We had done the UK's first zero carbon, not zero net energy, way past that, we did zero carbon. So we basically pushed the limits of engineering and we pushed the limits of thermal performance in buildings.

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09:04
Speaker 2
And that sort of took up to 2005. And in 2005 we sold that business to Kingspan, which is a large buildings material company based out of Ireland. And I stayed on a CEO in that till 2008 and then I moved to the US and that point in time, 2008, the world was in free fall, the financial markets were in crisis and basically the housing market was in devastation. And housing had gone from 2.2 million at its peak at that point in time down to about 550,000. But I kept looking at how Americans were building homes basically the same way as my dad had seen it pretty much 40, 50, 60 years ago and going, this is crazy, there has to be a better not, there has to be a better way. There is a better way.

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09:52
Speaker 2
And then waited for the market to turn around. And when the market turned around and went out and pulled together a team of people that had worked with in Ireland before and set up a company in California called Entecra. And we raised 45 million from Louisiana Pacific and set that business up and then got it up to a significant scale. And I mean I've been traveling up and down from Northern California, Southern California for five, six years, said, no, it's time for me to step back from that role. And then now, I then went into consultancy, basically helping, because now I think we help to light the fire under people to look at offsite as being a serious alternative to traditional construction methods.

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10:33
Speaker 2
And now I'm helping companies to transition to the offsite Industry, but not in the, not on answer is not in the sense of the way people here think of component manufacturers. My, that's never been my view of life. Off site companies and component manufacturers are two different entities. And also in that sense, I'm also pretty much at the technological side of things. I like to push technology and that's the way I've always done it. So everything that we do is digital and it's a high tech on the manufacturer from the manufacturing perspective. So that sort of brought us up to today. So that's how I got here. I love it.

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11:09
Speaker 1
That's great. That's, it's a fascinating, impressive story and I think it's got to be loaded with lessons and that's what. Oh, God.

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11:25
Speaker 2
Right.

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11:26
Speaker 1
An immense amount of lessons.

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11:27
Speaker 2
Right.

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11:28
Speaker 1
And so I think I want to explore one thing briefly before we get into lessons, and that is you talked about not being a component manufacturer in our very first conversation several months back. What really jumped out to. One of the things that jumped out to me in that discussion was that you were sort of saying, you know, look, there are a lot of people who claim to be doing off site and they're not really, they're just bringing one piece to the table and that might be a good choice for their little piece of the puzzle, but it's not actually correct, you know, solving the, the problems that true off site can solve. So talk a little bit about, you know, the differentiation.

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12:15
Speaker 2
Yeah, this is an important point because it actually does go to why off site, as a European understands off site, why it hasn't taken off up to now to the extent that it has in say, other parts of the world. But there is. So when I let me just start again, clearly says a component manufacturing company is not an off site company. That's absolutely. And actually by definition just anybody there go on Google the word component and you'll see that it's an element, a part of something. But on the other hand, off site is a system by definition. A component is part of a system, but the system is a totality of it. I mean, and as you know, Aristotle said 3,000 years ago, the whole is greater than the sum of the parts. And that's the problem. That's not to criticize component manufacturers.

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13:13
Speaker 2
That's their business. The problem that I have with it is when they go around masquerading as if they are an off site company. They're not, but they do a service for People who want that particular service. But true, offsite is technologically driven. It's a holistic view of the building where you take full responsibility of the building and that includes getting invol with the concrete slab, getting involved with the plumbers, with the electricians, with all the trades. You're effectively trying to coordinate because you're trying to coordinate with everybody that actually touches off or connects us to that connects to that frame with. Your objective is to make that building help that building. And it's not so not one component of it. The whole building get built as efficiently as possible. And so the key words in off site construction are process improvement and process optimization.

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14:04
Speaker 2
And that really does involve a granular level of input into the totality of the building, not one item. So what you have with component manufacturers or with framers who use component manufacturers going around and they buy the wall panels off this guy and they might buy the floor, either the floor trusses or the I joists off another guy and then maybe the roof trusses off somebody else if they happen to get them cheaper. So it's all about driving down the cost. And in the process of doing that, they end up with these bits and parts that have not come from one supplier, where one supplier has total responsibility for focusing on the total efficiency of the building.

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14:46
Speaker 2
And I mean, I'd take far greater amount of time to explain this in detail, but if you looked at an offset company and you looked at the technology that's employed, and the fact that a good starting point is I would look and say if you don't start with a full 3D model of the whole building, then you're not an off site company. Because what you do with that is we take the drawings in and assume that the drawings are incorrect, that the building has been designed wrong, and we go back to first principles and start to rebuild it with the whole purpose of process optimization and process improvement. And then only after we've done that do we start to look at the elements. But then when we start to look at those elements, I mean it's a total view of the building.

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15:29
Speaker 2
And again, when it comes to component manufacturers, Chad, one important point I want to say is that there's a lot of guys in the United States. I mean, I get this thing said back to me, oh, I've used wall panels before and they don't work. And I really want, I mean my head starts to explode when I hear that. I mean, I really, I mean I want to grab them and shake them and go like, what the heck has that got to do with me? What is a wall panel got to do with what I'm talking about? Because it's nothing to do with it. Because using a wall panel on a job, substituting a wall panel for six framing walls, all really means is that you're running fast to stand still.

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16:05
Speaker 2
Because what happens when you get to your floor and you're back to loose joisting again? Loose joisting it again. Whereas true offset companies would prefabricate the walls, the floors, on the roof or the roof. If the roof's a flat roof, they'll use trusses. If it's, if it's a regular picture, but it's a totality. Prefabricated stairs, everything's been designed to fit and to work as fast as possible to get that building up. And so when people talk about components and they say, oh, that proves offsite doesn't work. It doesn't, it bears no relationship, no relation to it. It's like going out to buy the engine of a car and then sitting in your front yard saying, like, I can't get the car to go. Yeah, because you don't have the rest of it. You know, it's not, there's off site is a complete solution.

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16:47
Speaker 2
It's not a part solution.

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16:50
Speaker 1
How many, how many companies in the US Right now? And you may not have this data, but you know, if you, if you don't wonder if you have a guess, but how many companies in the US Right now do you think fit the definition? You've laid it out?

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17:05
Speaker 2
Yeah. Less than 10. Wow. Less than 10. I have done that analysis myself.

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17:12
Speaker 1
And so you mentioned that you're consulting right now. Right. You're, you're helping companies to make the transition. So what's first off? What's motivating people to want to make the move?

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17:29
Speaker 2
Well, I think at the, I mean, there's probably been a lot of false starts in the United States over the last 30, 40, 50 years. You hear this. Well, you'll hear people say, oh, it was tried before and it didn't work. But again, it was tried when with components, they're misunderstanding what they're saying. But this time it is different. And I think this time it's the labor issue that's the primary driver this time. Because I think previous times, the way the US residential housing industry has worked up to now is you needed to build more houses. You just brought more people across the border. Sure. Simple as that. I mean, even let's call a spade. That's how it worked.

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18:12
Speaker 2
And in many cases a lot of those people were undocumented and maybe not have been treated all that well and they were willing to work for, for very low wages and. But that's how it was done.

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18:21
Speaker 1
Yeah. And that's, and depending on what era we're talking about, depends on what border and from where.

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18:29
Speaker 2
Yeah, yeah, that's correct.

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18:30
Speaker 1
I mean we've been doing it forever.

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18:31
Speaker 2
Yeah, the Irish were part of that too.

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18:33
Speaker 1
That's exactly right.

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18:34
Speaker 2
They were coming over and doing, and I'm talking about as early, like as late as the 1980s and coming over and doing it. So. But that's the way.

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18:43
Speaker 1
Canadians are coming over and doing it. I mean it's.

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18:45
Speaker 2
Yeah, that's the way it has been done. But I think the realization is now occurring that's no longer really possible and it's not going to happen. So you're now looking at, I think current estimates are that there's a 400,000 thousand person shortage in the construction industry of people. So there's 400 more thousand more jobs than there are people available. Then add to that the rate of attrition is for every one person who joins the industry, five are leaving. Right. So when you put those two things together and people think there's a labor crisis, there isn't. This is only the beginning. Literally, this is only the beginning. If were to fast forward 10 years from now, this problem is going to be an awful lot greater than it is currently.

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19:35
Speaker 2
And I think some of the more far seeing companies are actually starting to see that and say we need to prepare for this. I mean I am and I am working for numbers of companies who actually that's what they're doing. They're saying we've got to take a longer view of this. This is not going away. And even if it was going away, you have to overlay the other fact on this is, and if you look at the last McKinsey report on the U.S. residential construction industry, over the last 60 years, U.S. residential construction productivity has been flat at best to declining at worst. Now that's a shocking indictment of an industry.

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20:14
Speaker 2
When you think of the technology that has been brought into existence in the last 60 years and you think of the productivity gains that have, say occurred in agriculture which is up 1,750%, or manufacturing which is up 400% and construction is flat to Negative. And then people wonder why there's a housing affordability issue and why there's a housing crisis in terms of a shortage. The answers are clearly there. If you're not increasing your productivity in the 21st century and you're not using technology, then costs are going to increase. The number of homes getting built is not going to match the demand, and people are not going to be able for them. And you end up then with a social crisis that will occur, which you could argue we probably are seeing that with all the homelessness in the, That.

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21:40
Speaker 3
It.

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21:56
Speaker 2
Okay, I believe we lost. Chad. I'll ask that question that somebody's asked there about do we see multifamily as being the biggest opportunity to grow off site? And I would say absolutely. I mean, I think it's the biggest opportunity, but it's not the only opportunity. But I think it's the biggest opportunity because it's the easiest one to. Not that the economics don't work on single family and in hospitality and other types of construction, but in multifamily, it's very easy to make the, it's very easy to prove the economics behind off site construction. Particularly when you look at that, you can, on average, you can take the framing time down by over 50%. I would actually say that when it's properly organized, you can actually reduce the framing time by about 66% back. Chad.

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22:54
Speaker 1
Oh, my Lord. My power got knocked out. We had a big gust and all of a sudden I heard sirens outside. I don't know what happened, but guessing that there was some issue that affected my whole area. I apologize for that. If there was anybody that I'm confident could carry the conversation, it's an Irishman. Jerry.

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23:15
Speaker 2
I was trying to, there, Chad. I was trying to, I was trying.

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23:17
Speaker 1
To go on and do it for you to help.

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23:21
Speaker 3
I was struggling.

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23:22
Speaker 1
I'm sorry. Yeah. Hey, you know what? I can't believe it hasn't happened before now.

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23:28
Speaker 2
It would happen with me. Yeah.

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23:30
Speaker 1
Gary, I appreciate your, your, your help moving us through it. So, so here's the biggest question. I'm sorry to interrupt you. I, I want to, but I, I, I, if you've already gotten to it, skip it. But the biggest question that I have is what is the, the mindset shift and the real business challenges? What are those two things that we really have to confront if we're making the jump from running a more traditional, you know, building company to an off site company?

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24:02
Speaker 2
Well, it depends. I Mean, are you asking me from the perspective of the builder who's going to use the system or are you asking me from the perspective of somebody who wants to set up an off site company to manufacture and provide the off site solution?

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24:16
Speaker 1
See, you know what, you should talk about that to our group.

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24:20
Speaker 2
Right.

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24:21
Speaker 1
Just by itself. So the builder is the, in this case, the, you know, general contractor, if you will, that's driving the project. The off site construction company is going to be the system manufacturer.

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24:36
Speaker 2
Correct.

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24:37
Speaker 1
That does the entire structure is what you're saying?

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24:39
Speaker 2
Yes, yes.

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24:40
Speaker 1
So start with the, start with a builder. What's the biggest shift the building.

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24:45
Speaker 2
Okay, great question. The biggest mindset shift is to get the builder to understand that first cost is not irrelevant. But I don't know if you're familiar with, there's a gentleman there over in the east coast called Scott cdam, he runs a company called True North Consulting. And Scott's an absolute expert in this whole area. But Scott has a great expression that says if you only ever look at first cost, you'll never know your total cost. And one of the problems that, that you face with production homebuilders in particular is the fact that they only ever look at first cost. And the way they're set up is only ever to look at first cost.

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25:26
Speaker 2
So if you put a buyer in that role and that person is out to decide, you know, the various different products that they're going to buy to build that particular home, they're basically, they're motivated, they're incentivized to buy whatever widget they use at a half a cent cheaper this year than they bought it last year. That's their drive, that's their motivation, but they really don't have an incentive to look at, well, maybe it's going to cost me a cent more to actually install that. Because they're only incentivized to look at the first cost of what is the purchase of that particular item. And this is where with off site construction it comes into.

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26:00
Speaker 2
There's a bit, there's a bit of an issue because if you take it that cycle time on a job site is a critical element and there's a value associated with time. And we've all grown up being told time is money. So it's been in us from our little kids, your parents tell you time is money. Yet when it comes to looking at the value of cycle time reduction on a job site, the buyer who's not incentivized to look at it. So I'm not Saying it's their fault, the buyer does not consider cycle time or the cost of it. And in most cases, when you ask that buyer, what is the value, what is every day on site costing your company, they can't tell you. How can you make a purchase decision if you don't know what every day on site is costing you?

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26:54
Speaker 2
So in other words, if the focus from a builder was on reducing cycle time, that was their primary objective, as opposed to let me reduce the cost of the item, because you can actually have the opposite around. You can reduce the cost of the item and increase the cycle time because it takes longer to install, but you bought it cheaper, whereas it should be. You need to look at it holistically and say, if my objective was to increase, was to decrease cycle time, how much is every day on site going to save me in terms of costs? And that's where offset.

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27:24
Speaker 2
So if you go along and you're an offset company and you say it's going to cost $40,000 to frame that particular building, stick framing it, but it's going to cost $42,000 to frame it from off site and say, oh no, I'm not going to use the off site solution, it's $2,000 more expensive. But if the off site solution is saving you 10, 12 days on site, what are those 1012 days worth? I mean, are they worth $200 a day, $500 a day, $600 a day, what are they worth? They don't know. So but by anybody's estimate, and we've done a lot of research on this, even in the relatively lower cost areas, you're looking at around between 4 and $500 per day of site cost each day. So if you take it that you save 10 days, there's $4,000 there alone.

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28:15
Speaker 2
So it means that $2,000 that they're saying are more expensive, you are actually $2,000 cheaper than it. But the buyer doesn't care because the buyer is not incentivized to look at that. The buyers just said, no, you've got a quote at first cost is 42,000 versus first cost at 40,000. Buy the 40,000. It actually costs the builder money. So there's a problem in a mindset change that needs to occur. The first thing builders should do is make sure that every single one of their buyers understands what the cost of a day on site is worth. And then what they should do is make sure that they involve their operations team on the purchase decision when it comes to framing. Not Just the buyer.

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29:00
Speaker 2
Because in many cases the buyer has never actually even worked on a job site, but the operations people are doing it every single day. The other thing that they don't even consider in first cost versus total cost is if you look at the amount of dumpsters that are on a site with off site construction, you're gonna, you're gonna at least save two dumpsters on that job site. So there's a whole load of other things that just don't get included in the cost. So it's back to this thing of you need to look at total cost, but everything here is set up for first cost. And I think that is of a reflection on the fact that everything was basically set up for sick framing in the first place. So it was never really a consideration.

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29:39
Speaker 2
But if you're looking at maximum efficiency, you should be actually using cycle time reduction as being one of the qualitative decisions that you look at when you're quality of the items that you look at when you're making a purchase decision with regard to framing. So that's one part of it that's.

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29:58
Speaker 1
A major mindset shift and it's not complicated, but definitely shifting the focus from first cost total cost.

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30:08
Speaker 2
Yeah. Let me give you an example. I mean, somebody asked me questions in. These are multifamily distance. So I'm going to give you a real world situation. Now it's multi family because it's easier to shorten this. But it's, this is, these are real numbers from a real builder on a real job site that has been completed. So we price the job, a multi family job of 270 units in Northern California. And the stick framer who had framed for this developer previously on his previous multifamily development came in at $100,000 cheaper than the off site solution. Okay. So the developer said, listen guys, I love the technology, I love what you're doing. I love the fact that you're 3D modeling this. I love that I can see the problems.

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30:55
Speaker 2
I love the fact that there's going to be reduced waste on site and there's going to reduce manpower on site. Just, I love the whole concept. But you're $100,000 more expensive. Yeah, I just, I can't go there. And went back to this discussion of first cost versus total cost. So we asked them. Now this was again the difference of the attitude of the person you're talking to because I mean, I love this expression that an Irish newspaper says that you Know, before you make up your mind, open it. So you know, come into an, come into the discussion with an open mind. So the builder said, or the developer said, we said to him, so how long is it going to take your stick framer to frame this?

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31:31
Speaker 2
So he went off and he got the framer to give him a commitment as to how long it was going to take, which was 46 weeks. And we said, okay, our view is we can do this in 14. That's 46 weeks versus 14. Then we said to him, how much is that reduction worth to you? I said, because if we're going to talk about this, we need to know this. And he went off again and he came back. It was about 10 days later he came back and he said, and I think it was actually more than this, but this is what he said. He came back and said he reckons that there's $600,000 of savings if he can bring that job in 14 weeks as opposed to 46.

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32:14
Speaker 2
So we put a proposal to him which was, tell you what, if you award us the job and we bring it in 14 weeks, let's split the $600,000, you keep $300,000 of the savings and you write us a check for $300,000, which means you're going to pay us $200,000 more than we had originally bid. But you're up $300,000.

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32:36
Speaker 1
So just like your dad asked you to do back in the 80s, you put your money where the money.

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32:41
Speaker 2
Right? Yeah. So the developer agreed and the developer wrote the check. Fact, not made up fact.

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32:53
Speaker 1
Bet you never writes that check again.

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32:55
Speaker 2
Well, actually. So the second part of that project, which was 170 units was awarded and it was never competitively bid, right?

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33:05
Speaker 1
Yeah. Well, because the proof.

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33:10
Speaker 2
That is the proof was there. He did not need any more than that. Right. So that's what I mean about cycle time and understanding and being opening your mind to understandings. In many ways, the way things are priced and the way construction operates in the United States is at such a simplistic level. I mean, yeah, oh yeah, give me the price for that widget and then nobody considers anything else. Why are the operations people not involved in that decision making process? Do you think, do you think that the buyer knows better than the guys who actually operate on the job site of what really goes on and what the real costs are? Because at the end of the day they know about all the extra over costs that have to occur. They know about the injuries that occur in the site.

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33:54
Speaker 2
They know about the delays that occur in the site. They know about the quality issues, that delay in the site.

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33:59
Speaker 1
Absolutely.

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34:00
Speaker 2
The buyer doesn't. But, but that buyer is getting that, getting the right to make the final decision on what actually happens. But again, it starts with the fact that if you don't know what your daily cost is on site, you can't make an informed purchase decision. That's a fact. That's a simple economic fact. I mean, if you explain that to a four year old, they'll get it. They will, they will get it.

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34:28
Speaker 1
I'm gonna go bring you a three year old. You think it'll work on the third hour? All right, so. So because of time here, and I want to make sure that we hit on some of the stuff that the audience may be coming up with. Stacy, what questions do you have that we can funnel to Jerry before we have to jump?

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34:51
Speaker 3
All right, let's start with Bill Wilson. He has two questions for you. I think you were answering the first one when we got cut off here, to reiterate. So he said, do you see multifamily construction as the biggest opportunity to grow off site?

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35:08
Speaker 2
Any other markets, it is the lowest hanging fruit. And because again, that example that I gave you of that particular development developer, because I think especially specialist multifamily developers, they actually do understand the time value of money. There is a major distinction between production home builders, even the production home builders who do multifamily, and dedicated multifamily developers. Dedicated multifamily developers really know the time value of money. And so they are, they're a better target market initially. But also I think that multifamily itself, by its nature and regardless of who you're selling it to, it's. They, it's much clearer where the benefits are. But the benefits are equally. The benefits are clear with single family, but with multifamily, because you get such large buildings, you can see the speed and the benefit and the cleanliness on the site.

‍ ‍

35:59
Speaker 2
Much easier than you can with maybe with single family.

‍ ‍

36:02
Speaker 3
But.

‍ ‍

36:03
Speaker 2
So yes, the answer is multifamily is definitely an easier target.

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36:06
Speaker 3
Okay, and then how does the design community embrace this off site construction?

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36:13
Speaker 2
Remarkably well. I mean, there was a lot of talk at the very beginning when we came into this market that, oh, the architects and the engineers won't buy into this. That's actually not been the case. In fact, I'd go as far as to say is that again, I'm speaking more now from Northern California, some of the largest architectural companies in Businesses in Northern California are fully embracing this and actually are now sitting down with their clients in advance and actually saying to them, do you think that you might be using offset? And are actually contacting the offset companies and looking for insights and in advance of them completing the design.

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36:49
Speaker 2
So I think there's a much more willingness among the architectural and design community to look at new ways of doing this because in many ways the off site company is a, which is a facilitator or an additional arm for that, for the, for the design community because they work together. But the off site company does an awful lot of work that maybe would not have done until later that maybe the design community would have had to suck up. But when you bring in the offset company into it, they do it for them and particularly down to 3D modeling the building. So I think there's a lot of opportunity there. And actually we've certainly had very positive interactions with the design community. So it hasn't been a pushback, it has been the other way around.

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37:39
Speaker 3
Nice. Mark asked, what do you think about transforming high school tech school construction malls into off site construction manufacturing facilities?

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37:52
Speaker 2
I love this question. I mean, I think this is where there's a lot of, where there's a lot of misunderstanding but a lot of opportunity. And I'll say you hear at the moment lots of discussions about our reasons given for the fact that the reason why we don't have more young people coming into the construction industry is because we don't have shop classes in schools anymore. Right. I want to say quite clearly that is false. The reason why we don't have shop classes is because young people don't want to go to them. The reason why we don't have people in the construction is not because there aren't shop classes, it's because they don't want to come into the industry. And there's more and more research and proof of that in existence. So people saying that don't know what they're talking about.

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38:44
Speaker 2
The reflection of the fact that there's no tech schools is because people don't want to go to them. Because if you look at a young person coming out of school now and they figure that they're getting paid 15, 16, 70, 18, $90 an hour on a job site and they can go and work in an air conditioned building for Amazon, that's where they're going. And they can get to push buttons on computers and so forth and so on. That's where they're going and they can go to the same location rather than have to drive around all different places knowing where their next job is. That's why they're going there. If you want to bring young people into the construction industry, then you need to modernize the construction industry. Bring it into the 21st century.

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39:23
Speaker 2
I mean, I put a post up yesterday said we're now, the world is now in the fourth industrial revolution. That's a fact that's been agreed by the World Economic Forum. We're now in the fourth industrial revolution. Stick framing is still in the first industrial. It actually has even been through, it hasn't even been through the first industrial revolution. And you're looking at kids that are using iPads in one hand and an iPhone in the other coming home and watching flat screen TVs, going into their high tech cars, so forth and so on. And then you want them to go onto a job site and do stuff that hasn't changed in 200 years. In reality, in their heads they're going, how does this even, how do I even relate to this?

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40:09
Speaker 2
So, you know, if you want to attract, think about this, think about your own kids. If you want to attract young people into the construction industry, then you need to modernize the construction industry. It's, I mean it's, this is, it's not rocket science. Every single other thing that we have used or buy or produce or touch is, has dramatically changed because of technology in the last 10 years. And yet we want young people, and I keep emphasizing the word young people, to go onto a job site to basically say technology doesn't exist. Yeah, it doesn't make sense. So training people and that question, that person's question, I think that's so true. Start moving it towards technology and construction. Let's move it forward. Let's increase the productivity of the industry through the use of modern technology.

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41:08
Speaker 2
That's what every other developed nation, by the way, on the planet is doing. That is what every other, like I'm going off on a trip that's been organized now by various different US government departments in December to the UK to look at the technology that's being applied there and at the training programs that are being put in place to actually bring the industry into the 21st century. That's what we need to do. Stop resisting change. That's what young people want. They want to do things in a modern way, the things that they can relate to.

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41:44
Speaker 3
So to piggyback off what you're just saying. And Sean made a comment about, he's seeing a lot of the drywall companies move to this type of model. Is there other trades that you see are on the forefront like electrical, mechanical, that are really trying to embrace this over other terms?

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42:03
Speaker 2
Yes. And there are lots of technologies out there that are being designed for those industries. I mean, whether it's. I mean if you even take the modular industry and you look at the way they do their wiring and the wiring looms that are now available. I mean there's technology moving on to improve wiring. You look at even from H VAC systems. There's technology has been improved there. You look at the plumbers now using 3D modeling of the plumbing systems before they ever go into the building and then been able to prefabricate many of those items before they ever go out to the job site. There's a whole load of things that are actually out there and some very good companies are actually trying to push that thing forward and hopefully they will benefit in the long run because they're pioneering the way.

‍ ‍

42:47
Speaker 2
But the problem is you have so much resistance from other people who still, you know that expression that says the seven most dangerous words in the English language are that's the way we've always done it. Where do you hear that most? The construction industry. That's the way we've always done it. So. But there are opportunities there and there are companies who are actually certainly starting to push that envelope.

‍ ‍

43:07
Speaker 1
I'll say one quick thing on this. Where I've been, it seems to me that to reach the maximum value off site across different systems manufacturers.

‍ ‍

43:25
Speaker 2
Right.

‍ ‍

43:25
Speaker 1
Not just component manufacturers, but different systems manufacturers. There, there has got to be. Soon as you talk about H Vac, you talk about plumbing, you talk about the other folks that have opportunities to. To be doing this type off site construction. Seems to me the maximum value is going to be those entities working together off site and finding ways to, you know, eliminate the possibility of rework.

‍ ‍

43:59
Speaker 2
You touch on another very important point. Chad is as crazy as this sounds, the lowest level of digitization in any industry in the United States is in the construction industry.

‍ ‍

44:10
Speaker 1
Yeah.

‍ ‍

44:11
Speaker 2
Which is probably the one you would think would have the most.

‍ ‍

44:15
Speaker 1
But it has the, has one of the greatest needs for it.

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44:17
Speaker 2
This is correct. But now just to take your point, you said is, can you imagine now if everybody was digitized and was actually properly using technology that's out there so that you could actually coordinate in advance with the plumber, the electrician, the hitch fact, the off site company that everybody was actually using the same model and could interact with each other before you ever got to the job site to figure out how much money you would save. Yeah. How much more efficiency you would have. I mean, it's a very simple thing to do, but nobody does it. Nobody. I mean, try getting drawings from a, from the average plumber electrician in advance of them. Going on the job site is what's going to happen. Can't get them, don't.

‍ ‍

44:58
Speaker 1
I, I, and man, I would love to continue this conversation. We're Now a full 15 minutes past and I, so I should, I should draw it to a close. But I want to say that I think I'm hopeful coming away from this conversation. And I'm hopeful because I, I think what you have shared with us today is a story that to some extent is kind of, you know, if you build it, you know, they will come in, you know, type of thing. So, so if you're someone right now that is, you know, doesn't, I mean, there, I'm sure, limitations. Right.

‍ ‍

45:34
Speaker 1
But if you're running a construction company today and you have your, you're in a space that has the potential to, to have an off site system, to manufacture an off site system, there's evidence that the market has a willingness to take this on. And if you have the proof that in your ability to beat traditional methods of manufacturing and installation, then you, I mean, that's, you'll not only benefit from, you know, being on the leading edge of it, but you'll, you know, help to usher in, you know, positive change, which is, you know, Jerry, the decision you've made, right. Which is to be in this role now of coaching and leading other companies into embracing this change.

‍ ‍

46:30
Speaker 1
So I've got to ask you if people want to contact you and if somebody's, you know, watching or listening to this, if somebody wants to contact you and get help, how do they do that?

‍ ‍

46:41
Speaker 2
Well, they can get me on my office, on my website, offsitetech.com or it's very easy. Just email. It's very easy. My email is just Jerry with a.

‍ ‍

46:48
Speaker 1
G@Offsitetech.Com it's just T E K. Correct.

‍ ‍

46:54
Speaker 2
Yeah, TK that's correct. But I also want to say, Chad, I think there's an important point. I'm not, and you said this at the very beginning, but I said I'm not speaking from a point of, it's hypothetical. Right. I've been at this. All of my life, my family has built successful offset companies. I can give you a list offset companies around Europe that are doing this. And I've been doing this for 30, 40, 50 years. This works. You just have to approach it the correct way.

‍ ‍

47:29
Speaker 1
Love it. All right, thank you so much for joining us, Jerry. I'm sorry for the mishap in the middle of the show, but it's. I. I was amazed to come back and find that you were still here and that everything was still rolling. Hanging my head.

‍ ‍

47:46
Speaker 2
Maybe. Maybe I missed my. Maybe I missed my calling in life. Maybe I should be a. A podcast host or something.

‍ ‍

47:52
Speaker 1
Well, you are a hell of a storyteller, my friend.

‍ ‍

47:55
Speaker 3
Yeah.

‍ ‍

47:55
Speaker 1
And, you know, it's been. It's been a lot of fun having.

‍ ‍

47:59
Speaker 2
Thank you very much. Thank you very much. Even though you got me up in, you know, the middle of the night, but I returned the favor. Someday I'll have one.

‍ ‍

48:07
Speaker 1
I look forward to it. Yeah, I look forward to it. Yeah, you'll have me on at midnight Eastern.

‍ ‍

48:12
Speaker 3
Yeah.

‍ ‍

48:14
Speaker 1
Jerry, thank you so much. Stacy, let's wrap up a couple loose ends here.

‍ ‍

48:17
Speaker 2
So.

‍ ‍

48:19
Speaker 1
So next week we have our 36th episode, and we've got Tom Hughes coming on who's going to be talking about practical applications of lean in construction, which is probably something that, you know, Jerry could talk about as well, you know, in. In taking Apple, you know, concepts from the manufacturing, you know, space and applying it to the construction space. Although I think Jerry would argue that construction is by definition, manufacturing, which I think is, you know, a really, a valid way of thinking. So I look forward to that. Stacy, do you have a marketing tip of the week for us from Steeltoe Communications?

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49:02
Speaker 3
Yeah. So real quick, when you're doing your marketing, try to think about your customer and their pain points and use the word you or your instead of me and I. And we'll keep it short because this was a long episode. Great episode.

‍ ‍

49:18
Speaker 2
It was. Yeah.

‍ ‍

49:20
Speaker 1
Thank you. That's. It's. Customers care about them, not you. Yeah, I think. I think that's right. People like to hear about themselves, so. So good advice. All right, folks, as always, we thank you for joining us. Please spread the word, do us a favor, and just this week, try to find somebody that you know and tell them about the morning huddle and encourage them to check it out, whether that's live or whether it's however you get your podcasts or on YouTube, however you want to engage. And then lastly, if you or anybody that you know is creating positive change in the construction industry. Please join us. Be a part of our platform and spread the word.

‍ ‍

50:01
Speaker 2
Thank you.

‍ ‍

50:01
Speaker 3
Have a great day.

‍ ‍

50:03
Speaker 1
Thanks. ACU too.

‍ ‍

For companies and project teams that have embraced prefabrication and other concepts from manufacturing, the results are undeniable. To bring these ideas home to more contractors, we at the Huddle want to showcase more stories!

The Queen of Prefab, Amy Marks joins The Morning Huddle to continue her mission of advancing industrialized construction. Her role at Autodesk puts her in a position to meet and interview some of the industry's most successful leaders in Design for Manufacture and Assembly (DfMA).

We get to hear her real-world stories of Prefab in action and hold a Q&A for practical tips for our audience.

Transcript:

‍ ‍

00:00
Speaker 1
Sam, it.

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00:57
Speaker 2
Good morning. It's morning huddle time. Hello, Stacy and Amy. How are you two today?

‍ ‍

01:04
Speaker 3
Doing great. How are you?

‍ ‍

01:06
Speaker 1
I'm great. Good morning.

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01:08
Speaker 2
Good morning. Good morning. So Amy is joining us from San Francisco, but correct me if I'm wrong, you live in Jersey, so when we initially booked this, weren't thinking. We were asking you to join at 6am but here we are.

‍ ‍

01:22
Speaker 1
Yeah, well, all the construction workers are up anyway at the job site, so I figure it's really not that early, to be honest.

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01:26
Speaker 2
Well, that's true. Yeah. 6:00am is kind of not. Not an abnormal time in our industry. Yeah, no question. Well, good. So. So what are you. Give us a little bit of background, Amy, Sort of. Obviously, we know you as the queen of prefab. We know you as the creator of all this amazing content on, across all social media platforms. I only use LinkedIn. I'm trying to catch up, but I've seen you all over the place. Stacy and I have talked about you for quite a while and were super excited when you agreed to come and join us on the show. But talk a little bit about, you know, sort of who you are, what your background is, that type of stuff.

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02:04
Speaker 1
Sure. I work at Autodesk. I'm actually the vice president of industrialized construction now at Autodesk. But before that, I really, I grew up in construction and owned a couple different companies that were anything from one of the largest manufacturers of steel and concrete volumetric mods and assemblies like bathroom pods, to you know, then opening up a consultancy that was optimizing industrialized construction around the world for governments and big customers. And then really, you know, Autodesk found me and it's such a great opportunity for me to come here and work with some of, you know, the largest customers around the world and, you know, helping Autodesk with the way we are looking at things and the way customers are looking at things every day.

‍ ‍

02:50
Speaker 1
So I get to, I get to do what I love to do with some of the coolest people around and the smartest people around, which is great.

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02:58
Speaker 2
That is great. I mean, I think, you know, were talking about just sort of this dream job for somebody like Stacy or I who are just kind of nerds and love learning and being around, exposed to what all these sort of leading companies are doing and how people are doing things differently and better all over the country. You get an opportunity to do this at a really high level, which is. Which is amazing.

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03:21
Speaker 1
I do. Good morning, Mark Jury. I see some friends out in the audience. That's great. Hope you guys are going to join up this morning. It is. It's really a great job. You know, I think a lot of what we do is it has to. We have to be seen, right? People need to see other people that look like them, that talk like them, that are talking about things they're interested in. So it's one of the reasons why I rarely say no, you know, to people, because I want to make sure that, like, everyone has the opportunity to see other people that look like them, not just every day on the job site. And I think social media is such a great way to get that across, aside from the work that, you know, to talk about the real work that we're doing.

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04:00
Speaker 2
Yeah, agreed. So. All right, well, let's. Let's kind of orient ourselves a little bit with our objective today. I think we talk about prefabrication. What it really all kind of fits into, I think, is something that you and I were talking about is, you know, calling it the industrialized revolution in the construction industry. And, and it's. It really is a different way of thinking about looking at construction and how are we doing something that, you know, pulls in best practices from other industries and innovates and takes, you know, really, construction to a whole new level of productivity of, you know, creativity and, you know, effectiveness, safety, so on and so forth. So I. I'd like to, I guess, get a little bit of an orientation from you on this idea of what is the industrialized revolution, you know, in. In the building industry. What?

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05:08
Speaker 2
Describe that. A little bit.

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05:11
Speaker 1
Well, I think first we have to recognize that, you know, there are a lot of industries, individual industries out there doing great things. We're not really one industry. I think the first thing we have to recognize is that we're an ecosystem of, you know, 17, 20 different industries all trying to get a building out the door. And, you know, typically the way that we've worked historically is it's been a real cash for chaos type environment where people made money off of the misinformation or lack of information, you know, out in the job sites. And by the time it got there, you know, my dad used to say, walking around job sites, those guys over there looking in the ceiling, like, we're either making money right now or we're losing money. I can't tell which. But something's going on, like.

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05:50
Speaker 1
And I think that's one of the reasons we're seeing a little bit of a change now that, you know, it's not going to be we can't be just an industry can be disrupted from the bottom up, as you know, Clayton Christensen said. But we're an ecosystem that needs connection at the very top levels as well. And that's what's really been missing, that it's not just about the outcome of getting a wall panel on the job site. It starts much earlier in things like, you know, how we're thinking about conceptualizing these buildings and reuse of these building components and, you know, what we're doing that will result in an outcome of having industrialized construction out on your job site. But it's so much more than the physicality. It's about the data. It's about, you know, connection of the information. It's about the cloud.

‍ ‍

06:35
Speaker 1
It's about, you know, things like turning the eye and building information modeling into more intelligence so that we have things like manufacturing informed design now as a category of information that needs to be influencing our buildings. So it's just so much more than what I think meets the eye. And that's. That's part of what people have to get over in the beginning, that it's not just about.

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06:56
Speaker 2
I love that way of describing it. We're not just our own industry. We're not on an island. We're not sitting over here, you know, by ourselves. I think, you know, when. When I look at other industries, when I look at. When I look outside of what many of my clients, right, who are awesome, middle market, for the most part, general and subcontractors, some larger. But, you know, we're in a little bit of a bubble, right? We're in a little bit of a bubble. When we look outside of that bubble, what will we find? What will we find? What's happening? That is so exciting, I think.

‍ ‍

07:40
Speaker 1
Well, first of all, I gotta. I gotta answer, Henry, who, like, is out there saying, like, it's been a long time since I've had to introduce myself. But Henry, the point is that I want to introduce you to new people, new faces, new young people that are out doing podcasts and not the same old. You know, I think. I think what's different out there right now, it's a really different time, right? Like, it's not that we're in a place that things are happening that are so great. I think, look, change happens when there's first dissatisfaction with the way things are. And when you see that there's a potential vision that you want to reach, but you just aren't there yet.

‍ ‍

08:12
Speaker 1
So I think we're seeing that now in the world that, like, there's not enough housing, there's not enough hospitals, there's not enough digital infrastructure. And, you know, we also don't have the same labor that we used to have. And we have to make sure that we're capturing a lot of that craftsmanship and knowledge in things like technology and people so that we can pass that along to future generations. But it's a time of great pressure. And I would say, look, it's been at emergency levels for the fact that, you know, I don't know, 10 years ago, people would say, like, don't talk about this prefabrication stuff where you're taking jobs away. And I'm like, okay. Two years later, they're like, no one's applying for these jobs.

‍ ‍

08:47
Speaker 2
Right.

‍ ‍

08:48
Speaker 1
And it's not going to be the great resignation that people are talking about that is happening. It's stuff like, you know, Gary Vee, I'm a fan of Gary vee actually on TikTok and things is that people are not going to apply for these jobs like they are. Young people are thinking about where do I want to work, where I can get known and see what's going on and people can see what I'm doing and they're used to an expected experience of life that we're not offering. They're used to being digital natives. They're used to being able to portray their lives and see other people in their businesses. And, you know, were talking earlier, you said 3% of people are providing content on LinkedIn.

‍ ‍

09:22
Speaker 1
Okay, well, if you're under 25, that number is much higher on things like, you know, TikTok and Instagram, it's like everyone creates content. And you know, look at, even on TikTok, there's 6 billion hashtags about welding right now. And yet there's, I can guarantee you there aren't a lot of companies that have social media accounts on TikTok looking for welders, but we need to, you know, we do.

‍ ‍

09:44
Speaker 2
I, I, okay, so you, you touched on something that I, I always key in on. I can't help it. It's one of my most favorite discussion points is just this idea that any time we stand in the way of progress for fear of what that might do to, you know, people's jobs or what that might do to this person's income bracket or what that might do anytime we stand in the way of progress, it, number one, it delays the inevitable because it's coming. You're not going to actually stop it. So you're just gonna, you're just putting yourself on the wrong side of history.

‍ ‍

10:25
Speaker 1
Right.

‍ ‍

10:26
Speaker 2
But, but then number two, if you know, if you learn actually to embrace it, you not only do you, okay, from on a company by company standpoint, do you put yourself in a potential possibility to, you know, to be a, a market leader. But that aside for the industry, if we learn to embrace it, you actually create more opportunity. It never ceases to amaze me. People freak out about self driving cars. What about all the truck driving jobs? They will find other jobs, right? Other things will show up. There will be. We innovate. That's what we do. When the horseless carriage disappeared, everybody freaked out. They did, you know. I'm sorry. When the horse drawn carriage that is disappeared, everybody freaked out.

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11:10
Speaker 2
It was, there were, you know, hundreds of thousands of jobs cleaning up horse crap in cities all across the United States and everybody was like, what are we going to do? What are we going to do? All these people, they're going to be out of jobs. They find a new. We innovate, we create better things. What are the things that people are. And I'm not asking you to call out anybody who's, you're standing in the way of it, but what's the progress that's actually being impeded right now? Is there anything that you're seeing that people are actually trying to slow down in the construction industry?

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11:39
Speaker 1
And if, I mean, look, I've been known to call people out, so that's fine, I don't mind, you know, like I, I'm an equal opportunity offender and I think that's important. First of all, I say that because you have to have agents for change around this world, right? If you don't have an agent for change in your company that you know, is asking the hard questions, making you think differently, that's constantly thinking how you're going to go out of business. You probably are missing somebody on your senior leadership team. So I think sitting with the same people and talking about the same things and then one day waking up and realizing all the things you were doing to keep people working have now eliminated your company and got rid of all these great jobs.

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12:15
Speaker 1
I mean, look, I have a real love for the trades and I believe in the trade contractor. I believe in the fact that we are creating work for families. And if you're not thinking about how to protect these families by evolving your business and evolving what you're doing, you're actually putting them more at risk and I can prove that and say that, you know, think about the future state of the expected experience, right? Like, and what I mean by that is like, I could go on my Apple watch right now, I could order a pizza, customize it on my watch, figure out when it was going in the oven. They would give me transparency as to when it was leaving. I would see the license plate of the car and the make and model and a picture of the face of the driver.

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12:55
Speaker 1
And on my, you know, ring doorbell. I would see them walking up so I could come to the door before they would ring the doorbell, right? That is my expected experience in life from for anything totally down to ordering a pizza. Yet in our space, the only certainty 95% of people have on job sites is to call somebody to see if their equipment is going to show up. Who has to call somebody else? Who has to call somebody else? Who has to call somebody. Like, even though the technology exists because you have it for pizzas and we have, you know, geolocators and you can, you don't even have to scan things anymore to know where they are if they got on the ship. Like, I have lots of friends, you know, that have different technology, but not enough of them, right?

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13:32
Speaker 1
Like I was with somebody the other day and they were pulling up on their phone where their equipment was on the ship, and he's like 1.001% of my, the world that I know that's tracking equipment on his phone, right? Like, he doesn't have to call anybody. But the expected experiences is that one day you'll be able to know about things on the job site, design things, if you're an architect, to find things online and be able to incorporate them into your design without having to understand how that thing is made. Because the tools are not allowing you to do that right now anyway. So it's like we have very static data and listen, like, there's no secret. We have margin on top of margin on top of margin that is created because of this disconnected waste.

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14:17
Speaker 1
How many $14 trillion ecosystems still exist in the world that somebody doesn't want to disrupt and wipe those people off the face of the earth and take that margin over combining those things. I think, I wouldn't say there's anyone necessarily stopping it right now. It's more that they're turning a blind eye to that it's happening. So if you don't realize that is happening and you don't know your future value in that new future state of the expected experience, you probably want to step back. Like I had a guy recently as were talking and he was like, you know, I talked about the fact, you know, conducting things online and architects the vision of being able to see in real time things that are available to them where they can understand the sustainability outcomes at a touch of a button.

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15:01
Speaker 1
Just like I do when I order anything on prime, right where I set my own parameters, I could find the products available. I can even do bundling on there I go, oh, you should buy this shoe, these shoes, this shirt and the socks. Why don't I have. You should buy this assembly designed for this, for these outcomes when you're looking for them. We don't have that option. And a gentleman who was in his, I would say 70s, 60s, who is the owner of a big mechanical contracting firm said, well that'll never happen to my Craftsman. Like you'll never buy a pipe spool online.

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15:29
Speaker 1
And I was like, wait, you do realize like in 2019, Amazon had 145,000 different private label products under 45 different brands that I was like, listen, I put in my mouth and on my skin and hair and in my baby's mouth, skin and hair. Like you think your pipes full is so special that one day somebody's not going to be able to configure a pipe in your. And again, like we are. You are kidding yourself if you think that, you know, if you can't provide value that you won't exist. And that's what I think is really happening.

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16:03
Speaker 2
Okay, so that, and like you just said exactly what I, I was just writing furiously as you were talking, so I didn't forget. I, I think what occurs to me is if you're afraid of innovation hurting your business, then get better. Right? Bring more value. That would be the answer. You know, I, I was one time I was talking to an insurance agent who was really freaking out about, you know, what self driving cars were going to do to his industry. I mean, what value is a broker going to have if self driving cars never crash? You know, oh my God. And I, and I immediately responded by saying like, look, if your only value is connecting people to car insurance, you should go away. I'm sorry.

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16:47
Speaker 1
Right, right.

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16:47
Speaker 2
Like that's, that you're not adding value. So if, you know, if you're worried, do something, better, bring more value to the market. And what you're saying is, look around the ecosystem that we're in. I think I'm getting, you know, if I'm getting you right, assess what innovations, what's happening in your space that's relevant to you and start proactively trying to figure out how to make your company better today rather than turning a blind eye to it, rather than saying it'll never happen.

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17:22
Speaker 1
Right.

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17:22
Speaker 2
You know, there's lots and lots of examples of companies that turn blind eyes that, you know, went away. Right. Blockbuster and I mean, we could make a list.

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17:34
Speaker 1
There's no one left on the, you know, top 500 companies from like 20 years ago. So I think if you think about it like that. And again, it's not, I don't like fear for fear's sake. I like fear for a motivator. It's that dissatisfaction that makes. Look, if you don't have money in your pocket and you're growing up and you need to eat like, you will figure out a way to make some money. You know what I mean? Like right now, your family's families are not going to eat like that you employ. And that fear drives me to better. Like, it drives me to understand where the value of what my core capabilities are.

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18:07
Speaker 1
Like you should start asking yourself, how many things do you do that you get paid on because of some upstream wasteful process like redrawing things that have already been drawn, re estimating things, value engineering things, you know, designing things that have already been designed, pricing things to people that will never win the jobs transactionally. The transactional waste of a project is now at about 40% and it's. The answer is not only going to be about, well, go to an IPD contract. I see some of my friends from the Lean Congress that were with me last week. That's not the only situation. Right. Like, we have to start thinking about different measurements of success. Right. And we have to start thinking about where value is going to exist today.

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18:49
Speaker 1
Where it exists today and where it's going to exist and what matches up with what you know how to do. Like, I love the trades because I think they have a lot of make information. But they're not the only people that know how to make things. The building product manufacturing side knows about products already. They know about how to productize things. They know how to inform design with the actual productization that we talk about for construction. We have like some people are really in the infancy in construction trying to get into a place where we have products that can inform design so we have some certainty. Well, there's a whole category of groups that already know how to do that think about a skid. When a skid is made industrialized construction. Think about all the manufactured piece parts that are on there.

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19:28
Speaker 1
They're not being made by subcontractors, they're being aggregated by subcontractors and maybe the skid is being fabricated. So you're the guy that makes all those really complicated things that's on that skid, and yet you're even further downstream than these guys. Isn't it in your best interest to start making the skid and aggregating your own manufactured products? Like, we have to recognize that's a risk to some of the guys that are assembling other manufactured products. Right. That if that's not of a real value anymore and somebody else can do that besides you, that is a risk. And we have to recognize that it's not like these, it's not like manufacturing doesn't exist outside of construction. Like we have to reinvent it. That's. That's not true.

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20:07
Speaker 2
Agreed? Yeah, agreed. So here's a question, really direct one. Are we going to see considerable consolidation over the next 10 years in the building industry? Are we going to see companies, you know, are we going to see that the number of companies dwindle and potentially the size of companies grow?

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20:30
Speaker 3
Yeah.

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20:30
Speaker 1
Let me ask you this. Have you already seen it upstream with the owners? Aren't you seeing more serial owners, guys that, and women that don't own one building, they own 40 or data centers that aren't one data center, it's now 50 data centers. Or this hospital that's aggregated into this system, like we already see it happening. Do you think that those people that have now aggregated the information and certainty, programmatic certainty is more important to them than savings because they don't make the money on the building, they're making it on the services in the building, whether that's pharmaceutical or manufacturing or data. Do you think they're going to want to keep doing business in the fragmented, disconnected way now that they have consolidated upstream?

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21:10
Speaker 1
I can't imagine that it doesn't happen like that because it's more important for them to know what they're doing than it is. And the certainty around that, it's just so much more important now because everything else is connected in the expected experience that I think we have to recognize that it's coming. So think about this. I know guys that are doing contracts now, owners that want to name multiple partners from like, you know, a three building contract. So they're looking for the price to go down over that time, but they want named people in the Contract that are come coming from project to project because they don't want to relearn everything over and over again. That's happening already around the world. So I think you'll see some people that'll actually get consolidated.

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21:52
Speaker 1
But I also think there'll be some categories where if you're not providing any value, that entire category of types of businesses will be wiped off the face of the earth. It just won't exist anymore. You know, think about the people that you.

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22:03
Speaker 2
Any predictions? Any predictions on which categories?

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22:05
Speaker 1
Yeah, I mean I've had this conversation in the past. Like most of my contractors will say, and this is not me saying it, this is them, if they don't figure out how to become more like systems integrators. My dad used to say, as a contractor, just take great meeting minutes, Amy, and like make sure we get the best prices from subs. Okay, well those days are over. So like unless you can figure out like what value brings. If you're just getting. If you're just the middleman now for something, I think you've got to be really scared. I think on the other side of the business, if you are just distributing things and you're not actually, I mean, look, distributors these days are so far downstream, but they are providing some credit and financing and logistics. I don't know.

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22:45
Speaker 1
There are big companies on this planet that do pretty good logistics, right? They wanted to microfinance, they could.

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22:50
Speaker 2
That's exactly what I'm thinking. Yep. I agree.

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22:53
Speaker 1
I believe the distribution model. But here's again, I always say expect experience. When I shop on Amazon.com I see manufacturers, resellers and distributors all in the same query. They are. They figured out a way to provide some value or no one buys from them. But. But they are up there, right? Like think about what you're doing. You know what I mean?

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23:10
Speaker 2
Yep. Yeah, I think you know, if I'm. If when you talk about if you're being a middleman, right. Or middle person, you know, as a part of a value chain, that's a potential risk. If I'm a general contractor, my ears just perked up. Right. If I, if I've, you know, embrace the model of self performing absolutely nothing doing pure construction management and being that, you know, sort of logistics person. As the, as the owner gets more and more information, as the owner gets more and more power in the market, which is what will happen. It's just what does happen. General contractors models have to shift to what are we bringing to the table?

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23:47
Speaker 2
When an owner doesn't need us to buy subs when an owner doesn't need us to shop, when an owner doesn't need us to figure out whether their buildings are constructible, when an owner doesn't need us for V when an owner. All those different things, what do we, what do we stand for? What do we do? And I think you know what become.

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24:06
Speaker 1
What is estimating if you know the price as part of the criteria, right? Like, I mean think about these guys. Like right now, I saw Mark, I saw your question. Like we've been trying to standardize for many years. Standardization is only part of it. That's why it hasn't succeeded. I had a bathroom pod catalog. Look, my daughter's 14 before she was born, right? Like, but if you don't have a way for some, if you have to sell your standard product with your mouth or your feet these days, that's a problem. And until we connect the ecosystem with where you can place your standards in the cloud in real time and have it be updated in real time with the data backbone for your product.

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24:40
Speaker 1
And unless I can see analytics the way I do when I put something in my cart that people can market to me and they can change the price and they can see my wish list until I have that, standardization is only part of it and it won't succeed. Like you're basically a catalog in the dark. You know, if you're, if somebody is still drawing a geometric box and not being informed by those standards that you're creating. And I believe the standards will be created by the market, not necessarily one authority or you know, they'll meet code. But I don't think it's anyone's place to look at Amazon like what's what. I keep going back to expected experience. Look at Alibaba, what standards are being created by them.

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25:17
Speaker 1
It's just the data standard of being able to place your product in the, in the online catalog. Right. It's not, they're not telling me what I, how I have to make something. They're just allowing me to be there if I meet the requirements for someone to consume that data and to aggregate the data with other data. Right. Like so I always like to say yes, a revit button is amazing. You should all think about auditor's platform services to create great apps. And that's the, I think it's the beginning of the Internet right now with the way in which auditors platform services has been open to having any developers come and make the secret sauce. I like to say like look, right now there's no ways or WhatsApp on the Autodesk platform in totality, yet.

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25:55
Speaker 1
You could create your, take that domain expertise that's now in jeopardy and make something out of it that will be far more valuable than, you know, getting the next job. And I think we have to recognize if you're a young person in this space and you're into technology, or if you have the domain expertise, partner up, because you can literally make the next Waze, which is worth, I don't know how many billions on. And by the way, on my Apple platform lives, Waze, Google Maps, Apple Maps and probably 10 other, you know, directional capability apps. We, we have like, I don't know, 4,500 apps right now on Autodesk platform services, but they're growing at like, I don't know, 200amonth right now. So this is the beginning of the Internet.

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26:32
Speaker 1
If you were too young to make money at the beginning of the Internet, this is your time, right? So I think that should inspire you to want to come to this space and be an entrepreneur, because there is nothing but opportunity right now in the expected experience of how this is changing.

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26:48
Speaker 2
That's awesome. Wonderful. Okay, so now I have to ask a question on the counter end of this and sort of say, but how do we keep from getting totally lost in the wilderness of all that there potentially is out there? And how do I sort between. How do I sort the wheat from the chaff?

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27:15
Speaker 1
You know, I think, look, not. That's one of the reasons I came to Autodesk. I came here to help customers get on this journey. I think people are very good at seeing vision, right? Like, it doesn't take much to be like, an army of robot dogs is going to be on my job site one day and like, people predict that. And I go, yeah, that could happen. But let's take it step by step. In that formula of change, you have to do some first concrete steps of action. So assuming you have one robot dog, what does that dog want to eat? How do you charge it? Where does it go? Where does it stay? How do you interact with it? What data do you have? So it's like, take a first concrete step of action.

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27:51
Speaker 1
And for a lot of people, that's going to be digitization of what they have. Like just getting it up there to see what it is so you can use technology to sort it. You can't sort things in people's brains. You can't organize metrics. If you're not measuring things. So I would like just start to visually collect and so that you can digitize things that are only known to that one person that you are afraid if they leave your company. Right? And I think that's, that's the first concrete step of action you can take is to take an assessment of your readiness, of your culture, of your tools, of your technology.

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28:26
Speaker 1
Like, you know, in my Lean Friends, like do a little bit of a Shingo to like understand what assessment you need to do to see like what could be your value in the future state. What are your risks, what are your, you know, dependencies right now. Start there, take a little stock to make sure that you're ready for the future state and be really honest with yourselves. And sometimes that helps to bring in a third party to do that assessment. What's your technical health right now? What's your digitization of? What is your prefab readiness health right now? Like if this happens, there are people that can actually come and help do that, not just from my company, but others that we partner with.

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29:00
Speaker 1
Because look, at the end of the day I always say you can afford to potentially buy a 6 axis arm robot, but you probably shouldn't in your fab shop unless you're ready for that future state. Like it'll just get dusty or make scrap faster like my treadmill these days. You know what I mean? Like don't do it. Don't buy toys. Don't buy toys without understanding like why.

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29:21
Speaker 2
Yeah, I think that's brilliant advice. One, one of the biggest where I oftentimes start with my clients is let's. Before we start improving your processes, can we just write down what we do? Can we just write down how we currently do it? Just taking stock of what you currently do and actually just setting the standard for. Okay, at least we've assessed how things currently work. Now we can, now we can really prioritize what needs to be innovated, where we need to integrate technology and so on, you know, but it's not until you really take stock of what you have. So I think that assessment is a fantastic recommendation. Stacy, do you have any questions either yourself or from the audience? While we still have Amy, I want to start to wrap her up here soon.

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30:10
Speaker 2
I'm sure she's got plenty of other things happening today.

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30:13
Speaker 3
Amy, do you have any experience with, I guess giving some advice on how to establish an innovation committee within your organization like you were just talking about? You know, don't just go out there and grab a robot and then it sits in the dust because you don't have that team that can really take the time to start playing, you know, and integrating whatever virtual or technology, any technology, and kind of experimenting with it. Is there anyone out there that's doing a good job at, you know, implementing something new?

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30:50
Speaker 1
Interestingly enough, I was just talking to a company that's doing some 3D printing. There are a couple of young guys, right, and they were talking to me about a board seat with them. And I was like, they asked me the same question actually, Stacy. They're like, you know, they want to move from one type of the part of the business to like, they don't even really know what's out there. As an example, like what could be in 3D printing these days. And I was like, the first thing you need to do is stop asking the same people that have been in your place in your company for advice. Like, you have to go out. Anybody can create an advisory board. Like, it's not expensive. And mostly you can find people that would volunteer for the experience.

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31:26
Speaker 1
To be honest, there are boards that are created, that are real boards as well as, like, you know, that have paid board positions. But when you look for those people, look for people first that are going to ask the hard questions. Some of them that challenge you. And I think second, that people that have different experience from other places around the world and also that have seen things being done that maybe you haven't seen before. So it's like, you know, I often say, like, people ask questions like, well, when. If we could just do that. And I'm like, that's done every day. Like, I literally say that probably three times a week. Like the thing you're hoping for happens in this place. Like these companies are already doing that thing.

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32:03
Speaker 1
The fact that you don't know about it and you're trying to, you're not building on the shoulders of what information, what learning, what people know by bringing in outside perspectives. Again, I love diversity and perspective. Yes, we should all hire people that don't look like us and don't talk like us and that are creating, you know, diversity in the population. But diversity and perspective is almost even more important, right? Like I have a reverse mentor, actually, because I don't. I'm 51. I don't know what a 23 year old these days, what their true expected experience is, right? Like, you can have all the Tik Tok accounts as a 51 year old. Like I do, but you need to Actually know, like how somebody, I ask my 14 year old all the time, like, what do you, like what does that mean?

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32:43
Speaker 1
What's that, how you do that? And you know, it's like we need that diversity perspective so that our expected experience becomes something new. Right.

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32:53
Speaker 2
I love that. I think that it's so rather than looking at an internal innovation committee, look at external voices, opinions, and I think that's one of the biggest takeaways I have from this conversation. Amy, is exactly what you said. It's like what you're thinking about potentially trying to do. Somebody's doing. Yes, somebody is doing. You have to expose yourself to that information. If you were to rattle off sort of like, I don't know, top three to five resources that people should tap into to get exposure, aside from like building their own advisory board, which I think is great, but you know, whether it's publications or associations or, you know, what would you. Here's an opportunity to talk about.

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33:36
Speaker 1
So, I mean, look, I'm not, I'm the ambassador for the Advancing Prefabrication show for six years. It's a, it's one of the, I think it's coming to be like the largest show on not just prefabrication, but there's like seven different tracks. And, and it started really, I would say, with my personality. Like people ask hard questions even from the audience and there's workshops and there's CEO day and there's like, you know, market applications University is a great opportunity to go and find out some of those things. But I would say, you know, they're again, somewhat self serving. Like, I don't sell software and I don't sell consulting at Autodesk. But we do have an amazing customer success group that if you're buying our software, you can go and get resources for help.

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34:20
Speaker 1
A lot of people don't realize we're agnostic to the proprietary software you might have or competitive software. We're interested in the customer's business being successful. So you can go to like just the people you deal with at Autodesk and ask for some help. And believe me, I believe we should just ask for help. That, that's a, that's an. We should normalize that. We should normalize asking for some help.

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34:41
Speaker 3
Yeah.

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34:42
Speaker 2
Awesome.

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34:43
Speaker 3
Perfect.

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34:44
Speaker 2
All right, great. Stacy, anything else for Amy before we wrap it up today?

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34:50
Speaker 3
Nope, we're good.

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34:52
Speaker 2
Awesome. Amy.

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34:54
Speaker 1
I love seeing you guys, by the way. I love seeing young people. I love seeing you know, women that are out there. Doing their thing. I think it's really important for us. Expected experience. Remember, I think we want to see ourselves in places in this ecosystem. So the more you can get out there and be visible, if you have a diverse perspective, you know, whether that's quietly or even on social media, just do it, like, get out there and be seen. Be your authentic self.

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35:19
Speaker 3
Thanks so much for joining us. So fun.

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35:23
Speaker 1
Thanks for having me, you guys.

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35:24
Speaker 2
It was a blast. It was. You're very generous with your time this morning as well. Sorry we ran a few minutes past, but I hope that you have a wonderful day, enjoy your trip out in San Francisco, and I hope that you'll stop by and see us again soon.

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35:37
Speaker 1
Of course. Thank you, guys. Thanks so much.

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35:41
Speaker 2
So, Stacy, that was awesome. Thank you so much for, you know, being relentless and finding Amy and running all that down. I think that was. She was a joy to have on. So next. Oh, hey, what do you have for the Steeltoe Communications marketing ticket?

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35:59
Speaker 3
Yeah, real quick, very easy. I'm seeing this a lot with contractors when they're giving me some marketing pieces just to look over. They're always forgetting their call to action or normally. So a call to action. If you're doing a brochure, a flyer, a video, whatever it is, make sure you have an end goal. Once someone watches their video, where do you want them to go? Do you want them to email you? Do you want them to watch another video? Do you want them to go to your website call you just make sure to include that call to action with any marketing piece. It's pretty key.

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36:35
Speaker 2
I always forget that part. I'm sitting here like, okay, right. Reassess all marketing. Thank you yet again for a good reminder, Stacey. So, all right, so next week we have a fascinating conversation coming up. It's one that actually ties into some of the other stuff that we've talked about over time here. And we're going to be talking about human trafficking on the, on job sites. And we've got Meg Huey from Freedom Network usa. She's done some speaking for different associations around the construction industry. How I got some exposure to her and really wanted to bring Meg into the conversation about what we can do to not only spot, you know, infectious fix human trafficking as we see it in the, in the building industry, believe it or not, it's happening. It's not.

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37:28
Speaker 2
When we think about human trafficking, we always think about sex trafficking, which is a thing and horrible. Right? It's terrible, but it's not. It doesn't Always take that form. And it's actually happening a lot in, in the, in the building industry way more than we. Than we know. So Meg's going to help us to see that and also to maybe consider some of the conditions that we have in the industry that are contributing to it that we could, you know, kind of stop it at its source. So I'm really excited about that conversation. I hope that everybody enjoyed today. If you have any, if anybody, just as always, you know, I got toss this up on the screen.

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38:03
Speaker 2
If you want to get added to our weekly mailing list so that you're not reliant on getting the invites through LinkedIn mixed in with everything else that you're getting, shoot us an email. Shoot it to Stacy. Stacy h.steeltoe calm.com and Stacy will make sure that we get you added to our weekly newsletter. It's not spammy, and it's really specific to making sure that you're teed up for the show, so please do that. And then, as always, we don't say this enough.

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38:31
Speaker 2
If you or someone, you know, has an important story to tell about creating positive change in the industry, like the story that we just heard from Amy or stories that we're going to, you know, that we hear every single week, please let us know we're building our guest list for the winter at this point and would love to build that guest list with people that you know and that you think are doing an amazing job. So reach out to us. Stacy, anything else? Did I. Did I miss anything?

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39:02
Speaker 3
Go Phillies.

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39:04
Speaker 2
Yeah. So I'm gonna have to say go Astros.

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39:08
Speaker 1
I understand.

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39:09
Speaker 2
Yeah, I know I've got. I've got some clients down in Houston that I love dearly and who. This is like, their entire life right now. So I. But it has been for. It's, you know, the Phillies are the underdogs, right. Coming in, and I have a hard time not rooting for the underdogs, and Philly's like an underdog town, so it is hard to root against. I'm not rooting against Philly. I've just. I just want to see my friends be heavy now. Stacy, I want you to be happy.

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39:38
Speaker 3
You better. I'm your partner here. You better be on my side or I'm not showing up next week.

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39:43
Speaker 2
You guys can have game one. I. I hope. I hope that. That's tonight, right? Game one tonight?

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39:49
Speaker 3
No, I think it's Friday, actually. They have.

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39:51
Speaker 2
Why the delay? What are we. We're going to be playing baseball on, like, November 20th.

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39:55
Speaker 3
I know.

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39:55
Speaker 2
Crazy.

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39:56
Speaker 3
I know it is.

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39:58
Speaker 2
Stacy, have a wonderful week, all right, you too. See ya.

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40:00
Speaker 1
Byebye, guys.

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