Angela Gismondi
Special to Ontario Construction News
When it comes to offsite construction, if you want to realize the benefits, you have to put in the work, said Mike Schmidt, president, Auto Construct, during a session at the Buildings Show in Toronto.
In the session, billed Offsite Construction in Ontario: A Practical and Diligent Path Forward, presented by Wood Works, Schmidt discussed a study published in May 2024 called the Ontario Offsite Construction Opportunities Study, a 97-page in depth analysis of the offsite construction industry and the market conditions and trends that support the evolution and the growth of offsite construction in Ontario.
The study talks about the offsite promise. Generally speaking, people believe that there are certain benefits that offsite construction provides.
“If you ask me if offsite construction can deliver those benefits, I’ll tell you absolutely, without question,” said Schmidt. “Now ask me if you’re going to realize those benefits in your company and I’m going to say, ‘it depends.’ It depends on how hard you’re willing to work.”
When a business owner invests capital into a factory and technology, they expect to achieve the benefits, but that’s not necessarily the case.
“That’s because the offsite promise is a promise of potential, not results,” Schmidt stated. “If you want results, just like in any other aspect of your business, you need to work for them. It doesn’t matter how much capital you raise, it doesn’t matter what technology you employ, it doesn’t matter how clever your marketing scheme. In other words, what I’m trying to say here is money doesn’t buy results.”
If you look at some of the companies that have come and gone, you’ll see that the more capital they raise and the faster they deploy it, the higher the probability they’re going to run into trouble, Schmidt pointed out.
“That’s because the prefabrication journey is not a transactional journey,” he explained. “It’s an experiential journey. You innovate, you create, you learn, you grow. It takes time and there’s no getting around that. The two things that companies and people generally underestimate about offsite construction: number one, how incredibly difficult and challenging it is to be truly successful in this market and number two, how powerful and transformative it is when you get it right.”
Schmidt said every offsite construction company he has worked with had a different approach or a different business model because there are a lot of variables out there, which requires different approaches.
He provided a framework all offsite construction companies can use, whether it’s a start up or expanding an existing operation.
“If you stick to this, it will serve you well,” said Schmidt.
The five simple steps are: clarify, configure, confirm, culture, craft. The first step is to clarify your objectives.
“I want you to forget about offsite construction, forget about manufacturing, put it out of your mind,” Schmidt explained. “Purely from a business perspective, what are your financial and operational objectives? What do you need to achieve to be successful? And quantify it. It needs to be specific, it needs to be time-based, action-based and quantifiable in dollars, not in percentages.”
Next you need to configure a solution, which is the hardest step, he said.
“This is where you’re crafting your intellectual property, this is where you’re being innovative, this is where you figure out what differentiates you from the rest of the pack. It’s not supposed to be easy.”
Culture is also a factor.
“You will change, your organization will change,” said Schmidt. “If you’re a builder, be prepared to become a manufacturing-centred company. It will change the way you behave, the way you think, the way you operate, for the better … but be prepared for transformative change.”
One of the most important elements is for companies to learn their craft.
“There are two stages to this,” Schmidt noted. “Number one is develop the skills you need to become competent. Number two, allow yourself enough time to practice so that you can become proficient. Don’t think that if you invest in technology you get out of this, you don’t. In fact the more sophisticated your product is the more sophisticated the technology is that you employ, the steeper the learning curve.”
There is a tremendous amount of learning involved and, according to Schmidt, it’s not a learning exercise, it’s a journey.
“The problem that we face, especially today, is there is this incredible pressure to get to the outcome,” he said. “It might be that you have investors breathing down your neck, it could be that you’re highly leveraged…whatever motivates you to accelerate towards the outcome, don’t do it. No matter how ambitious you are, no matter how bright you are, no matter how hard you work if you try to accelerate towards the outcome you’re going to run into trouble.”
What is the reason for that?
“It’s something I call the natural pace of adoption,” Schmidt explained. “Your staff, your team, their ability to learn, to adapt and to become competent and proficient, that will either constrain your implementation or it will enable your implementation. Either way, they set the pace.”
What happens if you move beyond their natural pace of adoption?
“They get frustrated, angry, they’re overwhelmed and they push back and resistance builds in your organization and that’s the last thing you need,” Schmidt noted. “If you want to accelerate your implementation, don’t focus on speed, focus on learning. Anticipate the knowledge gaps, invest in your people, train them in advance and then give them the time to practice what they learned and become proficient. If you do that, not only will they no longer be a constraint but if you’ve got the right team, they will actually carry you across the finish line.”
