tech, design, build, osm, risk without death€¦ · tech, design, build, osm, risk without death...

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Off-SiteManufacturing

DAN HEYWORTH

Tech, Design, Build, OSM, risk without death



“The Government is seeking to transform the residential construction sector through this ITP”


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Key Numbers$300m Equity capital

$200m Supply chain working capital

42% Targeted reduction in cost per sqm

80,000sqm State of the art ‘4.5G’ scalable facility

3,800 Houses in Year 4

26,000 Houses over 9 years

40 Inbound/outbound truck movements per day


MMC is hot right now

• Amazon investment in Plant Prefab

• Fletchers, Concision, others

• Katerra – close to US$1bn

• Goldman Sachs –�75m in Tophat

• L&G & Oxford University �4bn

• Google – Factory OS US$25m

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Construction Marketing Services 5

1. Address the cost of materials

3. Prefabrication/ modular housing

2. Review the consenting and approvals process

Additional recommendations and general sentiment:

• Change the mindset and encourage more people to live in smaller or apartment-style homes

• Focus on medium-density housing• Decentralise business activities to drive business and industry in areas where

housing is more affordable• Look at different models of home ownership and rental options such as life-time

rental and institutional investment options• Consult with other countries who do medium and high-density housing well• Bring in innovative, alternative practices• Find ways to reduce land prices and lower development taxes• Change procurement methods with more contractor involvement and less tendering

* Statistics apply to the top three recommendations based on total responses

70% 48%69%

How could our industry create more affordable housing?*

National Research Survey – CMS, March 2019

Death by 1000 cuts


What is ‘Scale’ for you?

Web 2019Modular KIPExhibit 9 of 11

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Source: Expert interviews

Illustrative productivity impact vs onsite construction% impact on labor volume

-40

~10,000~5,000~1,000

-80

-45

Volume, # of units

Repetitiveness & process optimization (lean manufacturing)

Automation at scale

Critical size to start to invest in automation

Medium automationMax automation Low automation

The first critical productivity step is achieved at approximately 1,000 units a year, beyond which productivity gains drop slow down.

Exhibit 9The fi st c t cal o ct v ty ste s ach eve at a o mately n ts a year, beyond which productivity gains slow down.

manufacturing approach. In addition, developing design capabilities or partnering with designers can ensure the development of standardized products tailored for the manufacturing process. Integrating materials supply at the back-end of the value chain can help capture the gains from standardization and internalize distributor and OEM mark-ups. This highlights potential for modular construction to initiate deeper structural changes in the industry. The likes of Katerra and BoKlok are examples of players taking a more integrated approach.

3. Optimizing design. Modular construction requires different design thinking to account for production efficiencies, opportunities to develop standardization to offer mass customization, and ease of transport and assembly. All of this has to work within the same mandate that always governs construction projects: creating pleasing and functional spaces for the eventual occupants. The right design can improve productivity by 3–12 percent. One useful analogy is the automotive industry. Car makers use the same chassis in multiple car models but swap out various features to make different models look and feel distinct. Even within these models, customers are often given options to personalize a vehicle, all of which can be achieved in the manufacturing process. The design needs to lend itself to maintaining a processing line, without the need constantly to change the line itself to deliver some custom features.

24Modular construction: From projects to products

Capital Projects & Infrastructure

McKinsey & Co. June 2019


Market Structure?

~25,000

~15,000

~3,000

Social & Affordable

‘Executive’

Architectural

Consolidation;New Supply Chain

benefits


“The factory is the easy bit. Supply chain is more than 60% of the work”

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How would a guaranteed scale order for 5 years change your business?


Agile vs. Lean

Flexible, responsive, custom

⇢

Efficient, less waste, standard, ‘value-add’

Transformation from ‘Sales’ focus to ‘Delivery’


Agile ⇢ Lean

Obsession: custom (bespoke) ⇢ no waste (commodity)

Manage: uncertainty ⇢ process

Deliver: product ⇢ value

Relationships: fluid ⇢ stable

Dominant costs: marketing ⇢ operations

Negative associations: chaos ⇢ cost-cutting


Value-add? CNBM case study

• 90 day stock

• Pay when it’s installed

• Quality assurance

• Search best product at best price

• Warranty

• Returns

• Guarantee JIT OTIF

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What is your Value Add?• Maximise value to NZ Inc

• Tribal knowledge, close to the market

• Co-improvement and innovation (e.g. alternative linings)

• Adapt product for OSM. Product into components / sub-assemblies?

• Incremental price savings over time

• Software integration

• Quality assurance and warranty

• Mutual wins – no packagingOff-SiteManufacturing

Next Steps

• Which market do you want to play in?

• Kiwibuild ‘Reset’ – how will this influence market structure?

• Engage with OSMs / design-builders

• EBOSS OSM network

• What value-add could you offer with certainty of supply and scale?


Thank you

tech, design, build, osm, risk without death€¦ · tech, design, build, osm, risk without death...

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