speaker-0: Okay. Welcome to Building Forward with Clark Pacific, the show where we dig into how the built world is changing and then the people that are in it and the people that are actually changing it. Today I'm your host, Dan Delisle, and we're joined by two people who live and breathe this stuff, Melissa McEwen and Nick Massey, co-founders of the Industrialized Construction Group, ICG. Melissa is an environmental engineer turned operational improvement leader and the mind behind industrialized construction maturity assessments or ICMA. Nick is a former Navy lieutenant and lean construction leader who spent his career making manufacturing actually work in our world. We'll get into all of that ⁓ very soon. But between these two, they've run more than 70 of these assessments. So they know what separates the ⁓ the companies that talk about industrialized construction from the ones that are actually doing it. Melissa and Nick, welcome to the show.
speaker-1: Hi Dan.
speaker-2: Dane, we're glad to be here. So you want me to go on this one, take a little crack at this neck? ⁓ and we should start by saying we have a third founding business partner, Sally Meisell, and we could not have started ICG without her. So, you know, we were inside a large engineering firm ⁓ in a consulting practice that had been doing just lean and operational excellence in the built environment for a long time, 10, 20 years. And as we saw what was happening with the shift. towards more off-site construction, more pre prefabrication, more manufacturing. ⁓ we just kept seeing the same pattern, which was that companies are trying to get better. They're doing great things. They're moving the work off site, but they weren't getting breakthrough results. And we saw the drivers were there, ⁓ right? The labor shortage, like, God, we need housing and infrastructure and all those things. So like there's no mystery on the need for it. But we wanted to be part of trying to figure out why things weren't working, why people weren't getting the results they wanted, and actually drive success because we knew or we were starting to see or we had a theory that it was an effort, but people didn't actually have a roadmap for what could look like. We weren't actually training people, giving them new skills, the ones that they need. So it's really hard to be great at something new when you haven't been trained to do it. ⁓ and we weren't really changing the operating system that we were seeing are built around these people in construction. So We wanted to be part of trying to help drive that change because we want this to succeed. We need this to succeed.
speaker-0: That's fantastic. I I love the origin stories and honestly it's not too far from how a lot of us, you know, found our way into this world, right? And ⁓ at Clark Pacific it's the same and you know, nobody grows up dreaming of industrialized construction when they're little kids. Yet here we all are. ⁓ and, you know, it really makes me wonder what shaped the way that that you two think about it. Nick, you know, what And and Melissa, if you will, what what and where ⁓ did you start learning about this, you know, lean practice and construction manufacturing?
speaker-1: You know, I would say I'm glad you brought up my Navy history, you know. I think that I had like ⁓ bits of manufacturing and standard work being in the Navy. You know, I mean the Navy's got a lot of standard work and it makes a big complex system work. And, you know, when you're when I'm the officer of the deck on an aircraft carrier, I don't get to choose that I'm gonna put the engines if the engines go all ahead full, half or one third or two thirds, I don't get to say I want them to go ahead sixty percent. Like I just don't get that. I c I can choose the speed I want, but I can't choose my own ways. And and what I really think is happening here, and Melissa talked about this. This just used to be called prefab. You know, six years ago when we really started this shift, it was just called prefab. And I like that this industrialized word is here. And I hope that that word just goes away in the future and it's we just call it construction, because that's just the way it's happening now. But right right now it's a good word because it means something different is happening. And so I mean the other part that I get excited about is, you know, we liken this to the Industrial Revolution and the massive change that that had for America and the world. And if this is the beginning of the industrialized construction, industrialized revolution for construction, then think about what that could mean. And so it could just mean radical tectonic shifts in the productivity and the quality and the availability of things so that all of the Most all of the problems that are ahead in front of us right now will be extinguished. So yeah, that's a little bit of ⁓ unicorns and rainbows. Like it's there's a lot of work that needs to happen for that to happen. But I think that that's what's ahead of us.
speaker-2: Think I like my lean journey started inside. I'm we mentioned that we were inside Haley and Aldrich was a a large and wonderful engineering firm and it was just a great place to be for a really long time. And it was there that I first had exposure to lean and process improvement. ⁓ you could ask anybody, they'd say, like, I'm the least standardized person you'll ever meet. Melissa's always trying new things. ⁓ And so what's interesting is I just I think maybe because of how I was introduced to it or who introduced me to it, it was actually like the system changing level of it that appealed to me the most, right? Like not the tools, ⁓ but just how you can transform a system with these really rigorous problem solving methods. ⁓ and that's why I think it has the potential to take hold in construction. Like we are nothing if not incredible problem solvers. We're faced with problems all day long. And so to me, learning about lean, you know, over now it's been 20 or 30 years gave me a way to channel that problem solving instinct in a much more effective way. We have so many creative people and incredible problem solvers. And we asked them to do those things inside a highly chaotic system. So that's kind of my lean origin story. And then it's just evolved and evolved and evolved from there. But it was just the like, problem solving aspect of it that I love.
speaker-0: It's so great. I that that lean foundation is really everything and then it evolves from there. For us, the moment Clark Pacific started treating the the the building like a product instead of this brand new puzzle piece every single time was really that moment of adjustment and, you know, the whole factory mindset click, the whole, you know, field translation to the engineering teams and then communicating that back out to clients and vice versa is really, you know, what helped us there. It's it's ⁓ you know it's interesting 'cause it's it's ⁓ it's like the perfect excuse to do the right thing. But right now I think it's it's a good excuse to talk about what what actually is industrialized construction. And Nick, maybe we just call it construction from now on. How would you how would you sort of define a construction, if you will? Industrialized construction and in sort of plain Eng English.
speaker-1: Yeah, just as simply as I could state it, it would be the application of manufacturing techniques and methods to the built environment. What are we doing about that? You know, and even as I say that, Dan, there's been something that's been happened within us within just the past year where we used to have a whole category of topics in our assessment that we bundled under the manufacturing discipline. And because we know that in order for the value to really To be realized by the customer, it needs to be installed well so that we're not leaking value from the factory to where it's finally installed. So we've moved away from calling it manufacturing, those topics, to production, because production has to go all the way from the manufacturing floor into the field and finally installed. So I think that this really the signal that we're sending in the mindset is that of course the job site is a production environment in and of itself and that. As we start to see these systems and skills move into the field, we're starting to see some of the gains so that the field can be giving us better and more reliable signals. When is the demand really created? And we'll hope to see that the things that we measure on the factory floor, like how long is inventory in place, how what are our inventory turns? How long are these things on the job site? Because there isn't really a large job site that I go to that pretty much doesn't have something sitting there that's had a birthday, maybe even two. just sitting there waiting to be installed. And these would be absolutely intolerable on the shop floor. So I'm really excited about bringing these two things together.
speaker-0: Man, that might be the ⁓ cleanest definition I've heard in in a while, so thanks, Nick. ⁓
speaker-2: good at putting things in very concise, digestible and urgent terms. And that's what we need right now, right? There shouldn't be a lot of mystique and mystery around this, right? It's not magic.
speaker-0: We we like to say it's building like a manufacturer instead of building like it's the first time that we've ever seen something every single time, but folks still mix it up with just doing work off site. So, you know, let's talk about that and what's how is this different from simply moving work from off site or on site excuse me, to to on site? How is it different from just putting it into a factory?
speaker-2: It's so hard not to answer that by saying everything is different because I realize how ridiculous that sounds, but at some level it is, meaning like everything that we know about how we stick build things has come from years of experience and honing a system and creating planning systems designed to deliver it that way, and creating pricing systems designed to deliver it that way, and purchasing systems designed to do that. And when you take it off site and put it inside a factory, those are different systems. They're designed to work differently. The way they function is different. So it does mean, and we can get more specific, but like everything we know about planning has to change. Just taking your best estimator and being like, now you work in the factory and you're in charge of production planning isn't gonna work. And taking your best superintendent and foreman, who are these amazingly brilliant people who have honed their skill at doing something else and saying, and now you run a factory and you're in charge of line layout and process engineering and labor balling and sing and defining work content. So like everything does need to change to operate a manufacturing line, how you ship the materials, everything that we know and do in the field. has to change, except the craft expertise. That still holds and it's still critical. We just have to apply it differently. That was yeah.
speaker-1: I can say too that ⁓ you know, on a very simple level, simply moving it off site, then we see a lot of just construction under a roof. Yes. And so, you know, some and and another signal would be if anybody in your organization is says, send it to the warehouse, that's a problem. Because they still think it's a place where we store things and a fabrication facility is where we make things. So if anyone's out there is using the term the warehouse for where we're doing these things, then that's a problem because really what we want to have is a reduction in invent inventory and adding continuous values. I mean those are some basic signals and Melissa's picked up on ten threads there that we could have a whole nother each one of those things could be a whole nother get together, Dan. We could just be talking for hours and hours about each one of those things.
speaker-0: It isn't just putting a large tent or canopy in a in the middle of a of a parking lot. That's not a factory, you know, or or a metal building and and putting everything in it. That that's not what we're talking about here. And that's you know, it's it's really it's the repeatable system behind it. And you know, I think without grading my own homework here, we'd like to think we're pretty far down that path with You know, design, manufacturing, installational under one roof, everybody learning from each other, continuous improvements. Awesome. You know, all the optimizations that you're talking about. But I'm curious what that journey looks like from the outside. So what's what's sort of ⁓ from to story for a company that's trying to make that shift ⁓ from from on site to off site?
speaker-1: Yeah, there's some I'll kick one off that is just, you know, one of my favorites is, you know, we need to go from measuring things in huge cost codes and even just in timesheets. You know, so timesheets and cost codes are really the same thing. We put our time into a cost code and it it's it's just a very it's a view from fifty thousand feet of what's actually happening. And then in the factory environment, we want to know hour by hour what's happening. And that hour by hour anticipation about what's going to happen is based upon knowing the work down to the minutes and the seconds so that we can understand what should be the target for the next hour. And then do we hit the target or not? So the from two is very large in terms of the the understanding of the work and the work content. How well do we really understand that is a huge undertaking that does take process engineering. So we'll talk later, I'm sure, about What are the capabilities? What are some of the roles my organization should have that we don't have? What does the future workforce look like? These are where some of these really key parts are coming in, where we're gonna bring in factory science to the way that we're doing things. And it's really exciting because we're also doing things like simulation modeling and using predictive engines to say what what is the output gonna be. So that shift is gonna be really important and Right now we still have a very big mismatch between how well we may measure things in the factory and how well we measure and anticipate in the field because the field is still doing it a lot, is happening still on gut intuition because someone's done something for a long time. And so the from it's, you know, it's from the craft and tribal to standard work. I learned this from somebody else and that's how I do it. Yeah, go right ahead.
speaker-2: No, I just wanted to pull that thread a little bit, Nick, because to me it's just some of it is about it's moving from this iterative planning and level of definition that I'm experiencing right now on a job. Like it's still happening. We're on the seventh floor and we're still responding to RFIs or answering details and this and that, right? So it's like that that iterative planning. Where it just keeps going down from design intent to well, this is what the trade partner thinks to ⁓ now it's documented to really in a a manufacturing environment, that's all done. It's like two completed before we build anything. ⁓ and that's a really dramatic shift. You're not running something halfway down the line in a mature manufacturing environment and saying, shoo, we're at s, you know. Work cell seven here, and I forgot we don't have the work instructions for that. The design's not done and it's not complete. But that is how we work in construction. That's a big shift that also would alleviate a huge amount of pain and frustration. Nobody enjoys that. The architect hates it, the trade partner hates it, the GC hates it, the owner hates it. Huge source of pain. Yeah, these also like monumental shift. I made it sound so easy and it's not, but it's really foundational one.
speaker-0: I mean, for our own story took years and and more than a few lessons learned and and we are learning all the time. I mean, that's that's something I think that you know, we we you were talking here about data and and gathering and and trying to implement. I I love it. I think that that's exactly the kind of thing that your assessments must drag into the daylight. And and you've done a ton of ⁓ I mentioned before, seventy plus, probably more by now. What are the what are the common gaps that show up ⁓ during these assessments? Let's get into the the the data and and thinking about ICMA and and ⁓ you know, defining that overall and then seeing seeing how that how that shows up.
speaker-2: So this kind of gets back to where we started. So the ICMA is the industrialized construction maturity assessment, and lots of other industries have these models, right? Maturity models, maturity assessments. How do I know if I'm doing well? Am I what's the standard for how this should be delivered? And so what we did was we looked at other models out there and said, wow, construction needs one of these for this moment of industrialization. But it has to speak to what's different about construction. We just can't pull one off the shelf and say, ooh, this works for automotive. It's going to work here. 100% fail. So we took the best ideas behind it and created this model that is for tailored specifically to construction. So it looks across six disciplines, everything from strategy and management systems to operational excellence, production, DFX, design for. what's next and supply chain. And it had there are 57 specific topics that we're assessors are assessing against this very ⁓ you know, standardized, rigorous excellence framework. And then from there, ⁓ a roadmap can emerge to help companies know where to prioritize. And the trends in the data that we're finding inside it show there's just so many commonalities across the industry. So I'll let Nick maybe share a couple of the maybe the really big gaps, you think, Nick, that we're seeing most commonly, or what's defining those who are winning?
speaker-1: Yeah, let's pick up the thread where we were and just take it a little bit deeper. So like most people think like I just need to set up a production line. Well, really, if we think about some of the the disciplines you talk about, like strategy and management systems and operational excellence, like those are the things that set the ground so that the technical stuff like engineering and production can really flourish. So we're seeing big gaps in management systems. And like people be like, What? Like I'm a f I'm I'm in the top fifty ENR. You can't tell me I don't have great management systems. And I would say for what you're doing as a 70 year old trade contractor, yeah, they're great. But for what we're trying to do here, they're not so great because some of the things you might be missing are do you really have a common data environment? Is that allowing for the data to be extracted and made into useful dashboards so that we can actually act on them? And do we have leading indicators? Because we want visual management systems and When I say visual management, it means that both those words need to be active. It needs to be visual and you need to be able to manage from it. And if it isn't doing both those things, then you don't have a really you don't have a visual management system and then you're not learning. And I heard you talking about how because your value streams are connected, Dan, that the speed of learning is accelerated at Clark Pacific, and that's a key attribute. We want to we wanna check the speed of learning. So I would say that when these management systems are cohesive, then we're gonna expect ⁓ a huge reduction in the amount of unresolved issues, and I'm talking like twenty-five percent reduction in unresolved issues. And then we'd also expect that of those that are remaining, that they're they're solved 50% faster because we've got the insights and they're not lingering and the defects aren't going right under our nose. When I go into places of low maturity, you can bet your bottom dollar that they're sending defects out their door every single day and they don't even know it. And those are the worst. You know, the hidden waste is the worst and those defects. So the management systems, I would say, is a core one that people need to be thinking about. And we could certainly talk about the production ones because they're left, right, and center. And really, all of this sounds really hard and to a certain extent it is, but the payoffs are enormous because those that are operating at the very highest level are experiencing margins in like the forty percent range. And we know what what struggle it is. And And they're delivering the buildings and their and their services at a lower cost to their clients. This is a and and not an and but. That's the other thing I'm throwing I'm throwing away the three legged stool, Dan. I don't want to hear quality cost and schedule. Like I'm calling BS on that. Those days are over. You can have all those things and more.
speaker-0: There's a there's a ton of gaps and I bet a couple of those gaps would hit close to home for us too. Nobody's perfect and even the even the folks that swear that they've got it all figured out, right? I have some experience with that. And so really, you know, finding the gaps is key is what I'm hearing. And once you find those gaps using the assessment, what what What are people actually gonna do with that assessment and how and how do you go actually make change? Owners, builders, prefabricators, how are they using these assessments that you're doing and using that data? How do they go actually ⁓ make some change? 'Cause in my experience, change is hard. It's real hard.
speaker-1: Yes. True.
speaker-2: Yeah. ⁓ and change is so hard. And but the answer has to be yes. Otherwise this assessment isn't worth like, you know, two cents, right? Like we it you have to be able to act on it. And that's one of the things that we've really focused on is actually making sure it is actionable and specific and that people can like understand what they would do and measure that progress and then see that progress in the app so that they know where to go. And I One of the things that some of the things are actually small. So I want to say like sometimes the the roadmap coming out of this can be like overwhelming. ⁓ God, my I'm below level two in all these areas and I'm only level three in here. But you don't have to work on everything at once. Like there are like foundational things that other things build on. So one of the things that we've been focused on recently is when we went back in and looked at our data, we found that like For specific topics, like are we defining our work content? Like down to the step, is there time associated with it? All of those things. Are we using these really simple manufacturing tools to balance labor, right? It's data driven and we know we can do it. This exciting thing, a Yamazumi chart. And ⁓ like, are we using daily management systems to track things? And we went in and looked at our data and those four things, which are things people can learn, like these are s just foundational skills consistently were in the lowest quartile of our data. And then we actually noticed a really interesting distinction, which is that, but if you were a company like a modular factory that maybe started from scratch, you intended to be a manufacturer on day one, your scores weren't as low there. But for traditional trades making the pivot, and I am on team traditional trades making the pivot because we need the whole industry to do this. We cannot have enough startups out there. Solving the kind of infrastructure problems we're facing. Those four things were four of the eight lowest scores. And so, like, we have a long list of customers who actually have just tackled those things and can point to amazing changes that they've made in their business from doing those things, right? So just acting on these four little ways of planning your line, thinking about your work content, can generate 50%. Right productivity improvements. It changes how you think about your labor. So some of them are really tactical and then some are big and strategic and scary, right? Like we don't have the right product design capabilities inside our company. That's bigger. Right. We're gonna have to take that on. We don't create that on day one, but ⁓ so people are using it in both those ways.
speaker-0: This like I yeah, right. I I love the idea of this sort of scorecard. You can actually go measure, you know, using data and like we were just saying, it, you know, none of that matters if you're not making useful changes on a Monday morning. And that ac and that actually goes into implementation. And and I imagine that it just capturing the data goes well beyond, you know, the shop floor. It goes all the way through into sales into marketing and client outreach and back all the way through the whole entire system. What what KPIs do you you know, what what sort of and maybe maybe it's not KPIs that that you go after, you know, just in the loose terminology of yeah, you know, capturing things matter the most when when we're looking at this stuff. Is it quality? Is it schedule? Is it throughput? You know, productivity. We talked about labor, maybe we can talk about labor in a little bit too.
speaker-2: No, this is your time to shine, Nick. What's our favorite one?
speaker-1: Skewed it. Yeah. So we like safety, quality, delivery, inventory, and productivity. Like how are those things doing? Like those are manufacturing one ⁓ one. And so, you know, on the shop floor, that's what we're really looking for. And I think those are great in the field too, the production environments. And we could be looking at different things in we look for things so when I talk about quality, Dan, I'm talking about first pass yield. How many of the things that go through the process meet the quality standard?
speaker-0: There we go.
speaker-1: And even the cost standard. We want to know is it giving us the right yield, but mostly quality? And we even bring that into the design environment. So we want we want to know for from the design. While we are expecting iteration, we do want to understand what is that first pass yield? What is the tap time for the design team? They should know what the rate is that they should be working on this at. So we look at things like that. We We should be looking at how many of the things that are in our production environment are going through a productized environment. So, you know, a lot of the trade contractors that we talk about, and I'm totally on board with Melissa on this, we need the trade contractors. They've got the capacity, and a lot of them have the willingness to shift. They just don't know how to get started. And that that's a big theme for us is helping people to see how to get started. But They need what I would like them to shift from is being what I would consider more of like a job shop where they're just doing things that the the field leaders need, you know, and reacting on a week to week basis or day to day basis even, to having schedules that are going out months and months. In your case, I would I would imagine how f your schedule must go out, I don't know, I'm gonna say twelve, sixteen months, eighteen months, longer.
speaker-0: Walker. Yeah.
speaker-1: Longer. Yeah, that's that's the mark of a company that's creating real stability. They understand their market. They're creating the right signals, they're creating stability and all those things. So but Skew Dip is ⁓ that's numero uno.
speaker-2: Anything bad that works. My post-it it says labor hours per unit. And that I'd like to I'm not the manufacturing expert on our team by I'm ⁓ by a landslide is a fair thing to say, but that is the one thing that is just stuck and that they have just instilled in me is this notion that we need to know our labor hours per unit. Every single day. And that is not something we track, and Nick likes to say in our grotesque, you know, estimating and cost tracking spreadsheets that exist in construction. We want hours per unit, actual, and we want to know what it is at any moment in time. And that that is a if that if anyone listening took one KPI away, like that would be the one that we would hit home all day long. Cause it just changes how you look at everything.
speaker-1: We hear this a lot, you know, labor we we've heard about the labor shortage. And so when we talk with our customers, they say, I don't have a labor shortage. I can I can pull from the bench and I'm the best employer and I can get who I want. Well, it doesn't mean you don't have a labor productivity problem. Just because you can get bodies doesn't mean that you don't have a labor productivity problem. So that's the one we're really trying to solve. And so, you know, another ratio that a company could be looking at is what is your re ratio of materials to labor? And so for a lot of, you know, kind of an old school metric for a trade contract there would be roughly fifty fifty. These numbers are changing, you know, with some of these data centers, those numbers are changing. But what I'd like that number to be is more like thirty percent labor and seventy percent material. So if you could start shifting that ratio, then that would be an incredible indicator because a lot most of the risk is in labor. That's That's where most of the margin starts to bleed. So that just really leads into one other kind of foundational thing about all this, which is you have to have an abundance mentality in order to take this on. Because if people think it's going to put them out of a job, then that's a problem. And so even with Toyota, when they come in and they work with a company with their supplier support center to help folks, they make the leaders make a pledge that no one will lose their job. Because of these improvement activities. And what it means is that we can expand our business line, take on a new line, meet more demand, open a facility in another state. I mean, there's all these things that can happen. So if you have a hoarding mentality, then you can just go ahead and hang on and ⁓ you know, die a slow death. But if you have an abundance mentality, well, I mean it's you know, we have to lay in some fire and brimstone here because actually
speaker-2: Yeah.
speaker-1: I kinda like that because we do need some urgency to change, you know, so a lot of companies are still making money and so that is another barrier to change is you know, just that what's the problem?
speaker-0: Yeah. It I'll be happy to say that we measure we measure hours per panel, we measure hours per per units, we measure, you know, all of the things that that we measure in in different ways and we do that throughout the the the entire stack, if you will. But you know, we can always do better and I lo I love looking at it from different angles. I think one way that we've looked at it ⁓ you know, most recently is our Customers actually feel certain things, schedule certainty, for instance, their feeling quality, you know, and if you sort of get a market sense of exactly what to deliver, you know, the safety always gets baked in, the margins get baked in, the you know, all of the things that we are trying to include get baked in, and those metrics we track, but we're leading with that. you know, getting things there on time, making sure that we have good quality and, you know, everything else is is following. That's easy to say. It's a lot harder to actually do. And especially when you move things, you know, into a factory and you're looking at a a local labor pool, which is, I think, another place where we can start to talk about how all of this comes together. You're not moving regionally You're actually in one spot, you're doing a whole bunch of things in one place. What what is that I guess what changes with labor when you move all of those ideas to to one location and and how can you help whoever's listening with, you know, really how do we make that work?
speaker-2: Just hit on what I think changes the most, and it's your the speed of learning. We can't learn fast enough in ⁓ traditional construction because the learning gets lost in some data sets or write constraint log or lessons learned or RFI, and you move from project to project to project and teams change. This is like rapid learning. The data's there, it's right in front of you, you can see it. And so the team's ability to I think that's the great irony. People are like, ⁓ it's so standardized and it's the same thing every day. But our ability to actually learn and innovate because of that is so much faster. And I wish I could pull it up. I don't know what the study was or who said it, but it is some study about what happened when the US offshored manufacturing and how our innovation dropped because of those things. Like we the product design and all of those things was disconnected from the make and the learning slowed down. So That isn't a how, but to me that is a hundred percent the greatest benefit and like we should be touting that tr to draw people in and create enthusiasm for this inside of our industry for sure.
speaker-1: Yeah, there's something else I think that is really nice about this environment. In the field, the worker goes to the work. So that means you might be up in a scissor lift or you have to crunch down to get to it. Or you you go to this wing or that floor. And in a factory environment, the work comes to the worker. And we can make it at a perfect ergonomic environment. And so that means that we can have a different classification of people can come and work in that environment. So it opens up new people that can come in and they don't have to the the job site's a very dangerous place and it takes a lot of mobility and awareness. And we still want that awareness of course in the factory, but we can create the environment where it's ⁓ much more stable. The lighting's great. It's clean. It's much more safe. Of course it can be or In most cases it can be conditioned or at least it's circulating the air and it's just a better environment. So and I think that people learn more quickly, as Melissa says, you know, we've had anecdotal responses from General Foreman in the field. They say like, ⁓ that crew that just that was working in the fabrication facility and came in after their first year apprentice, they're acting like fourth year apprentices. And so they they they get a much more They see the whole system in operation because they see the the supply, they see the finished goods, they see the engineering coming in, they see the instructions. And really these are all a lot of these things that they're learning, this is what makes an effective field leader, is being able to plan the work, see the work. And so I would just say in a in a lean system, because we say respect for people a lot, and so I would just say that ⁓ people deserve to see and understand the system that they work in and in a factory environment and if we use good visual management systems and we have good value stream management and all these things, then there's a greater opportunity for this. And if they can see and understand, then they understand the why. And of course that's critical because then they're really contributing and they feel empowered. So these are the some of the things that I would say will be hallmarks of ⁓ a more mature organization is that everybody sees and understands the system that they work in.
speaker-0: And it's an environment where lean and this system actually gets to shine where you're not constantly running into to new things. There there is some lean that we've applied to field conditions where it's constantly changing changing as well, right? But ⁓ easy to easy to make those changes and and mostly for the better once you once you bring things inside. What are the what are the biggest challenges once you do that? What are the biggest challenges that you see? making that s that that shift stick. And, you know, I'm I'm assuming that you've been through this and we've been through this as well, but it's just a completely different animal. And the you know, the tricky part is keeping it from being this big kickoff and, you know, bringing in, for instance, your team and, you know, something that is very exciting and then it quietly sort of fades by the summertime and Yeah, there's dust on things and that's we you know, the you know, not not at Clark Pacific where we're the dust is not on anything there. But we we d I've definitely seen it at other companies and and understand how that how that works. And you know, back to what we were talking about before with the ⁓ with culture shifts. I think, you know, discussing the challenges that companies may have with trying to You know, go this direction and stay with this.
speaker-1: Okay, go ahead. You know, and it go it really goes to something that you said, Dan, that really ⁓ just I wouldn't s is when a customer says to us, Nick, when you and your team walk out the door, so does lean manufacturing. And we just can't have that. So it's it's it's that people revert. So over the course of time, we've been working on Helping to embed the right skills and capabilities that people need. So some of our topics are called, do you have IC aligned roles? Do you have workforce capability improvement? Because we need process engineers. We need quality engineers. We need people that are not just in procurement, but they're in supplier development. So it goes past just the factory floor, but those are the places we focus because that's where the value is created. But those are the things that we're working on. So we're working actively and very much so on upskilling people, on giving them the skills matrices that they need so that they know what that gap is. So we're measuring this is what your current is and per skill that's required for a certain job, whether you're an operator or a process engineer or quality engineer, whatever those things are, we've got the list of skills that must be present. And this is another from too. Where are you now? And what is the target? And then we can predict what is the capability then to hit the lean manufacturing targets that we're setting for ourselves. And those might be to add another another $200 million in revenue and only grow my headcount by 10%. So we're given those kinds of targets which say I need to meet a business target and operationally it it also has to happen. So those are some of the things that we're we're trying to help people see. What are the roles, what are the skills that are required, and how do you know if you have the skills or not.
speaker-0: Fantastic. I mean making it making all that stick is the whole entire game. And we've definitely had initiatives, don't get me wrong, that started strong and then needed a second wind or a third wind or you know, a fourth, which is why I always want to see the receipts and see the data so we have, you know, things to go on and after as you know. And, you know, it'd be great. I I I love what you're saying. Is there ⁓ is there a good, you know, short case study maybe Melissa or Nick, ⁓ of a sort of before and after example of this, you know, where you've left, you came back, or you know, you're trying to get something going and it didn't work, or an example of where it did it did work. That's something something that the somebody listening to this can go and learn from.
speaker-2: So the I mean, there ⁓ we have a million little case studies that we could share. ⁓ I think the I'm thinking of one where to me, the thing that enables it to stick is that there has to be ⁓ the right organizational support around it and ⁓ leadership champions that really are you can't just hand this to your production team and be like, ⁓ do it. Right. Because the estimating team has to Be aligned with it too. Things about what they're doing are gonna change. The project management team has to be willing to look at different metrics. And so where it succeeds definitely in every example we can give is where it really is a strategic decision by the organization to foundationally, it can be slowly, but start to change all the things to enable that success.
speaker-1: So, you know, we worked with ⁓ a mature, the highest performing mechanical contractor in their region. And we came in and gave them their assessment and they and they have just been people have been fawning over them because they come to their production environment and there's a real difference between going and seeing a fab shop and doing a tour and really assessing it. And so if you go for a tour, then you're just kind of blown away. And so for the average person that comes in, you know, they're kind of like, wow, this is amazing. You're hired. And then maybe all the results don't get there. This is a company that was a high performer. And they found that after getting our assessment and seeing it and reflecting on it, that even though they've been welding carbon steel pipe for a long time and have been meeting all of the parametrics from the various associations that put out weld inches per hour and so forth, that they ended up absolutely revamping the entire thing, moving it to a different part of the building, and now they're getting fixed productivity. And this was ⁓ this was ⁓ based upon line structure on a very strong application of 5S, lean workplace organization, really did a lot for this on the tooling and the changeovers, those types of things. And this was done without robotics. And they're adding robotics too. But what they've done is they've created the stability through which technology and automation can really amplify the value. So that that would just be another bit of advice for folks is, you know, stabilize your operations, find out what's really creating value, take the waste out of it, and then apply technology and automation because the last thing you want to be doing is automating the waste. So we want to be working on value creation. That that is really the hallmark of a lean production system is continual addition of value. until it's delivered to the customer and we're doing that in the shortest amount of time possible. That's really the objective of a lean system. And that's what we're trying to do. Another one, another example of a company is where they went from batch production and what I would call static production, which is they make one thing and then people swarm around it for to provide the different functions and moving to single piece flow and station by station. So here, this was for especially the contractor making wall assemblies. And they used to just swarm people around it and they would bring in the different adhesives and the different toppings, and then the people would come with different tools and they'd move in and out. And that's what happens in a construction environment because you put the wall in place where the wall goes. But in a manufacturing environment, you move station by station or you want to. And if you can do that, then the tooling is specific to the station. You only have the tools that you need there with the right people. And this is what li Melissa was getting around to. And if you balance that so that thing just moves at a constant rate, then you can have this continually addition. And you know, this now this environment, you know, we find that these types of manufacturing facilities then know what their tack time is and like we're putting we're putting out a wall panel every seventeen minutes and it's moving down the line. Every seventeen minutes a new wall panel's going out and it's going onto the rack. And then we know exactly what's going to go on the truck at the end of the day. And we know exactly what's going to go to the field. So by doing that, this particular firm had an eleven X productivity gain. Eleven X. So w this is not nibbling around the edges at all.
speaker-0: It's so fantastic. Great stories. I've I want to talk to you more and more. We gotta we gotta keep moving on though. And and and I think that's you know, th those stories are why we keep tinkering with our processes and if you will, and and even our own products and trying to make sure that we are always improving, ⁓ looking at the data and making sure that instead of resting on what worked yesterday. or last year, you know, w we're we're continually improving and that that is sometimes forced on us, which I think I'd like to talk to you about, because what worked last year is is a is a perfect setup, but markets refuse to stay the same. They refuse to sit still. They're always changing. So, you know, what should companies do as not only are they adapting to markets and changing their products, but they're changing their processes constantly in order to evolve and and continue to serve the market. ⁓ so so we're trying to we're trying to make things tighter and optimize and then the market changes and you've got a different product and you've got a different process and you've got maybe even different machines, different people. Can you help us with with that? How do companies adapt to to all of those changes?
speaker-2: It's funny, that's one of the places that we're most focused on as a company in applying like our product development efforts because we want we know we need to be able to support that. Products do change. What ⁓ what's needed by a data center is changing and we need to make it easier for people to revamp their production lines, apply what they're learning, use the data. And that's kind of the exciting part, I think, right, with where we are with collecting data. What's happening with AI is it is we can process it a lot of data a lot faster now and learn from it, but you still need to be asking it the right questions and putting the right structure around it, right? You need to be looking at it through a manufacturing lens, not a construction lens. And so I'm kind of talking myself in circles here, but the I mean, this is what we're really focused on is if we can put these standard basic. line planning, production planning, tools in place. Put the right data capture in place. Not random data, like the right data that are the things that you track on a line, then tools can be created, right? To make it easier to do this planning so that we don't have to start over every time. And we can think about what we can keep from one line to the next as a product changes. So we don't start over from scratch every time and It's we're like excited to be working on it. We are looking for people who wanna be testing this out because we do think the industry needs these tools right now and we shouldn't all be having to build them ourselves.
speaker-0: Right. So those those capabilities are some of the first things that companies should build and start building those those muscles first, which is you'll go get the data first and try to understand what you currently have. Can you build on that a little bit? What are what are some good capabilities some companies should take from this talk and and go and do?
speaker-1: Well, I would say that, you know, the ones that at a high level, you know, one that we find is habitually low is product driven sales. That we are not selling things for which we can deliver the product because in construction we just say, we can build anything. Show us your dream and we can build it. Like those kinds of things are even taglines for companies. And so what we really want is we want to elevate our proven designs into the into the process earlier. Because if the customer says I want it in half the time at half the cost, then there are certain trade-offs that can be made. But if we don't make them early with proven designs, then we have to go in and rethink it all over again. I would say product-driven sales is really important, but that means you have to know your products. So what are your what is your design standards and libraries? How how good do they look? Are those design standards and libraries do eighty percent of those drawings can they be made with only 20% of the skews that are out there because we don't want to be going from an unlimited we don't want to have a whole hardware store and every single too many skews. So we with electrical contractors, we've seen this a lot. They're like, I just don't even have three eighths inch conduit anymore. It's either half inch, one inch, two inch, four inch, and like everything's got to fit into that. And all of that other variability just makes it so hard to be flexible. So we want our machining to be flexible. We don't want things that are ⁓ really if you can avoid it, don't bolt things to the to the floor. You guys have really heavy stuff at your shop. So, you know, we're gonna have more monuments than the average fabricator, but we don't want monuments, so we want things that also allow for the flexibility to happen. And if you've got this mindset that I'm gonna go ahead and say to the owner, to the design team, You can have these things, but here's the trade-off. They're usually willing to accept those things because that the gains are so great. But if you don't have the right libraries, then they'll say, Great, where is it? And then, well, you don't have anything that can be elevated into the design. So this is not a trivial undertaking as well. And it takes some ⁓ the courage to say no when it's not the right application. So this all kind of folds into new product introduction and design for manufacturing and assembly, only designing those things that can be manufactured and assembled and installed with the right quality, costs, and delivery.
speaker-2: The only one I'll add is like a foundational capability that we need to be building in our industry is process engineering. People who know how to study processes, who know how to analyze the data, who need know how to apply industrial engineering concepts, but foundationally it actually is around studying the process and finding ways to optimize it in a very technical way. And we can build those skills. It's more great jobs that we can create and be creating in the industry. And those things are foundational, right? Like right, I think we recently did a webinar and we asked this question like, who's redesigning your line? And across the board it was like, ⁓ my superintendent or the plant foreman and Steven, our amazing engineer, was like, That should be a process engineer. That's who really should be driving that inside your organization. And we just don't have those people in our organizations yet. But We can, we should, and ⁓ the more we add, ⁓ the better we'll get.
speaker-0: Really good point. And I really like the conversation about not selling what you don't have. That's a conversation that keeps us up at night a lot. And, you know, this this sort of next generation of, you know, trying to productize and trying to make sure that that you have something that not only serves you, the company, but also serves your client because that's part of it too. We're always, you know, shaping and and putting, you know, you know c course correcting, if you will, the di the designs to to what we've done before because that ultimately gives us all the things that we want. We want, you know, it's less cost, it's safer, it is faster, it's all of the things that ultimately is what your client is expecting, right? So, you know, making sure that you're not going off and doing something custom, which they may or may not ⁓ want because they've never seen something like that before is is where we're headed. So guys, what what are you most optimistic about in the next you know, speaking of that next next generation, the next I s let's say two to five years, maybe even ten years.
speaker-1: I mean, the the mature manufacturing, advanced manufacturing is entering into manufacturing five point ⁓ industrial five point ⁓ And I would say that our industry, and God love us, I mean, we're just starting. So as an industry is you we're we're kind of like it's like between two point ⁓ and three point ⁓ you know, just like basic assembly lines with some automation. And so the step gains, I think we can we can we can learn from others. And apply these things smartly with some construction domain knowledge. And we can skip two generations and move right to the front of the line. And so that that's that's what gets me excited is like the imprint that this next five to ten years is gonna make is gonna be something most dramatic. This is the most dramatic period of my career, period. And I think that the next five years is gonna even eclipse that.
speaker-0: Awesome.
speaker-2: Yeah, I think I'm I was trying to think of a diff like a different I I'm excited about a lot of things. We're both ⁓ incredible enthusiasts for this industry, in case you can't tell. But like I think I'm excited about almost like how we can like make construction cool, desirable, innovative, exciting again. Right. So when we talk about the retirement wave and the labor shortage and this and that, which is incredibly real, I just think there's so much going on right now that And I'm seeing little pockets of it even amongst my own teenage kids that is making maybe construction appealing again. And I'm optimistic about that. And I think we need to capitalize on it by making visible all these different things, right? Not having it be what it was perceived to be 30, 40, 50 years ago. So I'm pretty excited about that. And just we beat ourselves up. The marketplace beats us up, everybody and their brother writes about how terrible we are. Construction investors are like, ⁓ they're so mine, we'll put all our money here. But the pace of change I've seen just in the past ten years of my career as well, like I've been at this for over twenty five years, monumental. And that is something to be excited about, even though it can feel scary and chaotic at the same time.
speaker-0: There with you. It's genuinely a fun time to be in this business. And I think that the you know the optimism and the the excitement about waking up and thinking about the pipeline of stuff that we are gonna go build. I mean the size and the scale of some of these things, Melissa and Nick, and it fits right in with all of the things that you're talking about, right? Before we let you go, let's leave Some of these folks that are listening with something that they can act on. What's one first step that a company can take to understand where they are in this game? Are they just beginning? Are they in the middle? Do they think that they're in the middle or super mature? But they're not? What's a good step to understand their maturity with all of this?
speaker-1: Yeah, I would say, you know, just go have a s just go talk with a cross section of your people and find out if they really believe that prefab and off site construction is of value to the industry and to the company in particular. Because one of the first things I like to do is just stamp out the water cooler talk. Because, you know, we need to move from opinion led to data data driven decision making. And so I would say do a time motion study of an assembly. That's made off site and include all the things, the transportation, all of it, and see it get installed and do a video of it and document it and then do it stick built or however it's happening now and then measure it. Because when I've done this, when I go in there and I hear that there's this conversation going on, I'm like full stop. We're gonna do this and I am gonna put an end to this water cooler conversation. And I'm undefeated. I've done this twelve times. And I've won every single time. And even when I'm going into these early companies, I'm like, the site's got a hundred year head start on us. Imagine when this even gets better. So I would say get the data, get the facts, get away from opinions, and build a strategy around that.
speaker-0: Simple and actionable. I like it. Yeah, that's fantastic.
speaker-1: Yeah, so in two days.
speaker-2: It is the what Nick described is super actionable and ⁓ and in in addition to Nick being undefeated, it's eye opening for people, right? Like so the people that have done it have been like, ⁓ well shit. Yeah. So ⁓ it's been just incredibly helpful on that front.
speaker-0: Even a a company like us benefits from looking in the mirror ⁓ now and then, right? Yeah.
speaker-2: Yeah. Everybody does. I we all I've like I benefit from looking in the mirror and I'm like, ooh, gotta have more water today. Yeah. So I right, like we need to just do that more. I think one thing that I have found is and we do this as assessors ⁓ when looking trying to figure out just how well aligned the company is around their direction they're going and where maybe the gaps are because that is a huge that's gonna stop your maturity. just immediately is just to actually spend time either whether it's on the shop floor or in the field confirming. Did do your people actually know what you're trying to achieve with your with prefab, with industrialized construction, with setting up a manufacturing facility? Do they actually, what do they think about the why behind it? Can they tell you? Do they understand the why? And is it connected actually with what your s most senior leadership would say. And if those two things are disconnected, and they often are, ⁓ that's a pretty good indicator of sort of where you are in your maturity as well.
speaker-0: Right. Well if if listeners could take let's say just one thing with them today, what what what would you want them to take away and and remember from this conversation?
speaker-1: Understand the work at a much deeper level than you do now. If you really learn your work, then it'll reward you.
speaker-2: It's great one. I think if you're if you are planning anything, whether it's a prefab project, a job, a whatever, and you are planning it the same way you would have when you were in the field, it's not going to deliver what you want. It is a foundationally different way of planning work. And that's what I'm most focused on right now is we have to rethink how we're planning these things. It's it's not just changing the means and methods of how it comes together. But actually how we plan it.
speaker-0: Love it. Love both of those. And I'll quietly steal both of those for our next team meeting. And for anyone who wants to go deeper ⁓ into this subject, right, I think we can safely say that was a fantastic conversation. Thank you guys so, so much. Where where can people learn more about ICG?
speaker-2: You can learn more about us at on our website www dot icg.build. Check us out on LinkedIn. Call us, email us. Those were the the main places to go. But ⁓ we would love to talk to people. We love talking about this. ⁓ we're just so passionate about driving change in this industry. And we learn so much from conversations like this and interactions with everyone we talk to. So
speaker-0: Perfect. Go check them out. Melissa and Nick. This has been fantastic and a fantastic conversation. I really appreciate you too. And I appreciate ICG. ⁓ thanks for helping us at Build Forward. And thanks for listening, everybody else. And thanks from all of us at Clark Pacific as well. Until next time.
speaker-2: Thanks, Tan. This was fun.
speaker-1: Thank you.
speaker-1: Hi Dan.
speaker-2: Dane, we're glad to be here. So you want me to go on this one, take a little crack at this neck? ⁓ and we should start by saying we have a third founding business partner, Sally Meisell, and we could not have started ICG without her. So, you know, we were inside a large engineering firm ⁓ in a consulting practice that had been doing just lean and operational excellence in the built environment for a long time, 10, 20 years. And as we saw what was happening with the shift. towards more off-site construction, more pre prefabrication, more manufacturing. ⁓ we just kept seeing the same pattern, which was that companies are trying to get better. They're doing great things. They're moving the work off site, but they weren't getting breakthrough results. And we saw the drivers were there, ⁓ right? The labor shortage, like, God, we need housing and infrastructure and all those things. So like there's no mystery on the need for it. But we wanted to be part of trying to figure out why things weren't working, why people weren't getting the results they wanted, and actually drive success because we knew or we were starting to see or we had a theory that it was an effort, but people didn't actually have a roadmap for what could look like. We weren't actually training people, giving them new skills, the ones that they need. So it's really hard to be great at something new when you haven't been trained to do it. ⁓ and we weren't really changing the operating system that we were seeing are built around these people in construction. So We wanted to be part of trying to help drive that change because we want this to succeed. We need this to succeed.
speaker-0: That's fantastic. I I love the origin stories and honestly it's not too far from how a lot of us, you know, found our way into this world, right? And ⁓ at Clark Pacific it's the same and you know, nobody grows up dreaming of industrialized construction when they're little kids. Yet here we all are. ⁓ and, you know, it really makes me wonder what shaped the way that that you two think about it. Nick, you know, what And and Melissa, if you will, what what and where ⁓ did you start learning about this, you know, lean practice and construction manufacturing?
speaker-1: You know, I would say I'm glad you brought up my Navy history, you know. I think that I had like ⁓ bits of manufacturing and standard work being in the Navy. You know, I mean the Navy's got a lot of standard work and it makes a big complex system work. And, you know, when you're when I'm the officer of the deck on an aircraft carrier, I don't get to choose that I'm gonna put the engines if the engines go all ahead full, half or one third or two thirds, I don't get to say I want them to go ahead sixty percent. Like I just don't get that. I c I can choose the speed I want, but I can't choose my own ways. And and what I really think is happening here, and Melissa talked about this. This just used to be called prefab. You know, six years ago when we really started this shift, it was just called prefab. And I like that this industrialized word is here. And I hope that that word just goes away in the future and it's we just call it construction, because that's just the way it's happening now. But right right now it's a good word because it means something different is happening. And so I mean the other part that I get excited about is, you know, we liken this to the Industrial Revolution and the massive change that that had for America and the world. And if this is the beginning of the industrialized construction, industrialized revolution for construction, then think about what that could mean. And so it could just mean radical tectonic shifts in the productivity and the quality and the availability of things so that all of the Most all of the problems that are ahead in front of us right now will be extinguished. So yeah, that's a little bit of ⁓ unicorns and rainbows. Like it's there's a lot of work that needs to happen for that to happen. But I think that that's what's ahead of us.
speaker-2: Think I like my lean journey started inside. I'm we mentioned that we were inside Haley and Aldrich was a a large and wonderful engineering firm and it was just a great place to be for a really long time. And it was there that I first had exposure to lean and process improvement. ⁓ you could ask anybody, they'd say, like, I'm the least standardized person you'll ever meet. Melissa's always trying new things. ⁓ And so what's interesting is I just I think maybe because of how I was introduced to it or who introduced me to it, it was actually like the system changing level of it that appealed to me the most, right? Like not the tools, ⁓ but just how you can transform a system with these really rigorous problem solving methods. ⁓ and that's why I think it has the potential to take hold in construction. Like we are nothing if not incredible problem solvers. We're faced with problems all day long. And so to me, learning about lean, you know, over now it's been 20 or 30 years gave me a way to channel that problem solving instinct in a much more effective way. We have so many creative people and incredible problem solvers. And we asked them to do those things inside a highly chaotic system. So that's kind of my lean origin story. And then it's just evolved and evolved and evolved from there. But it was just the like, problem solving aspect of it that I love.
speaker-0: It's so great. I that that lean foundation is really everything and then it evolves from there. For us, the moment Clark Pacific started treating the the the building like a product instead of this brand new puzzle piece every single time was really that moment of adjustment and, you know, the whole factory mindset click, the whole, you know, field translation to the engineering teams and then communicating that back out to clients and vice versa is really, you know, what helped us there. It's it's ⁓ you know it's interesting 'cause it's it's ⁓ it's like the perfect excuse to do the right thing. But right now I think it's it's a good excuse to talk about what what actually is industrialized construction. And Nick, maybe we just call it construction from now on. How would you how would you sort of define a construction, if you will? Industrialized construction and in sort of plain Eng English.
speaker-1: Yeah, just as simply as I could state it, it would be the application of manufacturing techniques and methods to the built environment. What are we doing about that? You know, and even as I say that, Dan, there's been something that's been happened within us within just the past year where we used to have a whole category of topics in our assessment that we bundled under the manufacturing discipline. And because we know that in order for the value to really To be realized by the customer, it needs to be installed well so that we're not leaking value from the factory to where it's finally installed. So we've moved away from calling it manufacturing, those topics, to production, because production has to go all the way from the manufacturing floor into the field and finally installed. So I think that this really the signal that we're sending in the mindset is that of course the job site is a production environment in and of itself and that. As we start to see these systems and skills move into the field, we're starting to see some of the gains so that the field can be giving us better and more reliable signals. When is the demand really created? And we'll hope to see that the things that we measure on the factory floor, like how long is inventory in place, how what are our inventory turns? How long are these things on the job site? Because there isn't really a large job site that I go to that pretty much doesn't have something sitting there that's had a birthday, maybe even two. just sitting there waiting to be installed. And these would be absolutely intolerable on the shop floor. So I'm really excited about bringing these two things together.
speaker-0: Man, that might be the ⁓ cleanest definition I've heard in in a while, so thanks, Nick. ⁓
speaker-2: good at putting things in very concise, digestible and urgent terms. And that's what we need right now, right? There shouldn't be a lot of mystique and mystery around this, right? It's not magic.
speaker-0: We we like to say it's building like a manufacturer instead of building like it's the first time that we've ever seen something every single time, but folks still mix it up with just doing work off site. So, you know, let's talk about that and what's how is this different from simply moving work from off site or on site excuse me, to to on site? How is it different from just putting it into a factory?
speaker-2: It's so hard not to answer that by saying everything is different because I realize how ridiculous that sounds, but at some level it is, meaning like everything that we know about how we stick build things has come from years of experience and honing a system and creating planning systems designed to deliver it that way, and creating pricing systems designed to deliver it that way, and purchasing systems designed to do that. And when you take it off site and put it inside a factory, those are different systems. They're designed to work differently. The way they function is different. So it does mean, and we can get more specific, but like everything we know about planning has to change. Just taking your best estimator and being like, now you work in the factory and you're in charge of production planning isn't gonna work. And taking your best superintendent and foreman, who are these amazingly brilliant people who have honed their skill at doing something else and saying, and now you run a factory and you're in charge of line layout and process engineering and labor balling and sing and defining work content. So like everything does need to change to operate a manufacturing line, how you ship the materials, everything that we know and do in the field. has to change, except the craft expertise. That still holds and it's still critical. We just have to apply it differently. That was yeah.
speaker-1: I can say too that ⁓ you know, on a very simple level, simply moving it off site, then we see a lot of just construction under a roof. Yes. And so, you know, some and and another signal would be if anybody in your organization is says, send it to the warehouse, that's a problem. Because they still think it's a place where we store things and a fabrication facility is where we make things. So if anyone's out there is using the term the warehouse for where we're doing these things, then that's a problem because really what we want to have is a reduction in invent inventory and adding continuous values. I mean those are some basic signals and Melissa's picked up on ten threads there that we could have a whole nother each one of those things could be a whole nother get together, Dan. We could just be talking for hours and hours about each one of those things.
speaker-0: It isn't just putting a large tent or canopy in a in the middle of a of a parking lot. That's not a factory, you know, or or a metal building and and putting everything in it. That that's not what we're talking about here. And that's you know, it's it's really it's the repeatable system behind it. And you know, I think without grading my own homework here, we'd like to think we're pretty far down that path with You know, design, manufacturing, installational under one roof, everybody learning from each other, continuous improvements. Awesome. You know, all the optimizations that you're talking about. But I'm curious what that journey looks like from the outside. So what's what's sort of ⁓ from to story for a company that's trying to make that shift ⁓ from from on site to off site?
speaker-1: Yeah, there's some I'll kick one off that is just, you know, one of my favorites is, you know, we need to go from measuring things in huge cost codes and even just in timesheets. You know, so timesheets and cost codes are really the same thing. We put our time into a cost code and it it's it's just a very it's a view from fifty thousand feet of what's actually happening. And then in the factory environment, we want to know hour by hour what's happening. And that hour by hour anticipation about what's going to happen is based upon knowing the work down to the minutes and the seconds so that we can understand what should be the target for the next hour. And then do we hit the target or not? So the from two is very large in terms of the the understanding of the work and the work content. How well do we really understand that is a huge undertaking that does take process engineering. So we'll talk later, I'm sure, about What are the capabilities? What are some of the roles my organization should have that we don't have? What does the future workforce look like? These are where some of these really key parts are coming in, where we're gonna bring in factory science to the way that we're doing things. And it's really exciting because we're also doing things like simulation modeling and using predictive engines to say what what is the output gonna be. So that shift is gonna be really important and Right now we still have a very big mismatch between how well we may measure things in the factory and how well we measure and anticipate in the field because the field is still doing it a lot, is happening still on gut intuition because someone's done something for a long time. And so the from it's, you know, it's from the craft and tribal to standard work. I learned this from somebody else and that's how I do it. Yeah, go right ahead.
speaker-2: No, I just wanted to pull that thread a little bit, Nick, because to me it's just some of it is about it's moving from this iterative planning and level of definition that I'm experiencing right now on a job. Like it's still happening. We're on the seventh floor and we're still responding to RFIs or answering details and this and that, right? So it's like that that iterative planning. Where it just keeps going down from design intent to well, this is what the trade partner thinks to ⁓ now it's documented to really in a a manufacturing environment, that's all done. It's like two completed before we build anything. ⁓ and that's a really dramatic shift. You're not running something halfway down the line in a mature manufacturing environment and saying, shoo, we're at s, you know. Work cell seven here, and I forgot we don't have the work instructions for that. The design's not done and it's not complete. But that is how we work in construction. That's a big shift that also would alleviate a huge amount of pain and frustration. Nobody enjoys that. The architect hates it, the trade partner hates it, the GC hates it, the owner hates it. Huge source of pain. Yeah, these also like monumental shift. I made it sound so easy and it's not, but it's really foundational one.
speaker-0: I mean, for our own story took years and and more than a few lessons learned and and we are learning all the time. I mean, that's that's something I think that you know, we we you were talking here about data and and gathering and and trying to implement. I I love it. I think that that's exactly the kind of thing that your assessments must drag into the daylight. And and you've done a ton of ⁓ I mentioned before, seventy plus, probably more by now. What are the what are the common gaps that show up ⁓ during these assessments? Let's get into the the the data and and thinking about ICMA and and ⁓ you know, defining that overall and then seeing seeing how that how that shows up.
speaker-2: So this kind of gets back to where we started. So the ICMA is the industrialized construction maturity assessment, and lots of other industries have these models, right? Maturity models, maturity assessments. How do I know if I'm doing well? Am I what's the standard for how this should be delivered? And so what we did was we looked at other models out there and said, wow, construction needs one of these for this moment of industrialization. But it has to speak to what's different about construction. We just can't pull one off the shelf and say, ooh, this works for automotive. It's going to work here. 100% fail. So we took the best ideas behind it and created this model that is for tailored specifically to construction. So it looks across six disciplines, everything from strategy and management systems to operational excellence, production, DFX, design for. what's next and supply chain. And it had there are 57 specific topics that we're assessors are assessing against this very ⁓ you know, standardized, rigorous excellence framework. And then from there, ⁓ a roadmap can emerge to help companies know where to prioritize. And the trends in the data that we're finding inside it show there's just so many commonalities across the industry. So I'll let Nick maybe share a couple of the maybe the really big gaps, you think, Nick, that we're seeing most commonly, or what's defining those who are winning?
speaker-1: Yeah, let's pick up the thread where we were and just take it a little bit deeper. So like most people think like I just need to set up a production line. Well, really, if we think about some of the the disciplines you talk about, like strategy and management systems and operational excellence, like those are the things that set the ground so that the technical stuff like engineering and production can really flourish. So we're seeing big gaps in management systems. And like people be like, What? Like I'm a f I'm I'm in the top fifty ENR. You can't tell me I don't have great management systems. And I would say for what you're doing as a 70 year old trade contractor, yeah, they're great. But for what we're trying to do here, they're not so great because some of the things you might be missing are do you really have a common data environment? Is that allowing for the data to be extracted and made into useful dashboards so that we can actually act on them? And do we have leading indicators? Because we want visual management systems and When I say visual management, it means that both those words need to be active. It needs to be visual and you need to be able to manage from it. And if it isn't doing both those things, then you don't have a really you don't have a visual management system and then you're not learning. And I heard you talking about how because your value streams are connected, Dan, that the speed of learning is accelerated at Clark Pacific, and that's a key attribute. We want to we wanna check the speed of learning. So I would say that when these management systems are cohesive, then we're gonna expect ⁓ a huge reduction in the amount of unresolved issues, and I'm talking like twenty-five percent reduction in unresolved issues. And then we'd also expect that of those that are remaining, that they're they're solved 50% faster because we've got the insights and they're not lingering and the defects aren't going right under our nose. When I go into places of low maturity, you can bet your bottom dollar that they're sending defects out their door every single day and they don't even know it. And those are the worst. You know, the hidden waste is the worst and those defects. So the management systems, I would say, is a core one that people need to be thinking about. And we could certainly talk about the production ones because they're left, right, and center. And really, all of this sounds really hard and to a certain extent it is, but the payoffs are enormous because those that are operating at the very highest level are experiencing margins in like the forty percent range. And we know what what struggle it is. And And they're delivering the buildings and their and their services at a lower cost to their clients. This is a and and not an and but. That's the other thing I'm throwing I'm throwing away the three legged stool, Dan. I don't want to hear quality cost and schedule. Like I'm calling BS on that. Those days are over. You can have all those things and more.
speaker-0: There's a there's a ton of gaps and I bet a couple of those gaps would hit close to home for us too. Nobody's perfect and even the even the folks that swear that they've got it all figured out, right? I have some experience with that. And so really, you know, finding the gaps is key is what I'm hearing. And once you find those gaps using the assessment, what what What are people actually gonna do with that assessment and how and how do you go actually make change? Owners, builders, prefabricators, how are they using these assessments that you're doing and using that data? How do they go actually ⁓ make some change? 'Cause in my experience, change is hard. It's real hard.
speaker-1: Yes. True.
speaker-2: Yeah. ⁓ and change is so hard. And but the answer has to be yes. Otherwise this assessment isn't worth like, you know, two cents, right? Like we it you have to be able to act on it. And that's one of the things that we've really focused on is actually making sure it is actionable and specific and that people can like understand what they would do and measure that progress and then see that progress in the app so that they know where to go. And I One of the things that some of the things are actually small. So I want to say like sometimes the the roadmap coming out of this can be like overwhelming. ⁓ God, my I'm below level two in all these areas and I'm only level three in here. But you don't have to work on everything at once. Like there are like foundational things that other things build on. So one of the things that we've been focused on recently is when we went back in and looked at our data, we found that like For specific topics, like are we defining our work content? Like down to the step, is there time associated with it? All of those things. Are we using these really simple manufacturing tools to balance labor, right? It's data driven and we know we can do it. This exciting thing, a Yamazumi chart. And ⁓ like, are we using daily management systems to track things? And we went in and looked at our data and those four things, which are things people can learn, like these are s just foundational skills consistently were in the lowest quartile of our data. And then we actually noticed a really interesting distinction, which is that, but if you were a company like a modular factory that maybe started from scratch, you intended to be a manufacturer on day one, your scores weren't as low there. But for traditional trades making the pivot, and I am on team traditional trades making the pivot because we need the whole industry to do this. We cannot have enough startups out there. Solving the kind of infrastructure problems we're facing. Those four things were four of the eight lowest scores. And so, like, we have a long list of customers who actually have just tackled those things and can point to amazing changes that they've made in their business from doing those things, right? So just acting on these four little ways of planning your line, thinking about your work content, can generate 50%. Right productivity improvements. It changes how you think about your labor. So some of them are really tactical and then some are big and strategic and scary, right? Like we don't have the right product design capabilities inside our company. That's bigger. Right. We're gonna have to take that on. We don't create that on day one, but ⁓ so people are using it in both those ways.
speaker-0: This like I yeah, right. I I love the idea of this sort of scorecard. You can actually go measure, you know, using data and like we were just saying, it, you know, none of that matters if you're not making useful changes on a Monday morning. And that ac and that actually goes into implementation. And and I imagine that it just capturing the data goes well beyond, you know, the shop floor. It goes all the way through into sales into marketing and client outreach and back all the way through the whole entire system. What what KPIs do you you know, what what sort of and maybe maybe it's not KPIs that that you go after, you know, just in the loose terminology of yeah, you know, capturing things matter the most when when we're looking at this stuff. Is it quality? Is it schedule? Is it throughput? You know, productivity. We talked about labor, maybe we can talk about labor in a little bit too.
speaker-2: No, this is your time to shine, Nick. What's our favorite one?
speaker-1: Skewed it. Yeah. So we like safety, quality, delivery, inventory, and productivity. Like how are those things doing? Like those are manufacturing one ⁓ one. And so, you know, on the shop floor, that's what we're really looking for. And I think those are great in the field too, the production environments. And we could be looking at different things in we look for things so when I talk about quality, Dan, I'm talking about first pass yield. How many of the things that go through the process meet the quality standard?
speaker-0: There we go.
speaker-1: And even the cost standard. We want to know is it giving us the right yield, but mostly quality? And we even bring that into the design environment. So we want we want to know for from the design. While we are expecting iteration, we do want to understand what is that first pass yield? What is the tap time for the design team? They should know what the rate is that they should be working on this at. So we look at things like that. We We should be looking at how many of the things that are in our production environment are going through a productized environment. So, you know, a lot of the trade contractors that we talk about, and I'm totally on board with Melissa on this, we need the trade contractors. They've got the capacity, and a lot of them have the willingness to shift. They just don't know how to get started. And that that's a big theme for us is helping people to see how to get started. But They need what I would like them to shift from is being what I would consider more of like a job shop where they're just doing things that the the field leaders need, you know, and reacting on a week to week basis or day to day basis even, to having schedules that are going out months and months. In your case, I would I would imagine how f your schedule must go out, I don't know, I'm gonna say twelve, sixteen months, eighteen months, longer.
speaker-0: Walker. Yeah.
speaker-1: Longer. Yeah, that's that's the mark of a company that's creating real stability. They understand their market. They're creating the right signals, they're creating stability and all those things. So but Skew Dip is ⁓ that's numero uno.
speaker-2: Anything bad that works. My post-it it says labor hours per unit. And that I'd like to I'm not the manufacturing expert on our team by I'm ⁓ by a landslide is a fair thing to say, but that is the one thing that is just stuck and that they have just instilled in me is this notion that we need to know our labor hours per unit. Every single day. And that is not something we track, and Nick likes to say in our grotesque, you know, estimating and cost tracking spreadsheets that exist in construction. We want hours per unit, actual, and we want to know what it is at any moment in time. And that that is a if that if anyone listening took one KPI away, like that would be the one that we would hit home all day long. Cause it just changes how you look at everything.
speaker-1: We hear this a lot, you know, labor we we've heard about the labor shortage. And so when we talk with our customers, they say, I don't have a labor shortage. I can I can pull from the bench and I'm the best employer and I can get who I want. Well, it doesn't mean you don't have a labor productivity problem. Just because you can get bodies doesn't mean that you don't have a labor productivity problem. So that's the one we're really trying to solve. And so, you know, another ratio that a company could be looking at is what is your re ratio of materials to labor? And so for a lot of, you know, kind of an old school metric for a trade contract there would be roughly fifty fifty. These numbers are changing, you know, with some of these data centers, those numbers are changing. But what I'd like that number to be is more like thirty percent labor and seventy percent material. So if you could start shifting that ratio, then that would be an incredible indicator because a lot most of the risk is in labor. That's That's where most of the margin starts to bleed. So that just really leads into one other kind of foundational thing about all this, which is you have to have an abundance mentality in order to take this on. Because if people think it's going to put them out of a job, then that's a problem. And so even with Toyota, when they come in and they work with a company with their supplier support center to help folks, they make the leaders make a pledge that no one will lose their job. Because of these improvement activities. And what it means is that we can expand our business line, take on a new line, meet more demand, open a facility in another state. I mean, there's all these things that can happen. So if you have a hoarding mentality, then you can just go ahead and hang on and ⁓ you know, die a slow death. But if you have an abundance mentality, well, I mean it's you know, we have to lay in some fire and brimstone here because actually
speaker-2: Yeah.
speaker-1: I kinda like that because we do need some urgency to change, you know, so a lot of companies are still making money and so that is another barrier to change is you know, just that what's the problem?
speaker-0: Yeah. It I'll be happy to say that we measure we measure hours per panel, we measure hours per per units, we measure, you know, all of the things that that we measure in in different ways and we do that throughout the the the entire stack, if you will. But you know, we can always do better and I lo I love looking at it from different angles. I think one way that we've looked at it ⁓ you know, most recently is our Customers actually feel certain things, schedule certainty, for instance, their feeling quality, you know, and if you sort of get a market sense of exactly what to deliver, you know, the safety always gets baked in, the margins get baked in, the you know, all of the things that we are trying to include get baked in, and those metrics we track, but we're leading with that. you know, getting things there on time, making sure that we have good quality and, you know, everything else is is following. That's easy to say. It's a lot harder to actually do. And especially when you move things, you know, into a factory and you're looking at a a local labor pool, which is, I think, another place where we can start to talk about how all of this comes together. You're not moving regionally You're actually in one spot, you're doing a whole bunch of things in one place. What what is that I guess what changes with labor when you move all of those ideas to to one location and and how can you help whoever's listening with, you know, really how do we make that work?
speaker-2: Just hit on what I think changes the most, and it's your the speed of learning. We can't learn fast enough in ⁓ traditional construction because the learning gets lost in some data sets or write constraint log or lessons learned or RFI, and you move from project to project to project and teams change. This is like rapid learning. The data's there, it's right in front of you, you can see it. And so the team's ability to I think that's the great irony. People are like, ⁓ it's so standardized and it's the same thing every day. But our ability to actually learn and innovate because of that is so much faster. And I wish I could pull it up. I don't know what the study was or who said it, but it is some study about what happened when the US offshored manufacturing and how our innovation dropped because of those things. Like we the product design and all of those things was disconnected from the make and the learning slowed down. So That isn't a how, but to me that is a hundred percent the greatest benefit and like we should be touting that tr to draw people in and create enthusiasm for this inside of our industry for sure.
speaker-1: Yeah, there's something else I think that is really nice about this environment. In the field, the worker goes to the work. So that means you might be up in a scissor lift or you have to crunch down to get to it. Or you you go to this wing or that floor. And in a factory environment, the work comes to the worker. And we can make it at a perfect ergonomic environment. And so that means that we can have a different classification of people can come and work in that environment. So it opens up new people that can come in and they don't have to the the job site's a very dangerous place and it takes a lot of mobility and awareness. And we still want that awareness of course in the factory, but we can create the environment where it's ⁓ much more stable. The lighting's great. It's clean. It's much more safe. Of course it can be or In most cases it can be conditioned or at least it's circulating the air and it's just a better environment. So and I think that people learn more quickly, as Melissa says, you know, we've had anecdotal responses from General Foreman in the field. They say like, ⁓ that crew that just that was working in the fabrication facility and came in after their first year apprentice, they're acting like fourth year apprentices. And so they they they get a much more They see the whole system in operation because they see the the supply, they see the finished goods, they see the engineering coming in, they see the instructions. And really these are all a lot of these things that they're learning, this is what makes an effective field leader, is being able to plan the work, see the work. And so I would just say in a in a lean system, because we say respect for people a lot, and so I would just say that ⁓ people deserve to see and understand the system that they work in and in a factory environment and if we use good visual management systems and we have good value stream management and all these things, then there's a greater opportunity for this. And if they can see and understand, then they understand the why. And of course that's critical because then they're really contributing and they feel empowered. So these are the some of the things that I would say will be hallmarks of ⁓ a more mature organization is that everybody sees and understands the system that they work in.
speaker-0: And it's an environment where lean and this system actually gets to shine where you're not constantly running into to new things. There there is some lean that we've applied to field conditions where it's constantly changing changing as well, right? But ⁓ easy to easy to make those changes and and mostly for the better once you once you bring things inside. What are the what are the biggest challenges once you do that? What are the biggest challenges that you see? making that s that that shift stick. And, you know, I'm I'm assuming that you've been through this and we've been through this as well, but it's just a completely different animal. And the you know, the tricky part is keeping it from being this big kickoff and, you know, bringing in, for instance, your team and, you know, something that is very exciting and then it quietly sort of fades by the summertime and Yeah, there's dust on things and that's we you know, the you know, not not at Clark Pacific where we're the dust is not on anything there. But we we d I've definitely seen it at other companies and and understand how that how that works. And you know, back to what we were talking about before with the ⁓ with culture shifts. I think, you know, discussing the challenges that companies may have with trying to You know, go this direction and stay with this.
speaker-1: Okay, go ahead. You know, and it go it really goes to something that you said, Dan, that really ⁓ just I wouldn't s is when a customer says to us, Nick, when you and your team walk out the door, so does lean manufacturing. And we just can't have that. So it's it's it's that people revert. So over the course of time, we've been working on Helping to embed the right skills and capabilities that people need. So some of our topics are called, do you have IC aligned roles? Do you have workforce capability improvement? Because we need process engineers. We need quality engineers. We need people that are not just in procurement, but they're in supplier development. So it goes past just the factory floor, but those are the places we focus because that's where the value is created. But those are the things that we're working on. So we're working actively and very much so on upskilling people, on giving them the skills matrices that they need so that they know what that gap is. So we're measuring this is what your current is and per skill that's required for a certain job, whether you're an operator or a process engineer or quality engineer, whatever those things are, we've got the list of skills that must be present. And this is another from too. Where are you now? And what is the target? And then we can predict what is the capability then to hit the lean manufacturing targets that we're setting for ourselves. And those might be to add another another $200 million in revenue and only grow my headcount by 10%. So we're given those kinds of targets which say I need to meet a business target and operationally it it also has to happen. So those are some of the things that we're we're trying to help people see. What are the roles, what are the skills that are required, and how do you know if you have the skills or not.
speaker-0: Fantastic. I mean making it making all that stick is the whole entire game. And we've definitely had initiatives, don't get me wrong, that started strong and then needed a second wind or a third wind or you know, a fourth, which is why I always want to see the receipts and see the data so we have, you know, things to go on and after as you know. And, you know, it'd be great. I I I love what you're saying. Is there ⁓ is there a good, you know, short case study maybe Melissa or Nick, ⁓ of a sort of before and after example of this, you know, where you've left, you came back, or you know, you're trying to get something going and it didn't work, or an example of where it did it did work. That's something something that the somebody listening to this can go and learn from.
speaker-2: So the I mean, there ⁓ we have a million little case studies that we could share. ⁓ I think the I'm thinking of one where to me, the thing that enables it to stick is that there has to be ⁓ the right organizational support around it and ⁓ leadership champions that really are you can't just hand this to your production team and be like, ⁓ do it. Right. Because the estimating team has to Be aligned with it too. Things about what they're doing are gonna change. The project management team has to be willing to look at different metrics. And so where it succeeds definitely in every example we can give is where it really is a strategic decision by the organization to foundationally, it can be slowly, but start to change all the things to enable that success.
speaker-1: So, you know, we worked with ⁓ a mature, the highest performing mechanical contractor in their region. And we came in and gave them their assessment and they and they have just been people have been fawning over them because they come to their production environment and there's a real difference between going and seeing a fab shop and doing a tour and really assessing it. And so if you go for a tour, then you're just kind of blown away. And so for the average person that comes in, you know, they're kind of like, wow, this is amazing. You're hired. And then maybe all the results don't get there. This is a company that was a high performer. And they found that after getting our assessment and seeing it and reflecting on it, that even though they've been welding carbon steel pipe for a long time and have been meeting all of the parametrics from the various associations that put out weld inches per hour and so forth, that they ended up absolutely revamping the entire thing, moving it to a different part of the building, and now they're getting fixed productivity. And this was ⁓ this was ⁓ based upon line structure on a very strong application of 5S, lean workplace organization, really did a lot for this on the tooling and the changeovers, those types of things. And this was done without robotics. And they're adding robotics too. But what they've done is they've created the stability through which technology and automation can really amplify the value. So that that would just be another bit of advice for folks is, you know, stabilize your operations, find out what's really creating value, take the waste out of it, and then apply technology and automation because the last thing you want to be doing is automating the waste. So we want to be working on value creation. That that is really the hallmark of a lean production system is continual addition of value. until it's delivered to the customer and we're doing that in the shortest amount of time possible. That's really the objective of a lean system. And that's what we're trying to do. Another one, another example of a company is where they went from batch production and what I would call static production, which is they make one thing and then people swarm around it for to provide the different functions and moving to single piece flow and station by station. So here, this was for especially the contractor making wall assemblies. And they used to just swarm people around it and they would bring in the different adhesives and the different toppings, and then the people would come with different tools and they'd move in and out. And that's what happens in a construction environment because you put the wall in place where the wall goes. But in a manufacturing environment, you move station by station or you want to. And if you can do that, then the tooling is specific to the station. You only have the tools that you need there with the right people. And this is what li Melissa was getting around to. And if you balance that so that thing just moves at a constant rate, then you can have this continually addition. And you know, this now this environment, you know, we find that these types of manufacturing facilities then know what their tack time is and like we're putting we're putting out a wall panel every seventeen minutes and it's moving down the line. Every seventeen minutes a new wall panel's going out and it's going onto the rack. And then we know exactly what's going to go on the truck at the end of the day. And we know exactly what's going to go to the field. So by doing that, this particular firm had an eleven X productivity gain. Eleven X. So w this is not nibbling around the edges at all.
speaker-0: It's so fantastic. Great stories. I've I want to talk to you more and more. We gotta we gotta keep moving on though. And and and I think that's you know, th those stories are why we keep tinkering with our processes and if you will, and and even our own products and trying to make sure that we are always improving, ⁓ looking at the data and making sure that instead of resting on what worked yesterday. or last year, you know, w we're we're continually improving and that that is sometimes forced on us, which I think I'd like to talk to you about, because what worked last year is is a is a perfect setup, but markets refuse to stay the same. They refuse to sit still. They're always changing. So, you know, what should companies do as not only are they adapting to markets and changing their products, but they're changing their processes constantly in order to evolve and and continue to serve the market. ⁓ so so we're trying to we're trying to make things tighter and optimize and then the market changes and you've got a different product and you've got a different process and you've got maybe even different machines, different people. Can you help us with with that? How do companies adapt to to all of those changes?
speaker-2: It's funny, that's one of the places that we're most focused on as a company in applying like our product development efforts because we want we know we need to be able to support that. Products do change. What ⁓ what's needed by a data center is changing and we need to make it easier for people to revamp their production lines, apply what they're learning, use the data. And that's kind of the exciting part, I think, right, with where we are with collecting data. What's happening with AI is it is we can process it a lot of data a lot faster now and learn from it, but you still need to be asking it the right questions and putting the right structure around it, right? You need to be looking at it through a manufacturing lens, not a construction lens. And so I'm kind of talking myself in circles here, but the I mean, this is what we're really focused on is if we can put these standard basic. line planning, production planning, tools in place. Put the right data capture in place. Not random data, like the right data that are the things that you track on a line, then tools can be created, right? To make it easier to do this planning so that we don't have to start over every time. And we can think about what we can keep from one line to the next as a product changes. So we don't start over from scratch every time and It's we're like excited to be working on it. We are looking for people who wanna be testing this out because we do think the industry needs these tools right now and we shouldn't all be having to build them ourselves.
speaker-0: Right. So those those capabilities are some of the first things that companies should build and start building those those muscles first, which is you'll go get the data first and try to understand what you currently have. Can you build on that a little bit? What are what are some good capabilities some companies should take from this talk and and go and do?
speaker-1: Well, I would say that, you know, the ones that at a high level, you know, one that we find is habitually low is product driven sales. That we are not selling things for which we can deliver the product because in construction we just say, we can build anything. Show us your dream and we can build it. Like those kinds of things are even taglines for companies. And so what we really want is we want to elevate our proven designs into the into the process earlier. Because if the customer says I want it in half the time at half the cost, then there are certain trade-offs that can be made. But if we don't make them early with proven designs, then we have to go in and rethink it all over again. I would say product-driven sales is really important, but that means you have to know your products. So what are your what is your design standards and libraries? How how good do they look? Are those design standards and libraries do eighty percent of those drawings can they be made with only 20% of the skews that are out there because we don't want to be going from an unlimited we don't want to have a whole hardware store and every single too many skews. So we with electrical contractors, we've seen this a lot. They're like, I just don't even have three eighths inch conduit anymore. It's either half inch, one inch, two inch, four inch, and like everything's got to fit into that. And all of that other variability just makes it so hard to be flexible. So we want our machining to be flexible. We don't want things that are ⁓ really if you can avoid it, don't bolt things to the to the floor. You guys have really heavy stuff at your shop. So, you know, we're gonna have more monuments than the average fabricator, but we don't want monuments, so we want things that also allow for the flexibility to happen. And if you've got this mindset that I'm gonna go ahead and say to the owner, to the design team, You can have these things, but here's the trade-off. They're usually willing to accept those things because that the gains are so great. But if you don't have the right libraries, then they'll say, Great, where is it? And then, well, you don't have anything that can be elevated into the design. So this is not a trivial undertaking as well. And it takes some ⁓ the courage to say no when it's not the right application. So this all kind of folds into new product introduction and design for manufacturing and assembly, only designing those things that can be manufactured and assembled and installed with the right quality, costs, and delivery.
speaker-2: The only one I'll add is like a foundational capability that we need to be building in our industry is process engineering. People who know how to study processes, who know how to analyze the data, who need know how to apply industrial engineering concepts, but foundationally it actually is around studying the process and finding ways to optimize it in a very technical way. And we can build those skills. It's more great jobs that we can create and be creating in the industry. And those things are foundational, right? Like right, I think we recently did a webinar and we asked this question like, who's redesigning your line? And across the board it was like, ⁓ my superintendent or the plant foreman and Steven, our amazing engineer, was like, That should be a process engineer. That's who really should be driving that inside your organization. And we just don't have those people in our organizations yet. But We can, we should, and ⁓ the more we add, ⁓ the better we'll get.
speaker-0: Really good point. And I really like the conversation about not selling what you don't have. That's a conversation that keeps us up at night a lot. And, you know, this this sort of next generation of, you know, trying to productize and trying to make sure that that you have something that not only serves you, the company, but also serves your client because that's part of it too. We're always, you know, shaping and and putting, you know, you know c course correcting, if you will, the di the designs to to what we've done before because that ultimately gives us all the things that we want. We want, you know, it's less cost, it's safer, it is faster, it's all of the things that ultimately is what your client is expecting, right? So, you know, making sure that you're not going off and doing something custom, which they may or may not ⁓ want because they've never seen something like that before is is where we're headed. So guys, what what are you most optimistic about in the next you know, speaking of that next next generation, the next I s let's say two to five years, maybe even ten years.
speaker-1: I mean, the the mature manufacturing, advanced manufacturing is entering into manufacturing five point ⁓ industrial five point ⁓ And I would say that our industry, and God love us, I mean, we're just starting. So as an industry is you we're we're kind of like it's like between two point ⁓ and three point ⁓ you know, just like basic assembly lines with some automation. And so the step gains, I think we can we can we can learn from others. And apply these things smartly with some construction domain knowledge. And we can skip two generations and move right to the front of the line. And so that that's that's what gets me excited is like the imprint that this next five to ten years is gonna make is gonna be something most dramatic. This is the most dramatic period of my career, period. And I think that the next five years is gonna even eclipse that.
speaker-0: Awesome.
speaker-2: Yeah, I think I'm I was trying to think of a diff like a different I I'm excited about a lot of things. We're both ⁓ incredible enthusiasts for this industry, in case you can't tell. But like I think I'm excited about almost like how we can like make construction cool, desirable, innovative, exciting again. Right. So when we talk about the retirement wave and the labor shortage and this and that, which is incredibly real, I just think there's so much going on right now that And I'm seeing little pockets of it even amongst my own teenage kids that is making maybe construction appealing again. And I'm optimistic about that. And I think we need to capitalize on it by making visible all these different things, right? Not having it be what it was perceived to be 30, 40, 50 years ago. So I'm pretty excited about that. And just we beat ourselves up. The marketplace beats us up, everybody and their brother writes about how terrible we are. Construction investors are like, ⁓ they're so mine, we'll put all our money here. But the pace of change I've seen just in the past ten years of my career as well, like I've been at this for over twenty five years, monumental. And that is something to be excited about, even though it can feel scary and chaotic at the same time.
speaker-0: There with you. It's genuinely a fun time to be in this business. And I think that the you know the optimism and the the excitement about waking up and thinking about the pipeline of stuff that we are gonna go build. I mean the size and the scale of some of these things, Melissa and Nick, and it fits right in with all of the things that you're talking about, right? Before we let you go, let's leave Some of these folks that are listening with something that they can act on. What's one first step that a company can take to understand where they are in this game? Are they just beginning? Are they in the middle? Do they think that they're in the middle or super mature? But they're not? What's a good step to understand their maturity with all of this?
speaker-1: Yeah, I would say, you know, just go have a s just go talk with a cross section of your people and find out if they really believe that prefab and off site construction is of value to the industry and to the company in particular. Because one of the first things I like to do is just stamp out the water cooler talk. Because, you know, we need to move from opinion led to data data driven decision making. And so I would say do a time motion study of an assembly. That's made off site and include all the things, the transportation, all of it, and see it get installed and do a video of it and document it and then do it stick built or however it's happening now and then measure it. Because when I've done this, when I go in there and I hear that there's this conversation going on, I'm like full stop. We're gonna do this and I am gonna put an end to this water cooler conversation. And I'm undefeated. I've done this twelve times. And I've won every single time. And even when I'm going into these early companies, I'm like, the site's got a hundred year head start on us. Imagine when this even gets better. So I would say get the data, get the facts, get away from opinions, and build a strategy around that.
speaker-0: Simple and actionable. I like it. Yeah, that's fantastic.
speaker-1: Yeah, so in two days.
speaker-2: It is the what Nick described is super actionable and ⁓ and in in addition to Nick being undefeated, it's eye opening for people, right? Like so the people that have done it have been like, ⁓ well shit. Yeah. So ⁓ it's been just incredibly helpful on that front.
speaker-0: Even a a company like us benefits from looking in the mirror ⁓ now and then, right? Yeah.
speaker-2: Yeah. Everybody does. I we all I've like I benefit from looking in the mirror and I'm like, ooh, gotta have more water today. Yeah. So I right, like we need to just do that more. I think one thing that I have found is and we do this as assessors ⁓ when looking trying to figure out just how well aligned the company is around their direction they're going and where maybe the gaps are because that is a huge that's gonna stop your maturity. just immediately is just to actually spend time either whether it's on the shop floor or in the field confirming. Did do your people actually know what you're trying to achieve with your with prefab, with industrialized construction, with setting up a manufacturing facility? Do they actually, what do they think about the why behind it? Can they tell you? Do they understand the why? And is it connected actually with what your s most senior leadership would say. And if those two things are disconnected, and they often are, ⁓ that's a pretty good indicator of sort of where you are in your maturity as well.
speaker-0: Right. Well if if listeners could take let's say just one thing with them today, what what what would you want them to take away and and remember from this conversation?
speaker-1: Understand the work at a much deeper level than you do now. If you really learn your work, then it'll reward you.
speaker-2: It's great one. I think if you're if you are planning anything, whether it's a prefab project, a job, a whatever, and you are planning it the same way you would have when you were in the field, it's not going to deliver what you want. It is a foundationally different way of planning work. And that's what I'm most focused on right now is we have to rethink how we're planning these things. It's it's not just changing the means and methods of how it comes together. But actually how we plan it.
speaker-0: Love it. Love both of those. And I'll quietly steal both of those for our next team meeting. And for anyone who wants to go deeper ⁓ into this subject, right, I think we can safely say that was a fantastic conversation. Thank you guys so, so much. Where where can people learn more about ICG?
speaker-2: You can learn more about us at on our website www dot icg.build. Check us out on LinkedIn. Call us, email us. Those were the the main places to go. But ⁓ we would love to talk to people. We love talking about this. ⁓ we're just so passionate about driving change in this industry. And we learn so much from conversations like this and interactions with everyone we talk to. So
speaker-0: Perfect. Go check them out. Melissa and Nick. This has been fantastic and a fantastic conversation. I really appreciate you too. And I appreciate ICG. ⁓ thanks for helping us at Build Forward. And thanks for listening, everybody else. And thanks from all of us at Clark Pacific as well. Until next time.
speaker-2: Thanks, Tan. This was fun.
speaker-1: Thank you.
