Vision To be a North American housing solutions provider recognized for sustainability and for leading a revolution in housing industrialization.

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2 Vision To be a North American housing solutions provider recognized for sustainability and for leading a revolution in housing industrialization. We use a revolutionary panelized construction system. Simple and sophisticated designs are manufactured using basic building components in a central, state of the art, manufacturing facility and assembled on site in one or two days. Panelized homes look just like traditional stick-built homes but with superior materials and quality. We can build between 4 and 5 residential homes per day or one every 3 hours. We abolished traditional stick framing in Edmonton, Alberta. Last year we built 750 homes. We are the undisputed leader in both product development and production volume in North America.

3 It wasn t always this way. Back in the 2 nd quarter of 2012 We couldn t increase our throughput to meet customer demand. Efforts to increase throughput were disproportionately high when compared to the incremental output. Results were inconsistent and unpredictable. In June 2012, our customers decide to revert back to stick framing for a major project in Fort Saskatchewan due to our failure to meet their production needs. Why? We couldn t quantify our manufacturing capacity and were chronically overbooked as customer demand created a push system throughout our entire manufacturing process. We didn t have a common unit of measure in the plant so we could not effectively practice the Theory of Constraints. Erratic stop/start among stations in sequential operations destroyed productivity and created frustration among employees. We didn t have the takt time established for each product line or the plant as a whole. This led to a severe disconnect between product lines and between plant manufacturing and field operations.

4 1. Changed our culture 2. Simplified our business 3. Drove decisions down

5 1. Change your culture

6 How do you make the cultural shift from a wasteful, inefficient, fragmented, unpredictable business to a cost conscious, efficient, coordinated, world-class manufacturing organization? Simple.

7 Hire a squirrel.

8 General Manager HR Manager Assistant General Manager Financial Controller Production Manager Materials Manager Logistics Manager

9 2. Simplify your business Simplify and standardize your business around your basic commodities with simple, relevant units of measure.

10 Our customer sold and ordered homes. That was their unit of measure. Is this a customer order for 4 buildings or 9 homes and why is that important? Three townhouses will consume 74% of daily plant manufacturing capacity. Three estate homes will consume 146% of daily plant manufacturing capacity. We couldn t quantify our customer s orders, using conventional units of measure, in a way that allowed us to effectively manage our manufacturing facility.

11 The confusion continued internally. Wall systems were measured in a number of different ways such as the number of individual walls, multi-walls, panels, lineal feet, and square feet. Floor systems were measured in panels. Panels can vary significantly in size. Roofs systems were measured in complete units. Each unit can vary significantly in both size and complexity.

12 We broke the business down into 3 main product lines, which became Business Centres, with one common unit of measure our manufacturing language. 1. Floors 1,650 sq. ft. 2. Walls 3,759 sq. ft. 3. Roofs 1,250 sq. ft. Floor Systems Panels SQUARE FEET Wall Systems Lineal Feet SQUARE FEET Roof Systems Full Roof Units SQUARE FEET

13 3. Drive decisions down Drive decisions to the lowest level in the organization and make the lowest level competent.

14 + + = 4 units 4 units = 14,835 sq. ft. Great things happen by design.

15 Let s talk turkey 1. Broke down all customer models into basic product lines (floor, wall, and roof systems) and converted each product line into square feet per model. Manufacturing language established. 2. Production data collected at each product line. Trend charts created. Information posted. Crew Leaders educated. Metrics established. 3. Floor line was the bottleneck in the plant so plant capacity was established based on historical floor line run rate (580 sq. ft. per hour X 8 hours = 4,640 sq. ft.). Plant capacity established. 4. Customer orders were booked, regardless of model, not to exceed 4,640 sq. ft. of floor product per day. Push system eliminated. 5. Historical data confirmed that on average, and regardless of mix, 2.4 sq. ft. of wall product was required for every 1 sq. ft. of floor product. Therefore, wall line productivity target was set at 1,392 sq. ft. per hour (580 sq. ft. per hour X 2.4 = 1,392 sq. ft. per hour). Floor line and wall line synchronized. 6. With the floor and wall line synchronized and the pace for the plant running consistently at approximately 3.2 homes per day, field operations received a coordinated and steady supply of floor and wall product at the right time for each home. As a result, field operations efficiency improved dramatically. Pull system established. 7. An 8 hour inventory buffer was created, monitored, and managed by each Crew Leader in the plant. This buffer allowed the plant product lines to run at the field consumption rate. Hours of work were adjusted to maintain buffer but line speed target remained unchanged. Takt time established.

16 The Drive to 85 The end of stick built homes in Edmonton Customer decision to start a stick framing operation in Fort Saskatchewan % increase in throughput JAN 2012 FEB MAR APR MAY JUN JUL AUG SEP OCT NOV JAN 2013 FEB MAR APR MAY JUN JUL 300 Labour Hours per Unit Units per Month Linear (Units per Month) 38% increase in productivity

17 True business transformation requires deep cultural change. Deep cultural change is a slow, difficult process at best. If you need to increase the speed of change, don t reinvent the wheel. Hire a squirrel. Numbers are simply a means of communication. The unit of measure is what makes the number meaningful and relevant. It is the basis for our manufacturing language. Everything that we produced had be to translated into the one common language understood by all employees. Transforming a business will affect, and there must involve, all employees in a meaningful, relevant way.