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July 28, 2020

Changing Typologies and Construction Innovations in Housing

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Rick Holliday
Rick Holliday | CEO, Co-Founder, Factory OS
Janet Stephenson
Janet Stephenson | Head of Building Platform Sales, Katerra
Lucio Soibelman
Lucio Soibelman | Chair, USC Astani Dept of Civil and Environmental Engineering
Mary Lynne Boorn | Associate Professor, USC Sol Price School of Public Policy

Rick Holliday, Janet Stephenson, and Lucio Soibelman join host Mary Lynne Born in a discussion on changing typologies and construction innovation in housing. The panel brings experience and insight on shipping constraints, misconceptions of manufactured housing, education for builders and stakeholders, and how construction technology will aid human laborers, not replace them. For further reference, innovators involved in homelessness mentioned during the discussion include Pallette, Seattle's The Block Project, and Mary's Place at Amazon HQ.

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Please note this automated transcription may contain errors.

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Mary Lynne Boorn:  it is my pleasure to introduce our panel today, the latest in our Lusk Perspectives.

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Mary Lynne Boorn: Today our topic is changing topology and construction innovation and housing.

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Mary Lynne Boorn: I am Mary Lynne Boorn and I'm stepping in for Richard Green who cannot be with us today. I have a wonderful group of speakers here today.

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Mary Lynne Boorn: We have Rick holiday, who is the CEO and Co-Founder of factory OS, which is a multi family modular building manufacturer

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Mary Lynne Boorn: We have Janet Stephenson, who is the head of the building platform sales for the global leader Katerra construction firm and then we have USC's very own Lucio Soibelman.

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Mary Lynne Boorn: Who is the Viterbi Dean's professor and the Department Chair of the USC astronomy, Department of Civil environmental engineering. So clearly, a wonderful group of folks today to address the various questions we have about what is happening in

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Mary Lynne Boorn: multifamily and housing construction. What are some of the innovations that are coming on board.

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Mary Lynne Boorn: A lot of it is happening kind of in this prefab you fabricated manufactured aspects. And so I think I'm going to go ahead and kick it off with you, Rick.

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Mary Lynne Boorn: Because you have such an interesting story. You were a developer and you are a quote unquote client before you went into the actual manufacturing side of things. So

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Mary Lynne Boorn: I'd love if you could talk to us about that first and just share with us a little bit more about kind of how your latest venture and how you and your partner came to decide to start this business.

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Rick Holliday: Sure. Well, it's nice to join this illustrious group like I've spoken at UC Berkeley Fisher center and and according to my cell and Calla for for new friends is a major upgrade.

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Mary Lynne Boorn: There you go.

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Rick Holliday: So it's, it's nice to it to be able to catch up with folks from Southern California.

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Rick Holliday: Many people in Southern California may know Lake Tahoe. It's a popular area and I had a large project up there.

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Rick Holliday: In 2015 that I got a million square feet approved for and I said to my partner. I don't think we'll ever be able to build anything remotely affordable or for the workforce. If we don't find a way to build it somewhere else and bring it up to trucking

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Rick Holliday: And the modular manufacturing business had been a fairly logical choice for for communities like this where you have shortened building season and constrained labor markets.

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Rick Holliday: So I thought we would be a customer of our company, we would chose company and Sacramento name is Eva and decided we would try to

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Rick Holliday: Pilot Project in San Francisco about 130 apartments and 20 1516 and the good news is we save time and money and learned a lot about the whole business of our site building

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Rick Holliday: The bad news is a that didn't have enough capital or deep enough management structure or a large enough facility.

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Rick Holliday: To actually sustain itself. And they went out of business one job after and that led to some people, encouraging me for us to start on factory.

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Rick Holliday: Which I did in 2017 I signed a lease almost three years Saturday here in their island started production, two years ago.

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Rick Holliday: And I'm very pleased to report it is a very poignant day they're setting the units and tracking today for 77 artists affordable units. I just got photos this morning on the fourth floor. The fourth day into the set. So we're actually closing the loop today and it's already happened. So

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Mary Lynne Boorn: That's great. Well, it's a wonderful way to kind of kick us off because you really are addressing the fundamental aspects of labor shortage housing shortage affordability.

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Mary Lynne Boorn: And probably equal importance that will touch on more, I'm sure, especially with

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Mary Lynne Boorn: Janet Lucio is the issue about sustainability, too. So thanks for getting us going. So Janet, I'll turn the floor over to you a little bit

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Mary Lynne Boorn: For a moment here and we'd love to hear about just, you know, give us a couple of the highlights of what Qatar is doing, primarily in this housing space.

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Mary Lynne Boorn: What kind of products or even you know out there and kind of cutting edge. You know, where do you see the easiest adopted adoption of some of the products and maybe you know some of the challenges I know that the giant question but

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Mary Lynne Boorn: Kind of, you know,

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Mary Lynne Boorn: You know, the, the innovative products that you have, because I know you've really been at the leading edge and a really looking at this from a

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Mary Lynne Boorn: global perspective so

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Janet Stephenson: Thank you for the introduction and certainly a privilege to join this conversation and audience. So thank you for having me.

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Janet Stephenson: That's a giant question and I'll try not to hog all of the time here. And, but I think it's probably worth just

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Janet Stephenson: If you'll indulge me giving a little potted history of where Qatar is today because we're very different company today, then we are when when we began and today at koczera has been

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Janet Stephenson: Has been a frequent phrase of mine, just to kind of keep up with a constant evolution and growth of the company. So we started about five years ago and I've been with the company that's three our very first year was dedicated just purely to global supply chain of materials.

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Janet Stephenson: You know,

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Janet Stephenson: Our founders were having conversations about a couple of projects, you know, the two projects happening down the road. Oh, you must be getting a great deal on doors.

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Janet Stephenson: Probably not because they're contracted in completely separate ways, right. Oh, I'm global supply chain. We've got an answer for that.

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Janet Stephenson: Very quickly, of course, the submarket became the barrier because of the relationships with the subs and material.

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Janet Stephenson: And this is what I love about Qatar, in terms of problem solving, which is what if that's the case, clearly, we just have to become our entire general contractor and own the full system from design through material specification global supply chain manufacturing construction.

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Janet Stephenson: I joined when we started

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Janet Stephenson: Opening up to our first customers beyond our founding customers and we would fully dedicated to a turn key service at designing a building as a product and that is a term that we call building platforms today.

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Janet Stephenson: That was three years ago there was 700 of us today. It's over 7000 maybe 8000 I think the world over. And we have very significant operations in India and in Saudi which have a very different business model in many ways to the one and the domestic US

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Janet Stephenson: So today at Coursera, we have through acquisition of a lot of general contractors, but three major Sam. So.

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Janet Stephenson: I'm squarely within building platforms that designing out building as a product like a very high quality IKEA kids as part of that we assemble it for you as well.

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Janet Stephenson: And I'm sure many of you will be familiar with Qatar's name related to mass timber and the acronym co op for cross laminated timber, we have a factory in Spokane that's dedicated to that.

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Janet Stephenson: And so we have a full mass timber industry and you can access us in so many different ways that as a turnkey product.

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Janet Stephenson: Which is specifically around mid rise Office products and rapidly becoming as a CFP and structural hybrid opportunity for the urban markets, particularly eight to 12 stories.

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Janet Stephenson: But you can also access us from simply materials we work with other GCS we can provide design assists and materials to third party architects and developers and DCS

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Janet Stephenson: We can provide the design, you can really mix and match, within that industry. And then finally, we've got, it's just a solid core of general contracting as well across the US.

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Janet Stephenson: And our thing and you can kind of

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Mary Lynne Boorn: Relate to this IKEA kit of parts you do a similar type of product for that.

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Janet Stephenson: Very much so. So in terms of housing of it's about why we really started off focus

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Janet Stephenson: And

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Janet Stephenson: From an easiest to understand how to design as a product, we've started with the suburban markets with that three story walk up GARDEN STYLE apartment complex

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Janet Stephenson: big part of that is because we don't get the urban constraints. And so we can really understand how to design the philosophy of delivering it.

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Janet Stephenson: Up with offsite manufacturing and from there were taking that philosophy into ever evolving building technologies that that

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Janet Stephenson: Find make sure cannot be 100% designed the product and then I'll just say, you know, one of the things that

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Janet Stephenson: We do at terminology wise, we're not a modular company we're very much a kit of parts.

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Janet Stephenson: It's like a major touches challenge. You know, we don't like to ship air, but it also gives us a little bit of design flexibility that response.

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Janet Stephenson: To some of the site. Some of the Design Review guidelines, it makes sure that off site manufacturing isn't equated to the old concerns that you're just sort of bashing out because he cuts a poor quality.

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Janet Stephenson: Product, which is not what we're about.

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Mary Lynne Boorn: Well, that was very helpful overview and an introduction.

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Mary Lynne Boorn: I'm going to switch gears here to Lucy for a brief moment and then I had somebody to read question. So we'll, we'll kind of get back to

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Mary Lynne Boorn: I want to talk a bit more about kind of supply chain and and other aspects to but Lucio

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Mary Lynne Boorn: You know, I know you're super active in terms of the industry and the cutting edge of research and so as we're just kind of introducing this topic to our audience.

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Mary Lynne Boorn: What are you see you talked about, you know, your beginning in in construction and development and you're ever excited hope that we would get to this point where there would be more kind of prefabricated

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Mary Lynne Boorn: More technology used in the manufacturing process. And so can you talk a little bit about kind of the more recent adoption to this new technological advancement in construction and some of the products and things that you're most excited about right now.

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Lucio Soibelman: So I think the party says here that I would like to present is that we are in an inflection point

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Lucio Soibelman: We've been talking about pre fabrication modular ization for many, many years, and

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Lucio Soibelman: Some success, a smaller success and some failures, but I think that this is the moment that things are really, really change.

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Lucio Soibelman: And their part. This is here is that we're moving from a data poor environment for a very data rich environment when you talk about modeling. You talk about digital twins. They talk about being all these is empowering us to rethink the industry in a different way.

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Lucio Soibelman: In 1990 I got a fellowship from the Japanese government. I went to study in Japan with the large construction companies in Japan Jima by action. She needs.

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Lucio Soibelman: And they are deploying robotics, for example, they are trying very, very ahead of everyone in the curve there were developing several types of Roberts.

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Lucio Soibelman: And they failed the film making 90 exactly because you had to progress the Rob, but you have to start from scratch.

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Lucio Soibelman: Teaching the Robert. Where is the wall. How to Build a wall. What are the wall characteristic now all his information. It's available in 3D model in a beam in the digital twin and you can feed those Roberts and you can feed the machine for fabrication in a pre fabrication model.

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Lucio Soibelman: In 3D printing that it's coming to construction. All those things are coming, not because the technology today is better than the past

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Lucio Soibelman: But because the information is available data is available. Those models are readily available and you can just feed your Roberts your machine.

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Lucio Soibelman: With those models and start publication. So I think that is the point that everything is changing and allowing us to rethink the industry in a much very rich environment where you have data and information.

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Mary Lynne Boorn: Well, thank you for that. So Rick, I wanted to switch back a little bit to the conversation.

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Mary Lynne Boorn: With you and I think, Janet.

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Mary Lynne Boorn: might also have some interesting insights to add as well. But one of the things that came up in our earlier conversation was the issue of constraints for

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Mary Lynne Boorn: The factory in the manufacturing and how far you can kind of go before you start eating into your cost savings with transporting materials. And so I know you know you're very focused on Northern California.

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Mary Lynne Boorn: But clearly that issue of moving this kit of parts to various locations is a challenge. So if you can talk a little bit about what your experience has been with that Rick and then

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Mary Lynne Boorn: Janet, maybe you can talk about how he deals with that kind of on a bigger scale. So Rick, if you can start us

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Rick Holliday: So to the Truckee project. This is a case in point. That's about a three hour drive from the Bay Area from Vallejo, and we sent 77 units up the hill to that site about 10 days ago.

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Rick Holliday: They started setting last Wednesday and there'll be done with the setting of the the first building probably tomorrow and so

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Rick Holliday: We, we can ship air which is less efficient. I would agree percent certain challenges, but one of the benefits is was

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Rick Holliday: We're shipping a fully formed finished room down the toilet paper been done. So there's very little off site labor need. We're just going to scan roof and landscape, said the three hour trip costs about $1,000 per unit

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Rick Holliday: Maybe 1500 we haven't got the exact numbers. We haven't got all the bills in to go to Southern California. Conversely,

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Rick Holliday: It's about an eight or 10 hour trip would add about 1000 or 1500 more dollars per unit

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Rick Holliday: What we've learned from the companies that are in Idaho, which have really been supplying a lot of the Western United States LA and Northern California is they can send things 12 hours. So that's been happening. The cost is around $5,000

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Rick Holliday: So I think you got to have the savings in your overall budget to start off saying transportation costs, but you're saving 20 30% of the overall construction saving so much with the the transport is not unimportant, but it's doable.

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Mary Lynne Boorn: Have you found that to be the case as well in terms of your distribution system.

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Janet Stephenson: Yes, absolutely. And, and I can't rap last this specific metrics that cost but I

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Janet Stephenson: Read very much have

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Janet Stephenson: A mapping of not just adults or of transportation freight costs, but also labor costs. And so where a certain product, the most value is not just in the freight, but it's in the labor pool and then there's also the baseline cost of the product.

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Janet Stephenson: So for example in California, you've got a in Frost first factory and Tracy, California. We've got highlighted, we've got the proximate

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Janet Stephenson: Distribution. We've also got some seismic issues and some high title 24 performance code. So there's a there's a complete delta of all the things that need to be the baseline of the product that start to make the value proposition happen.

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Janet Stephenson: In Texas, for example, the labor is extremely low. So even with a tree in Texas, we really have to take a look at where the value proposition is for certain products.

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Janet Stephenson: So it's a market by market.

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Mary Lynne Boorn: Kind of product by product, if you will.

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Janet Stephenson: It can be, you know, you've got the same product and that chips to Nevada, which isn't about other but and Barbara has very different sort of codes and other things that we need to sort of plan for as well. So it all comes together in a bit of a algorithmic past him.

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Mary Lynne Boorn: To do you see that potentially

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Mary Lynne Boorn: Standardization of kind of products and and then almost like manufacturers, kind of like a Model T or something like that where you know you have the technology, the robotics, the systems in place.

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Mary Lynne Boorn: That then kind of I don't wanna say push out labor, but kind of encapsulate a cost within that system. And then, you know, allow savings to kind of occur in a little bit of a different kind of way. Is that a way that technology is happening.

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Lucio Soibelman: I would answer to two different ways. Okay. One, I would say that you don't even need to go all the way to fabrication. When you talk about medallia muddler ization

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Lucio Soibelman: I work with a company in South America and Latin America that they have 100 million square feet projects at the same time.

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Lucio Soibelman: And they solve this problem. For example, in bathrooms, all the bathrooms have the same distance from the toilet bowl to the sink to the shower.

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Lucio Soibelman: So the architects can design the bathroom, wherever they want but all the distances from the

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Lucio Soibelman: Bathroom equipment are the same. So every bathroom is a key with the plumber comes everything quicker than be always assembled. They don't have to look at blueprints. They are extremely fast assembling it

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Lucio Soibelman: And they do millions of those bathrooms every day all over the Latin America and they're extremely efficient doing the soap even that you can bring some of those concepts to the construction side. You don't have to do everything upside

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Lucio Soibelman: So it's just the philosophy of of optimizing the design and bringing how you're going to build and assemble those things in a much smarter way. This is the first part of the question. The second about robotics.

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Lucio Soibelman: It's it's happening now, a lot of robotic solution coming to construction even bricklayers like the sound, but not they are not replacing they are just replacing the

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Lucio Soibelman: Back breaking job from bricklayer so they can work for a much longer live Spence or bricklayers can't retire young because physically, they cannot

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Lucio Soibelman: Survive. So when they are bringing robotics. Now, they still need the bricklayer, but all the heavy lifting a job. It's been done by the robots and saving the life and the health of

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Lucio Soibelman: Make keeping them healthy and working for a much longer span. So I think that a lot of things happening at the same time today and it's been a very exciting time in this industry.

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Mary Lynne Boorn: And Rick, that brings us to an interesting point, you and your partner made a very specific decision to go with a union all union shop.

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Mary Lynne Boorn: So if you talk a little bit about that and you know how that's impacted your business model, you know, both to the good and maybe some challenges in there as well.

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Mary Lynne Boorn: As you know, labor dealing addressing with labor shortages and training and all those and some wonderful just economic development that you're doing.

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Rick Holliday: Yeah, that was a big decision we made we four years ago, we felt that we were going to be supplying

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Rick Holliday: Affordable housing projects in the Bay Area and people that have worked with different government programs know there's all kinds of being

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Rick Holliday: imprints that require. And so we wanted to focus heavily on getting the cost of affordable housing less expensive.

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Rick Holliday: We needed to probably make some kind of arrangement with unions kind of incorporated as you need to be receptive when sat down.

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Rick Holliday: Made an agreement for five years and it's been a great agreement for us, they they recruited workers and train workers. So it really cut down on our HR nice early

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Rick Holliday: Because we hired our first worker in April of 18 which is about two years, four months ago, we have almost 400 workers out here today.

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Rick Holliday: And we've had to hire 600 to get the 400 we have so you don't necessarily get all of the workers, you're going to keep in the kind of labor market. We've been I think that on the issue of automation and many people think of labor unions would be somewhat

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Rick Holliday: Skeptical or hostile to automation. And for those of you in Southern California aren't aware, we've had a relationship with Autodesk 18 months now.

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Rick Holliday: And just last week they invested more money in our factory. They are our largest investor today and they're very committed to robotics and using

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Rick Holliday: Some tools like with me mentioned about bricklaying to prolong workers experience and make them more productive, so they can be paid more.

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Rick Holliday: So our workers are working with Autodesk engineers on companion robots to help them work more efficiently and quickly like the brick later and are excited about it and I don't think automation has to be a

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Rick Holliday: Problem for unions, when we have three and a half million apartments that we need to build in California that aren't built. So, so far, we've had a had a good start with getting the unions to engage in the future, and most importantly to embrace technology and and and see it as a positive

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Mary Lynne Boorn: Jim, it has there been kind of you obviously you're dealing with a lot of different labor force, both at your manufacturing plants and then on site as well.

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Mary Lynne Boorn: Can you talk a little bit about kind of how you juggle between the labor in the different markets and how you how that works in terms of training, you know, if I think about like that. IKEA kit.

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Mary Lynne Boorn: That I'm working on and others. But, you know, clearly, you're

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Mary Lynne Boorn: Bringing in different kinds of technologies and what a lot of groups may be traditionally used to working with too so

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Janet Stephenson: Yeah, absolutely. And you know, I want to reinforce an echo

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Janet Stephenson: What Rick was saying at not because kotaro came out of the gate with a smart strategy on engaging the Union, but that we were very much looking at that idea of

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Janet Stephenson: Taking away some of the repetitive work and creating a longer pipeline of high quality, you know, potential work. So it's more about the you know the constant volume rather than the one off project and just a shift in mentality there and

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Janet Stephenson: Today, it could terror, we have

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Janet Stephenson: Our own sub so that performs self, the form works for our product and so

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Janet Stephenson: We have a general contracting arm that. So for example, in the West. It's Tara West and we have Qatari east, but for Tara west. We have a strong relationship.

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Janet Stephenson: Internally, which is something that nobody really needs to know about. But this is part of our means and methods. And so we have a group that focuses on how our kits go together. And so we can bring those teams to the project.

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Janet Stephenson: With a solid understanding and an efficiency of how it operates on site, there's a strong

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Janet Stephenson: Approach to construct stability in terms of, you will see a slightly different construction sequencing on the site in order to get the greatest efficiency, but we can also moderate that based on people's interest in the set number of units that they want to turn over to given month

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Janet Stephenson: You know, to set certain products building project type and interestingly today at tutera

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Janet Stephenson: Because we have this solid general contracting arm and because of the mass tend to businesses. Well, we've got a lot of opportunity, you know, while that is very much self performing

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Janet Stephenson: And non union that particular component of our work and in other spokes of work we can engage with union labor as well.

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Janet Stephenson: So that

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Janet Stephenson: There's a, there's a lot of different opportunities there to connect

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Mary Lynne Boorn: We had talked a little bit earlier about, you know, with the biggest challenges in California and some of these markets is you know obviously supply and and meeting that meeting that demand. But, you know, big part of it is that entitlement process. Some of its the design.

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Mary Lynne Boorn: You know I know Rick you're working on a couple projects in Los Angeles and other places. Do you find that using this type of construction system speeds up this development process and speeds up the entitlement, or is there. Is it harder to kind of measure that and see the results.

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Rick Holliday: I think it's interesting, it's speeding it up.

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Rick Holliday: And you wouldn't necessarily think that would be the case, but what we're finding is a lot of planning officials and housing officials that are really desperate.

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Rick Holliday: To get greater efficiencies and affordable housing programs have come to visit us.

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Rick Holliday: And one of the first things that were able to do is get them over the worries that the buildings aren't attracted. We have some buildings are finished, people can see them.

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Rick Holliday: And they're basically urban apartment buildings that are no different than cycle where people can also see that we can do it more efficiently and quickly.

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Rick Holliday: They then asked, Hey, how do we get tracker EOS to build in Napa. For example, which is a neighbor of our Vallejo factor that's kind of a high end summer.

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Rick Holliday: And we say, well, you know, you're building official problems have come down here and get familiar

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Rick Holliday: With how the State is responsible for inspecting the units and you building official responsible for everything that's not

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Rick Holliday: And they will send somebody if they want us to be available to their city and and then start working with us around potential planning impediments

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Rick Holliday: And so that's what happened with Los Angeles. They came and said we have 1.2 billion that we've earmarked for supportive housing when I can productivity, how can we work with the and we said, well, if you tell the three nonprofit clients of yours to adopt a standardized work plan.

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Rick Holliday: And to work in a more systematic fashion, rather than hiring six architects for six different jobs. Why don't you try to get one to do a

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Rick Holliday: In a more repetitive unit.

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Rick Holliday: And they were so the city was engaged and pushing that

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Rick Holliday: Now if I went to after 10 or Palo Alto and said, I'd like to drop 100 units of back realness housing in your in your community.

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Rick Holliday: In some cases, people would would would default to all the things that worry about with the industry and we probably would have some friction

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Rick Holliday: But we're finding there's enough interest in what we're doing that we get people with come here and we try to educate them on how they can best adapt to the local practices. So we can serve them.

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Mary Lynne Boorn: So it's more of a education process and having a quote unquote motivated buyer. It sounds like

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Mary Lynne Boorn: A big show. It's not so much that the technology itself is easing the process, but that the the buyer, whether it's, you know, the public groups or housing developers affordable housing are in need of this. And so they make accommodated.

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Rick Holliday: And we have a really first raid ambassador in our company. Some of you in Southern California mango Carol Galante

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Rick Holliday: You serve President Obama for eight years as the FHA, Commissioner, and she has a deep estrogen and affordable housing and she's been teaching account for last three, four years.

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Rick Holliday: Carol is very low or Gordon is there is part of our team and reaching out to communities that have a time or if communities are curious, which is happening a lot. She will set up webinars like this with different

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Rick Holliday: Local Planning Organization. So what we're doing.

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Yeah.

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Mary Lynne Boorn: Lucy. I'm curious because you're obviously dealing with people in Mexico and other groups. Have you found that

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Mary Lynne Boorn: You know, kind of this type of product is having the same kind of impact other places as well as far as

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Mary Lynne Boorn: You know adoption and moving it through approvals, you know, because it's a little bit more standardized and and maybe there's that again that desire for we've got to meet a market demand quickly.

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Lucio Soibelman: I would say that it's easier than the US.

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Lucio Soibelman: The US will have to evolve the way that you approve projects and the way that we certify projects.

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Lucio Soibelman: When you go to Latin America, the certification is done by whoever is the responsible engineer for the project.

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Lucio Soibelman: The CD you approve the design, but the construction. It's done by the engineer, so you you pay a fee and you're responsible if something goes wrong. You're sued, but the CV.

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Lucio Soibelman: Trust that the engineers that are certified in our professional engineers, they know what they're doing and they don't have to be seen.

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Lucio Soibelman: By someone from the CV step by step with what they're doing. So obviously, that it's something that the US it's going to have to evolve to and you start moving from decide to

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Lucio Soibelman: Fabrication and last and CDs going to send their inspectors for every assembly plant in the US. And if you're

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Lucio Soibelman: In Southern California. They're going to have to travel Northern California to see the construction process. So they have to trust and they have to know that those companies have

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Lucio Soibelman: engineers that are professional engineers that can sign what they're doing and they are responsible if something goes wrong, they take the responsibility. So I'd say that US has to evolve like Latin America to be able to

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Lucio Soibelman: Accept those technologies in the user way.

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Mary Lynne Boorn: Dan it, you're gonna mention something as well.

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Janet Stephenson: You know, I think the the point about education and mindset is just such an important part of aligning companies like factory Alaska and Qatar and others with partners, you know, on one level, we

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Janet Stephenson: Talk to your last Qatar what very hard to make sure that the clients experience is seamless, but at the same time, when you're creating a change delivery, there's a there's a fabulous partnership with people who understand the awesome thing about the process that all going to be different.

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Janet Stephenson: And so a lot of what I've done early on in partnering with clients is sort of determining the alignment of mindset, so that we are both able to be successful together.

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Janet Stephenson: And so given the audience. I just thought I would give a little call out and a plug for an invitation to everyone to to be curious and open your mind a little bit and be partners with us as we create the opportunity for this to be a very systematic and a usual way of building

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Mary Lynne Boorn: Thank you. So, we

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Janet Stephenson: Have been out there.

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Mary Lynne Boorn: And again to our audience, please feel free to type into the Q AMP. A. I have a couple of more questions. I want to throw it to our panelists. But, um, but I wanted to address James Taurus. He had a question.

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Mary Lynne Boorn: He said, I have a great interest in creating factory built extremely affordable housing for the homeless.

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Mary Lynne Boorn: Has the panel seen anyone in North America or Europe currently addressing the homeless population using cutting edge housing technology. And then, if not, what can we do moving forward to address this issue in North America, South America and Europe so

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Mary Lynne Boorn: I'm going to leave that open to I panel. I don't want to, you know, kind of direct it to anybody in particular at this point. So, do any of you have any kind of thoughts or experience in terms of, you know, kind of this factory built housing for the extremely affordable piece of it.

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Janet Stephenson: Yes. Yeah, I can. I can give a couple of anecdotes. This is very Pacific Northwest centric at the moment.

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Janet Stephenson: But it's an interesting aspect because it's also what stage of homelessness and what kind of solution. Are you trying to achieve. And so there's a company called palette.

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Janet Stephenson: That are doing some light structures that are about sort of a more immediate ability to get shelter.

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Janet Stephenson: So I would that palette. I would definitely Google then and then there's a just a darling outfit here called the block project, which is the project.

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Janet Stephenson: Are facing homelessness and they are very small. I mean, all of these is a smaller scale. And I think this is the other challenge is to get getting to a scale level of solution as well.

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Janet Stephenson: But the block project is basically saying, look, there are enough backyard in Seattle, that every entire block if they have if they have one homeless person. The homelessness would go away and if

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Janet Stephenson: They, they are now moving to it's a it's a certified by the Living Building Institute, so that

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Janet Stephenson: Rewarding.

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Janet Stephenson: Homeless with the dignity of a shelter with healthy materials and and solar energy

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Janet Stephenson: And and it is starting to be factory built and delivered on site, which is accelerating the ability to deliver that there's one other component there as well. And they require all the neighbors.

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Janet Stephenson: To the person who wants to have a backyard cottage to go around and make sure that all of the neighbors on that block. And in that community.

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Janet Stephenson: Engaged with the solution so that when that person comes to that backyard. They are welcomed by the community and it's it's a full

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Janet Stephenson: Experience of missing and the integration of homelessness. The idea of that is for it to be a year to two years division to get somebody on their feet and often running into the into the mainstream world.

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Mary Lynne Boorn: Anyone else have experienced with that I know Rick, you talked about kind of this housing project in Los Angeles. Have you been approached by any of the kind of more to the extremely homeless affordable and addressing the homeless.

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Rick Holliday: Philly. The project that's on the line today that I'm watching it out there is for 833 via for a group called Mercy housing and San Francisco.

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Rick Holliday: That worked with a very innovative private sector group called tipping point. They looked at the, the process of getting homeless units built in the city. And it was a five year

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Rick Holliday: Entitlement. And it was getting as close to $800,000 a unit, which was very, very staggering and overwhelming.

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Rick Holliday: They approached Larry me two years ago when we started production and said, Can we work alongside you. As we get our entitlements and if you get your company moving the way you're doing, we'd like to basically take advantage of what you're doing.

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Rick Holliday: About a week before Koba hit they broke ground. So they were able to get through a five year process in two years.

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Rick Holliday: And according to their the folks that are responding to some media inquiries. They're all in cost is going to be under $400,000 a unit. So you take five years and 800 and you go down to two years and 400 you can see you can have the limited money go much further.

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Rick Holliday: Than it would have otherwise. And it can get deployed much faster. So we have three other jobs that are building off of that experience that are actually ordered right now.

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Mary Lynne Boorn: And

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Lucio Soibelman: I personally

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Lucio Soibelman: Just uncommon. I personally

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Lucio Soibelman: Don't think that this is a technology problem, but this is a finance problem. I think that this is a question of policy.

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Lucio Soibelman: If you get for example in Brazil. They had a problem called My, my home, my life that was invested billions of dollars in low income housing.

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Lucio Soibelman: A lot of different solutions popping up. So a lot of very smart engineers and people would present solutions when the funding. It's available for them to try those new technologies. So I think that

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Lucio Soibelman: It has to be a national policy, you have to look at this problem is a problem and try to solve it as a nation. Yeah.

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Mary Lynne Boorn: Well, and the affordability aspect of this certainly feeds into better solutions and hopefully more widespread solutions. It sounds like so.

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Mary Lynne Boorn: I'm going to pop back over to our Q AMP. A here for a little bit. So we had another question.

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Mary Lynne Boorn: About the process for vetting the feasibility of new technologies, Janet luzzi I feel like probably, but even Rick. You guys are could all answer that. So,

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Mary Lynne Boorn: The question was, do you have a formal process for vetting the feasibility of new technologies. Does anybody want to kind of jump into that. So,

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Mary Lynne Boorn: Well, I'll, I'll, I'll say

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Mary Lynne Boorn: Likely. Yeah, I just about vetting

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Mary Lynne Boorn: But at what point does kind of a

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Mary Lynne Boorn: New technology become feasible or, you know, how do you pursue them because obviously, you know, there's the issues of transporting there's the issues of scalable.

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Mary Lynne Boorn: Of it, you know, a lot of supply chain issue, which is kind of a question I was going to leave to the very end here. So maybe what makes something more feasible and kind of at what point do you reach that

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Mary Lynne Boorn: You know, moment of inflection that Lucio was mentioning, or that tipping point where it then becomes something that can be really widespread adoption.

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Lucio Soibelman: I think the first point related to this is related to performance. So in performance should be done through testing and

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Lucio Soibelman: Evaluation and this is very clear. And you know how to do this. You have sample research organizations and and national groups like nice than others, that can evaluate performance of those units and those products being developed and then they usually related to supply chain and

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Lucio Soibelman: Transportation. This is all easy to do with the economic modeling and there are several tools that can allow us to do the modeling and analysis of the performance of those systems. So I think that this is done today. I don't understand what's the big issue related to that.

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Lucio Soibelman: I don't think that any of the products that

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Lucio Soibelman: Are required development. We are not being tested by

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Lucio Soibelman: Performance today.

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Janet Stephenson: Man.

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Janet Stephenson: I can offer a little snapshot. It's not directly answering the question, because we, you know, my CTO is got a great method to doing that and

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Janet Stephenson: But I will say, you know, it goes back to the conversation about that a little bit of an algorithmic approach to which product fits in which place well and it's

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Janet Stephenson: It's, you know, for example, and what what is the value set of the clients that makes it worthwhile to them so cross laminated timber in some markets at some height.

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Janet Stephenson: can really be extraordinarily competitive. So we have just, you know, we, through analysis, we found that once you get over 75 seat if you do a structural steel and see LP hybrid system.

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Janet Stephenson: And us thinking about doing a concrete building, then we can get a really competitive conversation going. But if you're looking to have, you know, lower than that, then the opportunities to get competitive to some of the other things that are in the market just shapes down

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Janet Stephenson: So that then if the if the client is really the value that is a production of carbon.

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Janet Stephenson: Than the pricing. It's not necessarily all about the pricing of the products. It's about what the value represents to the clients and so you really have to stay open minded.

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Janet Stephenson: To what the solution might be rather than just the pure principles with economics. It's a full business model review. Yeah.

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Mary Lynne Boorn: Well that segues this wonderfully into

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Mary Lynne Boorn: The other topic of sustainability. But before we get that I'm hopefully we'll have time. I did have another question from the audience asking about

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Mary Lynne Boorn: Where could we find relevant Southern California cost comparisons for turnkey housing unit cost between modular and stick built construction. So I know Rick. You had mentioned kind of a

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Mary Lynne Boorn: You know 20% savings type of number you talked about the you know 800,000 verses 400 my guesses. It's not quite as, you know, clear cut. And, you know, obviously this is holding a side cost of land.

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Mary Lynne Boorn: Which is a big piece. It was just going to move that off to the side, but we think about kind of construction costs, particularly in Southern California. Are there some kind of rule of thumb metrics or some resources available to help our audience members. Think about that.

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Mary Lynne Boorn: And really that's for anybody.

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Rick Holliday: There's there. We haven't delivered a project to sell in California with the savings that we can demonstrate in effect. So because we're today.

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Rick Holliday: There's a reason why I started Northern California. This is the epicenter of the worst housing costs problem on the planet.

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Rick Holliday: How did it happen, primarily because we're the epicenter of the technological revolution, Google, Facebook, Apple those three companies alone admitted $5 billion dollars to try to subsidize workforce.

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Rick Holliday: And so we decided we want to engage them starting with Autodesk

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Rick Holliday: Incubator here at Intel $40 billion company. So our building is a 300,000 square foot laboratory in my opinion.

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Rick Holliday: To constantly challenge everything about how we're doing it, including weather will be shipping air down the road. We may be shifting component parts but the

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Rick Holliday: We're excited this week because I can announce it publicly now Google made an announcement Friday in the Wall Street Journal that they've invested in our company.

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Rick Holliday: And we think some of the other technology companies will as well because they're finding when they try to apply the $5 billion to the affordable housing problem. It just doesn't cover.

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Rick Holliday: And that they've got to invest some money. It's very serious about trying to drive the cost down

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Rick Holliday: So what does that mean for Southern California. I think we're maybe a year away from being able to give somebody some confidence that there's 20% savings.

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Rick Holliday: Why do I think that I think the cost of Southern California, even with the slow down are going to probably continue to rise because a labor issues and all that. And I think that we're going to get better at what we do and be better capable of meeting the needs, there

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Rick Holliday: We definitely won't be competitive in Plano, Texas or or places where labor is very, very cheap and and we don't intend to be in those markets. But if you look at the what I call the high cost driven from Seattle to San Diego.

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Rick Holliday: Will likely be very, very competitive in Northern California. Now, in terms of saving time and money for people. And I think we'll probably expand maybe in the northwest first and we'll be in Southern California. And before long.

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Rick Holliday: But I think that most people that are in this industry agree. This has been an industry that's been so under invested in innovation and creativity.

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Rick Holliday: And we have cost that don't make sense and Southern California or in the Bay Area, and I think that we can reduce radically. The cost of building a house if we

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Rick Holliday: Apply the technological partners and relentlessly challenge everything we do. We got to get it down from 800,000 in Sarasota two months. We got to get it down 75%

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Rick Holliday: In the next five years.

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Lucio Soibelman: But, uh, but I would add something that it's not just a question of label so

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Lucio Soibelman: I think that you've got will come here in Southern California. We're going to see that the quality. It's really a big problem. But the biggest issue that I see it's material waste. So, so I measured in a construction site here 70% of wasting drywall because they were just cutting and then

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Lucio Soibelman: To increase the productivity, because they were being paid by by by productivity, but not by say and not wasting material so piles and piles of ways coming out of a small house.

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Lucio Soibelman: near my house and I was there, measuring every day because it couldn't believe what I would see so

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Lucio Soibelman: I think that the numbers have to be seen a much more complex way that just looking at labor and saying labor in Texas is cheap.

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Lucio Soibelman: But you have to see the quality of the final product and the amount of waste that they're producing the process. It's a sustainability issue, but it's still a money waste to

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Rick Holliday: Do that in

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Rick Holliday: Autodesk is putting a big investment for us to basically quantify that and focus on that to your point is that we measure every, every been a waste that goes out the door here in factory.

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Rick Holliday: And to your point, we're comparing it to cycle jobs and it's amazing how much less waste, there is if you work in an environment like this with a focus on not Winston Churchill.

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Lucio Soibelman: And don't forget that the waste. It's not just a waste that it's remove it as waste from the side, but there is a lot of waste incorporated in the building by making a concrete with more salmon than you need, by making a seeker.

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Lucio Soibelman: Paints or painting with expanding. So when you see the construction noise, a lot of ways that it's incorporating the building.

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Lucio Soibelman: That is even bigger than the ways that it's removed from the building in those processes that you have control like yours, and there's all these it's completely, completely different and you can have an optimization that

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Lucio Soibelman: That saves you a lot, a lot of money.

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Mary Lynne Boorn: Janet, I would think that also kind of in your to use your IKEA analogy again but just bringing you know, creating so many of the different kit of parts off site.

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Mary Lynne Boorn: Allows you to control again for some levels of cost and waste and establish a level of, kind of, you know, efficiency and sustainability in that process.

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Janet Stephenson: Very, very much so. And both this

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Janet Stephenson: Time you know with with the building platforms that starts with design. And so we're designing products right at the very beginning to reduce the amount of materials that you need.

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Janet Stephenson: Whether it's the way that we organize the utility spine so that you can just, just by organizing the utilities. You're reducing the amount of cable that you need electrical cable, just that.

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Janet Stephenson: One of the anecdotes that I always used to love about one of our early studies is because we know exactly where the electrical boxes need to go and the difference between the metal boxes plastic boxes, depending on where they need to be.

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Janet Stephenson: Just that alone means that we can say $5,000 on it on you know project because with that, that we can be that precise.

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Janet Stephenson: So there's the design at the beginning and then there's the efficiency within the factory and you know I spent 20 years of my career advocating and working very solidly on market transformation around sustainability principles.

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Janet Stephenson: And it's not at the moment with Tara every single input is, you know, Red List ready with we're not at a level.

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Janet Stephenson: Of sustainability there that we're building the pipeline and we're creating the scale that has been challenging. So the sustainability movement for so long.

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Janet Stephenson: And so once you've got that pipeline built and you're operating at that scale of output that it really just means that you can start changing the inputs and you've gotten you're leveraging at an extraordinary level.

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Janet Stephenson: So that's one of the things that I'm particularly excited about the long term implications that the model that we're building

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Mary Lynne Boorn: Well,

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Mary Lynne Boorn: I think we're actually almost at a time.

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Mary Lynne Boorn: The hour sure flies by and I just can't thank all of you enough

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Mary Lynne Boorn: For your time. I want to pause for a moment and announce our next less perspectives. Before I send everyone on their way and thank them again, but

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Mary Lynne Boorn: So our next less perspectives will be Bonnie Walter cool. She's the global head of E F G investments. The western asset management.

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Mary Lynne Boorn: It will be on Wednesday, the 12th of August at 11am Pacific time again. So, of course, if we were all in a big room, we would be clapping and saying thank you so much.

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Mary Lynne Boorn: But I'm wonderful, thank you to Janet Rick and Lucy. Oh, it was incredibly informative really interesting and I look forward to continuing the discussion. Hopefully in person at and

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Mary Lynne Boorn: Future discussion USC event something so take care all and thank you again.

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Lucio Soibelman: Thank you for. Thank you.

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Lucio Soibelman: Thank you. Thank you. Pleasure to meet everyone. Thank you.

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Janet Stephenson: Thank you.

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