Subscribe
PLANT

Staying close to the customers

Making moveable, reusable interior walls is DIRTT Environmental Solutions’ core business but the Calgary firm is also turning conventional manufacturing wisdom on its head.


January 14, 2011
by Nordahl Flakstad

Doing it right the first time at one of DIRTT’s plants.

Photo: DIRTT

Making moveable, reusable interior walls is DIRTT Environmental Solutions’ core business but the Calgary firm is also turning conventional manufacturing wisdom on its head.

DIRTT’s customized modular, floor-to-ceiling walls for commercial buildings employ a series of standardized components that fashion potentially infinite varieties of wall-related solutions to meet specific customer needs.

Many manufacturers centralize operations to capture economies of scale thought to be available through repeatability and batch production. In many ways, DIRTT is headed in the opposite direction.

With a name derived from the slogan “Doing it right this time,” it began production at two Calgary locations in 2005. In 2009, the widely held private company set up an 82,000 square-foot wall-manufacturing facility in Savannah, Ga. Now, it’s looking for an additional US location in California or Arizona.

DIRTT’s aim is to have production pods within 500 miles of all its major North American markets. Such distributed manufacturing makes sense, says CFO Scott Jenkins. He notes weighty wood, glass and aluminum components are fairly generic and readily accessible continent-wide from local suppliers. So, with relatively heavy inputs and finished products, proximity to sourcing and markets is a definite advantage.

This manufacturing version of the 100-mile diet, now popular in culinary circles, underlines DIRTT’s commitment to sustainability, which aligns with the environmental vision of company founder Mogens Smed. He led modular-furniture maker SMED International until its sale to US-based Haworth Inc., then he headed Evans Consoles Inc., another Calgary firm that produces control-room furnishings for power plants, pipelines and similar operations. Combining his manufacturing background with a growing interest in smart technology, Smed became DIRTT’s founder and CEO.

The company’s success is closely linked to ICE, a 3D proprietary software that wraps smart design, production and marketing into one tool. And it’s licensed through ICE Edge Business Solutions, a DIRTT subsidiary formed in 2007, which now has development offices in Calgary and Salt Lake City, Utah.

DIRTT co-founder Mark Greffen worked with SMED International and came to Smed’s new company with credentials in engineering, manufacturing operations and systems integration. He was very involved in developing ICE, which he describes as “a true front-to-back configuration in a single-solutions set (for manufacturing)” that’s licensed to a number of third parties, including furniture manufacturers and data-centre designers. Licensing in Europe and Asia is also under consideration.

Jenkins describes ICE as tool for clients and an internal tool for project management and manufacturing operations.

“ICE has been pivotal for our growth” he says. “For customized manufacturing, you need to be reliant on technology. We need to embrace it – we can’t do it the old way.”

Configuring solutions
ICE is not designed to supplant existing off-the-shelf software used by architects and other designers, but as an adjunct to existing tools, such as AutoCAD. In conjunction with those systems, the software  provides full 3D functionality, pricing, estimates, parts lists and shop drawings. Not only does it supply clients with 3D renderings of what DIRTT walls will look like in a client’s premises, the data also feeds directly into shop-floor CNC machines.

“We wanted to arm our sales force and distribution partners with a tool that would allow them to configure solutions that did not require any value added work after it left them. ICE is a powerful tool set that’s easy to use and makes the specification and engineering invisible to the user,” says Greffen.

Increased computing power, even on laptops, turns ICE into a powerful front-end sales tool. Even without it being loaded on computers, customers can access online, virtual renderings showing how DIRTT walls might fit into their space.

While the distributed production is important, using ICE as a common denominator allows DIRTT plants to run as one integrated operation with production of specific components spread among them. Multiple sourcing for a single order helps the company meet tight customer timelines.

The program allows for seamless and immediate updating and integration of any changes. All this results in a very low deficiency rate, which DIRTT now places at 0.5%, termed by Jenkins as “extremely low” for the industry. That means reduced waste and an enhanced commitment to sustainability.

The company operates within 130,000 square feet at two Calgary locations, an area barely one seventh of SMED’s space. Apart from small 1,350 to 1,500 square-foot showrooms in New York, Chicago and Calgary, DIRTT does not have its own sales space, relying instead on 109 distribution partners (including large furniture sellers) in major North American centres.

Though not complacent, DIRTT sees itself enjoying a measure of insulation from offshore competition. That’s partly because it produces a customized rather than commoditized product. Furthermore, through distributed manufacturing, ICE delivers turnaround simply unattainable from overseas sources.

Environmental commitment extends to using only water-soluble resins and UV-curing for panels. The Calgary plant has the largest solar array and largest windmill of any commercial operation in the city. To transport product, DIRTT has developed a unique reusable, hydrate-plastic packaging called the “Cookie.” It not only protects shipments, it also permits loading a fifth more product onto trucks.

DIRTT insists that sustainability complement – not hinder – economic performance.

“You can get people all misty-eyed about being green,” concedes Jenkins, “but at the end of the day the green that really matters is money. We have a product that is sustainable but if you can’t compete against traditional products in terms of price and design quality, then it doesn’t matter.”

DIRTT’s systems proved competitive for British Columbia Ferries Inc. (BCFI), which recently moved into new corporate headquarters in Victoria. BCFI corporate services manager Fran Hobbis, project manger for the relocation, lauds the company’s moveable wall system.

“We’re a very dynamic, change-oriented organization and wanted the flexibility of the moveable walls. We have a fairly high churn rate in terms of building more offices and bringing in more people. We wanted to do that cost-effectively and embrace LEED (Leadership in Energy and Environmental Design) principles. This is a huge way to act in an environmentally responsible way.”

DIRTT’s sustainability commitment extends to Spider Agile Technology, a firm based in Kelowna, BC and acquired in 2008. Its modular electric-power products can be integrated into the walls.

From a start-up staff of 12, DIRTT and its subsidiaries now employ 550, and the company’s success has led to awards. For instance, within a year of start-up, it received an Excellence in Partnership Award for Green Industry Contractors from the US Government. And the Ernest C. Manning Awards Foundation recognized Geoff Gosling, a primary inventor of the DIRTT wall system.

Success has caught the eye of competitors too and spurred DIRTT to stay ahead. With that in mind, the product development team recently expanded by 20%. Within DIRTT and its subsidiaries, more than 10% of employees are engaged in R&D and software development.

Revenues have grown from $20 million in 2006 to more than $100 million, although the pace of sales increases did slip a bit this year. That’s not entirely surprising considering much construction under way when the recession struck in 2008 was only completed (including inside walls) in 2009 – to be followed by construction pullbacks in 2010. With an order backlog triple that of 2009, Jenkins confidently predicts significant growth for 2011 and 2012.

He traces that projected growth to “people recognizing the power of sustainable design, modularity and that bad times, if anything, have probably refocused the importance of flexibility in the workplace.”

The recession, it appears, has not driven DIRTT up the wall.

Nordahl Flakstad is an Edmonton-based freelance writer. Contact him at nordahl@flakstad.edmonton.ab.ca