Human Resources Committee on Oct. 24th, 2024

[The Chair (Mr. Robert Morrissey (Egmont, Lib.)), Liberal, Bobby Morrissey]

I call this meeting to order.

Committee members, I invite you to take your seats. The clerk has advised me that we have a quorum and that the witness appearing virtually has been sound-tested and approved.

Welcome to meeting number 131 of the Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities. Today's meeting is taking place in a hybrid format, according to House of Commons procedures and rules, meaning that people are participating in person in the room as well as virtually.

To all of you, you have the option of choosing to participate in the official language of your choice. In the room, interpretation services are available by choosing the language of choice using the headset in front of your microphone. For those appearing virtually, click on the globe icon at the bottom of your Surface and choose the official language of your choice. If there is a breakdown in translation, please get my attention by raising your hand. We'll suspend while it is being corrected.

I'll also mention a few operational things.

Please wait until I recognize you to speak. To get my attention, please raise your hand and I will recognize you. Any members appearing in the room with devices and Surfaces, please turn off alarms or anything that may trigger a noise, because they can be picked up by the microphones and may be harmful to the translators. Also, please refrain from tapping on the microphone boom because it pops the sound.

With that, pursuant to Standing Order 108(2) and the motion adopted by the committee on Monday, June 3, 2024, the committee is continuing its study on the advancements in homebuilding technologies.

I would now like to welcome our witnesses. We have two today for the first hour. We have Andy Berube, vice-president of sales and strategic partnerships at BECC Modular Systems. Virtually, we have Mr. Stephen Smith, executive director of the Center for Building in North America.

I advise each witness that you have up to five minutes for your opening remarks.

We'll begin with Mr. Berube. You have the floor.

[Andy Berube, Vice-President of Sales and Strategic Partnerships, BECC Modular Systems]

Thank you.

Good morning, everyone.

Thank you, Mr. Chair and members of the standing committee, for the opportunity to speak on this subject, representing BECC Modular and the off-site construction industry. The homebuilding technology and advancements in that field are critical, obviously.

We have five key points we would like to table today. They are the standardization of design, procurement policy, enhanced collaboration, education on building quality in the off-site industry and sustainable advantages. I think it's important to understand that, when we're talking about technology in construction or off-site construction, we can have the best technology in the world, but if the whole ecosystem is not in line, it doesn't matter about the technology. The word “technology” is here, but it's important to understand it as an ecosystem in construction.

Number one is the standardization of design. As a construction industry, it's important that traditionally, when you design something, a conventional construction process can actually build whatever an architect designs up front. When you're improving the process in any way, shape or form, you have to look right back to the beginning: Does the actual design that's being produced in a traditional manner work in a process where new advancements will be able to take advantage of that design? In terms of improving the actual standardization across the board for the factories and coming up with a model that is not restrictive and specific to a factory, for example, but to a point where any factory can build from a standard—whether building with wood, steel or plastic, it doesn't matter—can we get to an approach where a fundamental design helps everybody?

The next one is procurement policy. In a traditional method, again, if we're going to an advanced methodology that changes things, if you go to the traditional model of procurement, often we'll see what is called a “design-bid”, which means you design something at an architectural level. In a traditional sense, if you design it, there's a construction firm that can build it. It doesn't matter; it's in situ. You've designed it and we can build it. However, if you're trying to improve the entire life cycle of construction and expedite it or improve it in any way, you end up designing something that doesn't fit a model that's being created by the industry, because it's being designed for a traditional sense. I think the standardization being put forward by the federal government and CMHC is admirable. It's more complicated than just putting out a standard, because you're dealing with land property, code differences and whether that design is the same and can go in different locations.

The next one is a deeper collaboration between all levels of government. As an example, at the federal level we have some fantastic policies being put in place, but unless it's at the provincial or municipal level, we'll continue to see roadblocks. It's critical that we ask members of this committee to keep that in mind and make sure that, at all levels, we're focused on the change at one level being continued through the other two levels of government.

The fourth one is education on off-site. What we mean by this is that often we run into the reality that, when we're building, people are not educated in the fact that when you have an off-site production facility, it is a very stringent quality QA and QC process. The CSA actually requires that. The inspection at a site is very common, but it's also as common in a factory.

What we're building in a factory has as good or better quality than what's at the site. It's important, on the education front, that we're all...especially at the municipal or provincial level. When there's a project going on, the quality in a factory is actually more rigid and stringent than what's going on at a site, but we need to reduce the barriers because of a presumption that the quality is lesser. It slows down the process and costs everybody more, which is counterproductive.

The fifth is sustainability. I don't think there's an industry we're working in right now that doesn't have this at top of mind. When we're looking at off-site construction or the modular industry, everything we do is as precise as possible, with less waste. If you go into a factory, you see a small trash bin. If you go to a construction site, you see multiple trash bins. The sustainability aspect of off-site construction and the technology we're bringing are superior.

[The Chair, Liberal, Bobby Morrissey]

Thank you, Mr. Berube. If there are any other points you want to make, I'm sure you'll get the chance in the question session.

We'll now turn to Mr. Smith for five minutes.

Mr. Smith, you have the floor.

[Stephen Smith, Executive Director, Center for Building in North America]

Thank you for having me here today.

My name is Stephen Smith. I'm the executive director of the Center for Building in North America. We're a non-profit organization based in New York City with the goal of conducting research on construction and building codes in the United States and Canada, with a focus on global perspectives.

My organization's research starts from the premise that demand for housing in the U.S. and Canada has shifted over the last generation, and existing ways of building have not caught up. North America has a unique construction culture, one that was well suited to sprawl. We developed techniques for affordably building single-family houses on greenfield sites—that is, sites that were not previously developed in an urban way. This served us very well in the 19th and 20th centuries. However, in the 21st century, we face new challenges. The climate and a strong demand for living in cities have meant that demand and policy have turned inward toward cities. More Canadians and Americans want to live in cities, and our construction culture has not caught up.

A unique feature of construction in North America—that is, in the U.S. and Canada—is this: Per square-metre construction costs—sometimes called “hard costs”—rise as density rises. A low-rise apartment building costs more to build per square metre than a single-family house, and a mid-rise apartment building costs more to build than a low-rise apartment building. This is a feature that I have not observed in other countries. I've looked at Italy, Germany and even Mexico. In those places, the cost of building is fairly consistent per square metre, whether they're building single-family houses or denser apartment buildings. The implication of this, as demand and planning policies lead to more urban construction, is that we face affordability challenges in construction, ones we do not know how to solve.

Fortunately, there are other models. If we want to bring down the cost of urban construction, we can look to places where it doesn't cost any more to build apartments than it does houses. The places most culturally and economically similar to the U.S. and Canada are in Europe. European nations have traditionally led the way in construction, whether we're talking about the use of mass timber, prefabrication, energy efficiency or more efficient floor plans for tight urban sites. Fortunately, Canada and countries in Europe share common histories, climates and languages, and they're in similar economic situations.

My research thus far has focused on elevators and stairways. However, throughout building codes and the web of what are known as “referenced standards” in areas from plumbing to windows, we can find similar themes. A North American tendency is towards oversizing, a reluctance to look outside of our two countries for standards and solutions, and generally higher costs, especially for more urban kinds of construction.

We can get into more specifics during the questioning about codes, standards and general approaches to construction and regulation, but my broad advice to Canada is to try to resist the cultural pull of your larger neighbour to the south. I realize this is a bit ironic, since I'm coming to you from the United States. Look instead to places that have had more success in implementing the goals you're trying to achieve.

Building codes in Canada and the construction industry more generally tend to look to the United States, but this is not where you will find a record of success when it comes to building cities. When you think about affordable new urban housing, more family-friendly apartments, more energy-efficient homes, more innovative forms of construction, housing that is safe from fires and better mass transit, you won't find those things in America. If you continue to emulate American models, you'll end up with American outcomes and will probably continue to be unhappy with the results.

Thank you for inviting me. I'm happy to answer any questions.

[The Chair, Liberal, Bobby Morrissey]

Thank you, Mr. Smith. That's an interesting comparison you gave. I'm sure it will be of interest to the members.

We'll begin the first round of questions with Mr. Aitchison for six minutes, please.

[Scott Aitchison, Conservative, Parry Sound—Muskoka, ON]

Thank you, Mr. Chair.

I want to start quickly with Mr. Berube.

Technology is amazing, and the technological abilities of a company like yours to produce buildings, multiple-unit buildings, at a really rapid rate.... I'm sure you probably haven't come close to maxing out the potential of what you could produce. What's the biggest limitation to your maxing out production of units in your factories?

[Andy Berube]

I think the analogy would be this: If you could build the fastest car in the world but don't have a road system, you're not going anywhere. It's kind of to the theme of the five points that I have. You can have the technology, but you need the support, the understanding and the education of multiple people in the construction ecosystem to make sure that it works. I would say that the biggest hurdle....

There's off-site construction of modular, which we're playing in, but our partnerships, our clients and our developers.... Everybody hears what they're saying about the policies, the roadblocks and the inefficiencies around trying to get things done. That's before.... The factory is ready to go; we have gas in the car. However, we're going out of business, literally, because of something that's happening down here. You can put as much tech in the factory as you want, but if you don't have the support—holistically, really, at all levels—we're not going anywhere.

[Scott Aitchison, Conservative, Parry Sound—Muskoka, ON]

You have to have a place to put those houses—

[Andy Berube]

Exactly.

[Scott Aitchison, Conservative, Parry Sound—Muskoka, ON]

—and it takes too long to get that approved.

Okay, thanks for that. I'm sure others will have questions for you.

I'd like to move over now to Mr. Smith.

What you're working on is fascinating to me. There are all kinds of examples, I think, where the United States and Canada have a whole different set of standards, and we make it more difficult and more costly to build than it is in Europe. I've read through your report on elevators. People would probably call me a nerd, but I found it fascinating—the different sizes of elevators in North America versus Europe.

I'm wondering if we can speak briefly, if you don't mind, Stephen, about stair policy and this concept that people might not understand: single-stair egress. Could you speak to that briefly for the committee to understand what the issue is?

[Stephen Smith]

Sure.

To get out of a building, you need at least one stairway, certainly. Historically, lower-rise buildings tend to have only a single stairway. The most lower-rise would be a single-family house, and there's only a single stairway. As the building gets taller, naturally, the egress requirements get more intense. Since you're farther from the ground, it's harder to rescue people, and this happens all over the world.

However, in the United States and particularly in Canada, the requirements get very tight very low to the ground. In Canada, it is effectively impossible to build an apartment building with multiple storeys with only a single stair. This sounds like a minor issue, but for a small urban site, it can be quite an imposition. I don't have data from Canada, but in the United States—prices are probably pretty similar—a four-storey stairway costs about a little over $200,000, depending on the market. I would assume it's a similar price in Canada. For a larger building, for a building on a former industrial site, maybe a commercial site where you have dozens of units on the floor, this is not a very high cost. However, I know that cities across Canada are encouraging and allowing multi-family buildings on what were formerly single-family lots, and on a small lot for example, it can be quite an imposition and quite a high cost.

There are all sorts of ways—

[Scott Aitchison, Conservative, Parry Sound—Muskoka, ON]

I'm going to jump in here quickly.

It's about cost, but is it also not about the lost opportunity for more rental units, for example, more units, more housing units, in that building?

[Stephen Smith]

Sure, it could be. I mean, it could be about more housing; it could be about more open space. A lot of people sort of oppose housing because it takes up a lot of the lot. That's ultimately a planning decision: whether you'd want to replace it with nothing at all and lower the cost, or replace it with housing and just get more housing out of it. There are some technical considerations around that, but in general, I mean, it'll reduce the supply of housing, the more building code requirements you load on. Some of them are necessary, but the the second stair at such a low height is not considered to be necessary in any high-income country outside of Canada.

[Scott Aitchison, Conservative, Parry Sound—Muskoka, ON]

Do you think it's safe to say that, particularly in Canada and I guess in the United States to some degree as well, we don't take affordability into consideration enough in our building code review?

[Stephen Smith]

I would say that it's taken into strong account for single-family houses and into less account for denser forms of construction. For a while, that was mostly what the U.S. and Canada were building—single-family houses—but as we move to more multi-family typologies, yes, I would say there's not as much of a focus on.... Maybe the intent is there for affordability, but the actual tax and the policies can be quite expensive for multi-family housing. It's quite expensive.

[Scott Aitchison, Conservative, Parry Sound—Muskoka, ON]

I think we have about 30 seconds left here. I was going to ask for three different changes you'd make to the code today, but maybe give me your top one.

[Stephen Smith]

The top one would be harmonization of standards, probably particularly with Europe. These are technical details that regulate anything from what kind of gypsum board you can use to what kinds of elevators or windows you can buy. Don't look to the United States, but harmonize globally.

[Scott Aitchison, Conservative, Parry Sound—Muskoka, ON]

Thanks very much, sir.

[The Chair, Liberal, Bobby Morrissey]

Thank you, Mr. Aitchison.

Mr. Collins, go ahead for six minutes.

[Chad Collins, Liberal, Hamilton East—Stoney Creek, ON]

Thanks, Mr. Chair.

Mr. Berube, I'll start with you.

I want to pick up on one of the last comments you made in terms of the use of modular and getting your company and others to a point where you're at full capacity. One of the challenges I've found is that there are a lot of people within the industry, and even those at all three levels of government, who really aren't familiar with the benefits of modular housing.

I look back to 2019. I was a city councillor. I had to bring a motion to my council to look at the benefits of modular and to investigate a municipal non-profit build for modular. I didn't know the pandemic was coming, and I didn't know that the federal government, before I arrived, was going to create the rapid housing initiative, which forced municipalities to build in a very short time frame. Therefore, my motion jibed very well with that program, and our council said that it was going to build a modular build to take advantage of the rapid housing initiative. If I look back at the course of what happened over a two-year period in my municipality, had it not been for the rapid housing program or the motion, it probably wouldn't even be looking at modular. Now, I think it's into its sixth or seventh project.

What can the federal government do in terms of encouraging or incentivizing—the rapid housing initiative is a great example, I think—our municipal and provincial partners as well as the private sector to investigate or to look at, at least, and consider modular as an option when they're considering a residential housing build?

[Andy Berube]

I think one of the points I talked about was just the barriers around the consistency across the three levels of government. To answer your question, I think there needs to be consistency. Is there a point person at all levels who has this as their initiative, and do you speak collectively as one? A policy that's created at the federal level that's not aligned with the provincial or the municipal level doesn't make any sense. It stops the progress. I would say that is probably the number one piece.

At the factory level, I think we're doing our job in promoting the industry and in expanding and discussing the benefits and the quality of what we build—that it's better or the same as conventional construction. We're just doing it a lot faster, which has inherent benefits. The policies and assumptions around what we do are really the roadblocks, so it's the education and the consistency across the governments.

[Chad Collins, Liberal, Hamilton East—Stoney Creek, ON]

Thanks for that.

Mr. Smith, I was on your website, and I looked at the “Why we can't build family-sized apartment units in North America”. Again, I'll revert back to my municipal days. Just before I arrived here in Ottawa, I worked on a public-private partnership with our municipal non-profit. In that partnership, we transferred lands where we previously had just over 100 townhouse residential units, and we looked to consolidate those units in a higher density.

You talked about infill. Of course, as municipalities and others look for sustainable developments, they look at higher densities. One of the challenges we had with higher densities and with moving families into an apartment building was the cost of constructing family-sized apartment units.

Can you provide some recommendations in terms of what the federal government can do to assist in bridging the gap with the whole issue of cost related to family-sized apartments?

[Stephen Smith]

The most important thing the federal government could do insofar as it controls the building codes, or at least the model code process that eventually filters down, is slim down what are called the vertical circulation requirements. These are the elevator requirements and stair requirements. Obviously, you don't want to sacrifice safety, but you need to find the right balance. The more vertical circulation you require, the larger the building has to be. Strangely, generally, the smaller the building, the easier it is to build family-sized apartments, so you want to make it easier to build small apartment buildings.

As I understand it, a number of cities and provinces are working on this. I think they should probably move a little more quickly and be a little more ambitious, and then there are also planning reforms that go along with it. I don't know the Canadian context well enough to know what role the federal government has there, but in general, you will find the most family-friendly apartments in any place in the lower density areas.

You don't want to limit housing to only very tall towers on very large sites. You want to open up some of these single-family neighbourhoods to modest apartment buildings of three to six storeys. That's where, for a number of reasons, it's always going to be easier to build family-sized apartments.

[Chad Collins, Liberal, Hamilton East—Stoney Creek, ON]

Thanks for that.

Mr. Berube, I have about a minute left. I toured BECC's facility in Ancaster when I was there for an announcement we made. I think we provided just over $2 million to assist with some improvements they were making at the plant.

I'm curious to know what federal investments, or any investments from any level of government, mean to your business and your sector as they relate to improving research and development and getting you to a point whereby those homes are being constructed more quickly in the factory and provided to the clients and whoever may choose to purchase them.

[Andy Berube]

That's a great question.

Funding at any level is significant for a factory or any industry. Funding at a factory level is put toward labour but also toward technology. If you're running a factory and you have, let's say, 100 staff in there and you can produce one or two fully finished units a day, can you invest in the technology to stay at 100 staff and produce four, five or 10 units?

We look to Japan and Scandinavian countries that have been doing that for 50 years, literally, and what they've done with their plants. It's not always about robotics. It's just about systems and efficiencies, and it costs money. To grow, expand and deliver quickly, you need capital, so capital coming into the private sector from the government is obviously well received and a huge benefit.