Thank you.

I would like to start by thanking this committee for giving me the opportunity to speak. It is an honour and a privilege for me to be here, and I commend the hard work you're collectively doing.

My name is Sabrina Fiorellino. I'm the CEO of Fero International Inc., a volumetric modular building company located in Stoney Creek, Ontario.

Fero operates a 300,000-square-foot manufacturing facility, the largest modular manufacturing plant under one roof in Canada. Fero delivers state-of-the-art volumetric modular infrastructure to the health care, educational, residential, industrial and commercial sectors. Europe and Asia have been using modular construction for over 50 years, and this technology has up to 80% market penetration in some countries. It is often under 3% across North America.

To build the modular industry in Canada, we need to begin by addressing three topics: procurement barriers, public perception barriers and speed barriers.

I'll start with procurement. Existing procurement practices are the single biggest barrier to the success of the industry. In Europe, at the inception of the modular industry, the government was the first to adapt the groundbreaking technology through the procurement of modular projects. The European modular sector is now booming, and the private sector has widely adopted its use. In Canada, there are very few modular construction projects procured by governments.

I was recently at a housing conference where a government official referenced the EV sector. They said that all levels of government work collaboratively to financially support the EV sector, because “Who would come here and spend tens of millions of dollars to build a factory with no support and no guarantee of orders?” Well, that's exactly what the modular industry has done. Our industry needs government to be more innovative in procurement so Canadian modular projects can answer current infrastructure challenges, such as housing. Doing so will greatly improve the timelines required to emerge from the crisis we currently face.

We recommend a modular-by-default procurement approach. Using this approach will send a signal to the market that governments are serious about seeing innovation and change. By creating a large pipeline of projects is created in all sectors, the housing sector will benefit in the long run and economies of scale for affordable housing will emerge.

In addition to modular-by-default, progressive procurement models that account for deposits, appropriate payment milestones, factory acceptance testing and more need to be considered. We believe these progressive procurement models make standardization of design less important, because they allow modular builders to be involved in the design process from the beginning. There are many architects and engineers who have over 30 years of experience. They are willing to work with those who are newer to the industry.

The need for industry support leads me to my next point: public perception. In Canada, there's a negative public perception that modular construction is inferior to traditional construction, a perception that does not exist in Europe or Asia. To educate the public, we believe governments need to send clear messages to Canadians regarding the benefits of modular, including speed, cost certainty, quality, sustainability and safety. One way to do this is governments being the initial adopters of the technology. This will have a domino effect. As more successful projects are delivered, more adoptions will occur in the marketplace, and secondary support industries will evolve in, for example, finance, insurance and surety. Additionally, Canada's modular construction industry should be considered an integral part of the mandates of economic development, job creation and trade across the country, in order to advance economic growth and innovation.

This brings me to my last point: speed. Speed is required to get us out of our current crisis. Modular can answer that call, but not alone. With productivity in the global construction industry declining as much as 8%, speed is even more critical. One of the biggest advantages of modular construction is speed, which inherently reduces costs, especially financing costs, in today's environment. With delays occurring outside of the control of modular manufacturers, the benefits of speed can be lost. These delays increase costs, which are ultimately passed on to the customer and in turn make housing unaffordable. In an environment where costs are already high, in part due to development charges and other fees, the need to keep costs down and maintain speed is critical.

One example of where speed has deteriorated is in codes and regulations. In Europe, where some manufacturers can produce a module every 37 minutes, the building codes are, for the most part, uniform. Canada has varying building codes federally and provincially, as well as additional conditions imposed by municipalities. As improvements are made to create greater consistency, we also need to determine how these standards are applied uniformly by inspection agencies. Other barriers to speed include zoning bylaw amendments, site plan approvals and building permits. These often take three years or more to obtain, and landowners incur additional carrying costs on lands. Overall red tape and complex legislation, such as transportation legislation, make it difficult to achieve any efficiencies in modular building.

It is only when modular is used to its full potential that we can take true advantage of this new technology, including AI and automation, and we realize all the benefits that modular construction can provide to create greater affordability.

Thank you.