Canadian firm brings its ‘swagger’ to the U.S.

Manufacturing south of the border – and closer to its customers – works for commercial interiors company DIRTT

An office interior by DIRTT Environmental Solutions Ltd.

With more than 80 per cent of its sales made in the United States, it’s easy to mistake DIRTT Environmental Solutions Ltd. for an American company. But the Canadian flags flying over its manufacturing facilities in Georgia and Arizona, as well as cultural novelties such as hosting annual hockey tournaments, reveal its northern heritage.

DIRTT is among a unique breed of small and medium-sized Canadian companies that operate in large measure outside of Canada, making and selling their products to an international market that in some cases doesn’t know they’re Canadian at all.

Through its distributed manufacturing model and its distinctive custom design technology, the Calgary firm, which makes modular interiors for the commercial, institutional and residential markets, is able to put down roots just about anywhere.

“Being closer to your clients is important. You’ve got home-field advantage,” says Scott Jenkins, president of DIRTT, which stands for Do It Right This Time, a nod to the company’s philosophy of flexibility, efficiency and sustainability. He calls the firm “a very proud North American company that’s now going international.”

DIRTT employs more than 800 people and brings in annual sales of $140-million worth of prefabricated, reconfigurable interior components such as walls, doors, flooring and furniture for office towers, hospitals, universities and army barracks. It started in 2005 with a plant in Calgary to serve Canadian clients and for export.

With growing demand from U.S. customers, including federal agencies and major universities, it opened its plant in Savannah, Ga., in 2009, to cover markets on the eastern seaboard and in the South. Savannah is also the largest container port on the U.S. coast, Jenkins says, from which DIRTT exports its products to burgeoning markets in the Middle East and Southeast Asia. The second U.S. plant opened in Phoenix, Ariz., in 2011 to serve the Western states, and the company is planning further expansion.

At the core of its foreign strategy is distributed manufacturing, which uses geographically dispersed facilities, co-ordinated through information technology, to make high-quality products close to their intended markets. This minimizes shipping costs and waste and allows for local customization. Jenkins says this practice is “the future of successful companies,” as it also reduces transportation times, integrates fabrication processes and materials while shrinking carbon footprints. “It pushes manufacturing out to your customer base.”

DIRTT was “welcomed with open arms” in its new U.S. locations, he says, and treated like a local company, especially as it brought jobs into high-unemployment areas amid the U.S. recession. “People thought we were nuts,” he recalls of the timing.

Among the strategies it has used outside Canada is bringing senior staff to the new plants to run their technical operations, although today the employees are local and most positions are “interchangeable,” he says. So are the products coming from all three of its locations, which are custom-designed for the end-user using the sort of three-dimensional visualizations found in gaming technology.

Core corporate functions such as finance, marketing and communications remain in Calgary, and the chief operations officer spends one week each month in Savannah, while other senior staff tend to travel quite a bit.

“Even in today’s world, with e-mails and the phone, it’s important we spend time with our team,” he explains, adding that given Canada’s cold winters, “who doesn’t want to visit Phoenix and Savannah from November to February?”

To sell its made-to-order systems, DIRTT has a network of more than 90 distribution partners throughout North America, the Middle East and Asia who can develop local relationships and are known in their markets, Jenkins says. It has also opened showrooms where it displays its products.

Companies that locate substantially abroad need to do their homework in terms of tax rules and special incentives that might be available, he says. “They want you there,” he points out, adding that Export Development Canada can be helpful in areas such as bonding, working-capital support and credits-receivable insurance.

In the future, DIRTT hopes to expand into more markets internationally and plans to develop new modular interior products, including for private homes and condos. It plans to open a fourth manufacturing facility, likely in the United States, he says, noting that each new area has a “slightly different culture” to accommodate.

“We’ve brought a little of our Canadian swagger down there,” he says, noting that the company supports local charities, initiatives and social events to fit into each community. “We’re proud to be Canadian, we’re proud to be listed on the TSX, but when I walk the streets of Savannah, it’s home to us.”
Nevertheless, the staff of its U.S. plants are happy to be associated with a Canadian organization, Jenkins adds. “I think the lyrics to O Canada have been memorized by every team member down there.”

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