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Residential construction bounces back Add to ...

Canada's home-building industry, one of the country's key economic drivers, is becoming increasingly competitive. To stand out, players are looking for innovations and new markets. One innovative company is Alouette Homes, which primarily manufactures pre-fabricated homes for the Canadian market, and panels and components for export.

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For decades, the walls of Canadian homes have been built using roughly the same materials: standard frames filled with fibreglass insulation. However, Alouette now produces its wall panels with energy-efficient polyurethane foam insulation sprayed into the cavities. That's just one example of its commitment to energy efficiency in its home designs.

"The demand for environmentally and energy-friendly solutions is increasing rapidly in our industry," says Bradley Berneche, the company's president. "So we decided to take advantage of the trend by getting out in front of it."

Alouette Homes, a BDC Financing and Consulting client, began its new initiative 3 years ago. That's when Canada Mortgage and Housing Corp. (CMHC) selected a dozen companies, including Alouette, to build prototype homes as part of CMHC's EQuilibrium initiative. EQuilibrium seeks to encourage the use of renewable energy techniques and technologies to create energy-efficient single-family homes.

Alouette Homes' prototype, built in Eastman, Quebec, includes innovations such as pre-engineered modular construction, advanced air sealing, passive solar heating, and a geothermal heating and cooling system.

"We got a small subsidy to participate in the project, but that in no way covered our initial investments," says Berneche, who concedes that the extra $90,000 to $125,000 that buyers need to invest to have all the new features does crimp demand. "The good news is that we were able to migrate much of the knowledge that we picked up from the project into our existing product lines. This gives us a leg up in building homes that people want to buy."

Berneche isn't alone in looking to innovative features to help his company stand out from the crowd. Canada's residential construction industry, which employed 523,000 people and contributed $21 billion to Canada's gross domestic product in 2009, felt the economic slowdown. Building activity rode a multi-year boom during the last decade, when housing starts regularly topped 200,000 units per year, but it slipped dramatically after the credit crisis hit in 2008. As a result, competition in the sector heated up significantly.

Sparked by an improved employment picture, income growth and continued low mortgage rates, the numbers bounced back somewhat in late 2009 and 2010. However, an end to federal home renovation tax credits, tighter rules for lenders and a projected rise in the Bank of Canada's policy rate are expected to slow industry growth once again in the near future.

Alouette Homes' 175 employees, portfolio of 20,000 completed homes, and significant geographic and product diversification provide the firm with a solid foothold from which to adapt to new circumstances. However, Berneche—who has just returned from a trip to Britain, where he was marketing his new efficient technologies—says he has no plans to sit around and wait for local demand to bounce back to pre-crisis levels.

"We have to keep moving and, right now, Britain looks particularly promising," he says. "The energy-efficiency standards that are imposed on builders are much tougher there than here in Canada, so the market seems like a logical one for us to tackle."

Content in this section is provided in partnership with the Business Development Bank of Canada. BDC provides entrepreneurs with financing, venture capital and consulting services. To find out more go to BDC.ca.

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