A big transformation is coming to the building and housing industry. Two leaders of technology are teaming up to create a platform to improve infrastructure and target the need for smart, affordable housing. Sketch-to-scale solutions’ provider Flex and leading software development company RIB creating a joint venture called YTWO Formative to support the optimization of housing business.
See Interview of Mr. Mike McNamara and Mr. Thomas Wolf on FOX Business
H: Good to see you both, thank you so much for joining us gentlemen. So let’s talk about why RIB and Flex decided to create this joint venture, what is the opportunity like?
M: Well, the opportunity is the building industry is extraordinary. It’s…umm… you have 75 trillion-dollar economy, you have a 10 trillion dollar housing and construction business. RIB is the leader in 5D BIM software systems, which is the whole frontend associate with the building design, virtualization, cost and time. And at the same time we have Flex who is a massive supply chain company that works in many many different industries and optimizes supply chains. So what YTWO Formative has done is we brought the two together and we’ve integrated them into an enterprise software platform that actually integrates it all the way through, from design concept all the way through to project completion.
H: I love it. Thomas, how is this different than what exists today in the industry?
T: You have it in many industries, let’s say, there’s a huge need for affordable houses and for smart houses. But the cost is too high. So in cities there is not enough space at the moment so the target is to get down the prices by 50% and using technology which comes from automotive and other technologies and we have developed this free platform and targeting real estate companies, housing companies in the big cities to build like automotive is built. And with this, when we can get down the price for 50% and create affordable and smart homes and infrastructure, if we build this in the future, so we are generating for the next generation the living space. And this is different because when the technology comes together with this supply chain then we have the same what was in the automotive in the 80’s, they were in the same direction. But now, technology is cheap so it means there is big data, there is cloud technology, there are all these fast internet, wearable devices, so we have now the infrastructure to use such technology and we can build, rebuild cities and infrastructure so that we have it ready for the next generation.
H: I love the way it sounds and we knew that there’s been this massive movement to people from suburban places into cities, and you made a good point – there is not enough room so the efficiency is important. What markets do you think that YTWO Formative will target and impact the most, the markets and populations who really get impacted?
M: We’re gonna start with residential and we’ll target all across the world. So with this big international company, Thomas runs his company in Germany, obviously, Flex is worldwide, he has a worldwide system as well, he has over 10,000 customers with his software. We’re gonna try to focus on all three regions. But within those regions we’ll focus on China for the Asia, we’ll focus on the United States for the North America market. And we’ll focus on Germany for the German market. And target those residential, large real estate and residential building companies that have units maybe a thousand unites or more per year that they do. So that’ll be our first target. And then expand from there.
H: This is important. I don’t know if it’s a pivot but it’s an important expansion for Flex, isn’t it? to really get this exposure to housing and construction.
M: Yeah, what’s interesting is we have 12 different industries where we already have a billion dollars of revenue and when we have a billion revenue —it’s really like 3 billion in commerce coz we’re really cogs. This’ll be our 13th vertical and we’re trying to drive into a billion dollars. And you know what we found with those other 12 industries is you can take the best ideas out of every one of those different industries about how supply chain happens, about how logistics happens, about how you use digital technologies to actually optimize the entire process. And you can apply the best of any of those and put them into a new industry. So that’s what we’re gonna try to do now, you know, Thomas talked about our automotive but it doesn’t matter where the technology is from if we can optimize the process all the way from the concept, the architectural concept, all the way through to the project completion, it can create a tremendous amount of value. And the one thing else that is I don’t think I’ve ever seen such a business opportunity where you have such a business value, like driving the cost of housing down to 50%. And you have a complementary social value by being able to bring more and more affordable, smart housing to people sooner and with lower costs.
H: That’s a great point. And Tom, I’m glad you brought up automotive, because there’s been a revolution in automotive as a result of technology. Are you expecting that kind of revolution in construction and housing now?
T: Yep. So when you go in the last century – beginning – nobody could afford a car, and look at the cars but nobody can afford. Today everybody can afford a car and car’s smart. And when you imagine that this will happen to the construction building industry, and you have smart homes and everybody can afford it and everybody can live and cut time and cost by 50%. Actually, it would be a huge development and make people very happy to live in cities.
H: Are there any worries in terms of president-elect, Donald Trump’s plan as it relates to trade, in terms of potential terrors, in terms of potential changes on that front? giving that, that’s really the worry about his economic plan?
M: Well, most of all, we’ve seen in terms of the announcement of, obviously, coming out of this morning but it seems like it’s pro-infrastructure development. It’s pro jobs, it’s pro … umm… we think it plays right into our situation so we actually think our YTWO Formative is actually in a better place now. Because, we actually do think, we actually have more development of commerce…of the GDP and more people are gonna buy houses and they’re gonna buy them quicker and…
H: There is one question that I feel like will actually double down on infrastructure, Donald Trump. The construction guy.
M: Maybe we can even sale him some of our software, when we get the amount on our platform to build some of the …
H: Well, you think you have the opportunity as we see this whole new movement towards rebuilding America?
T: I think America and the whole world has to be rebuilt because we have the digital age, we have a connected world. People live, work and learn in a house, so we need to build this infrastructure. And I believe he has the experience, he comes from real estate and construction sector, he really understands how to rebuild and he’s an entrepreneur so I think maybe he can give a direction for this new development. And I believe there’s a good opportunity and maybe he becomes the father of the new America.
H: Sounds like you’re very well positioned, Mike McNamara and Thomas Wolf, good to see you both. Thank you so much we’ll be watching the development.
Flex Ltd. is the Sketch-to-Scale™ solutions provider that designs and builds intelligent products for a connected world. With approximately 200,000 professionals across 30 countries, Flex provides innovative design, engineering, manufacturing, real-time supply chain insight and logistics services to companies of all sizes in various industries and end-markets. For more information, visit www.flextronics.com.
RIB Software AG is an innovator in construction business. Since its inception in 1961, RIB Software AG has been the pioneer in construction innovation, exploring and bringing in iTWO³ – new thinking, new work and new technology – to enhance construction productivity, and to transform the global construction industry into the most advanced and digitalized industry in the 21st century. RIB iTWO today is the world’s first Cloud / License based Big Data 5D BIM enterprise solution for construction, real-estate and industrial business.
RIB is headquartered in Stuttgart, Germany, and listed in Prime Standard Frankfurt Stock Exchange since 2011. With about 800 talents located in over 30 offices worldwide, RIB is serving 100,000 clients including construction contractors, sub-contractors, developers, owners, investors and governments, in the field of building construction, infrastructure, EPC sector and more.