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From a country road in Milton, 50 kilometres west of downtown Toronto, the newest phase of Hawthorne Village looks like a typical subdivision. It has the sort of ye-olde name that suburban builders favour, but, of course, it looks nothing like a bucolic English town. It's big houses, built close together on winding streets.
But look closer and you find something odd: There are no half-built homes, no wood-frame skeletons. You see either foundations or nearly finished houses that just need some bricks and a front porch. They appear to have sprouted overnight.
Which, in a way, they did.
On the western edge of the development looms a huge industrial building bearing the name Stelumar Advanced Manufacturing. They're building houses in there—on an assembly line.
Mattamy CEO Peter Gilgan started out as an accountant; now he has nearly 100 housing developments behind him (Chris Thomaidis)
Ten houses, in successively more complete states, sit in a row on a track of fat, broadly spaced steel rails that run the length of the plant. The assembly line moves once a day, spitting out a finished house through a large doorway onto a low, wide specialized truck. This happens at 4 a.m.—the best time to drive a house. After a journey of a kilometre or less, the new residence is placed on a foundation using hydraulic jacks.
On a bitterly cold day in February, one advantage of indoor home building is immediately clear: "Even if there's a blizzard out there, we can stay on schedule," says Stelumar president Ron Cauchi. Prefab insulated wall panels, windows and other components are stored inside, right beside the line. But they don't take up much room, because Cauchi, formerly an executive in auto-parts manufacturing, needs only a two-day supply, relying on just-in-time delivery. "Like the auto industry, the real artistry is in the logistics," Cauchi says.
This plant wasn't Cauchi's idea, however. Nor was it the brainchild of the stereotypical successful Canadian home builder—a skilled immigrant tradesman who grew the family business. As Cauchi says with a smile, "a lot of things in here were designed by an accountant."
That accountant is Peter Gilgan, the founder, owner and CEO of Mattamy Homes Ltd., of which Stelumar is a subsidiary. Over the past three decades, Gilgan has grown Mattamy from a one-man operation to Canada's largest home builder. He's completed almost 100 developments, mostly around Toronto, and now has more than 1,000 permanent employees. The company, being private, does not release financial information. But if you multiply the more than 4,000 houses Mattamy sold last year by an average price of just over $200,000 (a low estimate), you get annual revenues of close to $1 billion.
Despite ominous signs that a U.S.-style housing slump could spread to Canada, Gilgan is, as always, in expansion mode. He has sunk tens of millions of dollars into Stelumar, which produced its first house last August. The goal is to build 250 the first year, and crank that up to 2,000 a year in several factories by 2015. "I'm in love with the idea," Gilgan says. He's also spreading out geographically: Mattamy has been building in Ottawa for the past two years, and is gearing up in Alberta and the U.S.
All this might sound impulsive; Gilgan is anything but. Chatting in his spotless corner office in a generic glass-and-steel office building in Oakville, west of Toronto, you quickly realize that this is a very smart guy who's systematized almost every aspect of his business. Ask about his most successful innovation—widening and shortening lots to keep land costs down, yet making room for a wider house with more "curb appeal"—and Gilgan says, "It was a gut premise, vectored by a lot of focus groups."
He may have a good business model. But is it wise for Gilgan to be aggressive right now? The man has been known to make mistakes. But every mistake only seems to make him stronger.
uilding isn't in Gilgan's blood, but suburbs are. His father was an electrical technician with the Canadian Standards Association, and his mom stayed home and raised seven kids in the west-end Toronto suburb of Etobicoke.
After high school, he went straight into a chartered accountant program, and then articled with a small Toronto firm. He enjoyed visiting audit clients because it gave him an inside look at dozens of entrepreneurial businesses—convenience stores, independent movie theatres, department stores and the like. He was particularly drawn to home builders—"the old craftsman-builder guys," as he puts it.
In late 1978, Gilgan took the plunge himself. He bought two lots on opposite corners in the wealthy suburb of Burlington, between Oakville and Hamilton. He spent the fall and winter building two large, elegant three-bedroom houses—or supervising and helping, at least. "I had no 'skill,'" he says with a smile, "but I made a terrific labourer."
