Continuous improvement stretches across our company culture - even into areas with provensuccess, like the GrayWay! So, we’re introducing a more contemporary look and feel with this edition.

Since the first GrayWay was published in 1976, we’ve adjusted to deliver news in fresh and progressive formats, while preserving the touchstone values and culture that help us stay just a little bit special...and a good bit different!

Let us know what you think...and enjoy!

Jill WilsonVice President, Marketingjwilson@gray.com

The GrayWay is printed on 50% recycled content/30% post consumer content using vegetable based ink.

A NEW LOOK FOR THE GRAYWAY.

01QUALITY TIMESkanska and Gray meet to sharephilosophies and processes for improved efficiency

03WE’RE BUILDINGToyota Boshoku AmericaPrinceton, Indiana Fulton, Mississippi

04MAPPING THE GRAY WAYThe secret behind delivering consistent high quality

05WHAT IS KAIZEN?The process that started20 years ago and changedeverything at Gray

05GRAY MATTERSlow, steady, continuousimprovement

1976 1981 1994 2007

QUALITYTIME

SKANSKA, GRAY MEET TO SHARE PHILOSOPHIES AND PROCESSES FOR IMPROVED EFFICIENCY AND SERVICE.

01

Earlier this spring, in a hotel conference room in Orlando, Fla., representatives from Gray Construction and Swedish construction giant Skanska sat down for a benchmarking session on the practices of lean construction and continuous improvement (kaizen in japanese).

Skanska is in the process of streamlining their production systems through a program called Xchange, and asked for the meeting after reading about Gray last year in ENR magazine.

“Gray Construction is a forerunner in kaizen and lean construction,” said Isto Nuorkivi, Skanska Xchange program coordinator. “In the [ENR] article, Jim Gray made numerous references to the ‘Toyota Way,’ which has also played a role in catalyzing our development program.”

Gray was eager to accept the meeting.

“Conversations like this allow us to get outside our own skin and rethink what’s in this for the customer,” said Gray President and CEO Jim Gray. “This was an opportunity to benchmark with a company in another culture, people who are chasing the same endgame in terms of improved customer experience and a lower cost basis.”

MARKING THEIR OWN BENCH FIRST

On Gray’s side, preparing for the meeting seemed a simple task: putting together a description of the company’s day-to-day work environment. But, as the saying goes, the hardest thing for a fish is to describe its water.

“The years we’ve spent working with Toyota have embedded a lot of the Toyota practices and systems into our operating behaviors,” explained Gray. “But what we hadn’t done is document those systems.”

The prep work became a rare opportunity to stop for a moment and look back at where the company started and how far they’d come.

Twenty-five years ago, Gray Construction was a small family-owned, Kentucky-based construction company marked by strong values and a dedication to delivering high-quality products to our customers. That statement is still a true descriptor of Gray (except you can substitute the word ‘small’ with ‘growing.’) But does that mean nothing has changed? Just the opposite.

To maintain Gray values while staying competitive, the company had to learn to do more than just handle change. They learned to embrace change.

“Change has to be part of your company’s DNA to continue to grow and improve,” says Anthony Roy, Gray’s Senior Vice President, Construction Systems and Resources.

As Gray’s quality systems manager, it’s Jon Wright’s job to seek out and facilitate that change. “The thing you have to watch in construction or any business is that you don’t get complacent,” he said. “There may be a more efficient way, there may be a better product out there, there may be a better way to handle situations.”

Together, Roy and Wright, with input from Gray senior managers, have created The Gray Way: quality management system, a first step in documenting how continuous improvement works at Gray. (See “Mapping The Gray Way”) This living document, which describes in detail Gray’s production systems, became the focal point of the Skanska meeting.

Ideas were growing.

“BENCHMARKING IS THE PROCESS OF IDENTIFYING, UNDERSTANDING, AND ADAPTING OUTSTANDING PRACTICES AND PROCESSES FROM ORGANIZATIONS ANYWHERE IN THE WORLD TO HELP YOUR ORGANIZATION IMPROVE ITS PERFORMANCE.”

– AMERICAN PRODUCTIVITY & QUALITY CENTER

”

Location: Solna, Sweden

Rank: One of the 500 Largest Companies in the World One of the 10

Largest Construction and Engineering Firms.

Number of Employees: 56,000

President and CEO: Johan Karlström

Annual Revenue: $21 Billion

Core Competency: Residential Construction

MEET SKANSKA

02

”THE TAKEAWAYS

Two companies from different sectors of the construction industry, working mainly on different continents, in different languages and with vastly different numbers of employees came together in that Florida conference room to learn from each other. What were the takeaways?

Skanska had come for information on kaizen, how it works, how it can be instilled in a corporation.

“Gray’s approach to kaizen is an inspirational effort, so we expected very tangible ideas and results from the meeting. In that, the meeting was very fruitful,” said Nuorkivi.

Wright noted areas where there was more work to be done.

“What I learned from Skanska is they have the same hurdles we do,” he said. “Communication is always a challenge in any industry, any business. You have to be very clear and concise how you produce that information and how it’s perceived through the ranks. It’s just something you have to continue to work on.”

The companies plan to continue sharing information. Plans are in the works for a Gray contingent to visit the Skanska offices in Sweden within the year.

WE’RE BUILDING

Gray is pleased to have two projects currently under way for Toyota Boshoku America - one in Princeton, Indiana (TBIN) with the other in Fulton, Mississippi(TBMS). TBIN is building a 290,631 square foot Metal Stamping Seat Frame Manufacturing Plant in Princeton, Indiana located adjacent to its sister plant, Total Interior Systems – America (TISA), a joint venture between Toyota Boshoku America and Lear Corporation. The TBMS facility is a 405,617 square foot plant that will manufacture seats, carpet and door panels.

Toyota Boshoku America (TBA) manufacturers automotive interior systems which include seats, door trims, headliner sub-stratas, carpets, fabrics, straps and round recliners in addition to air and oil filters and power train systems for a variety of customers such as Toyota Motor Corporation and General Motors. TBA and its affiliates employ more than 7,000 team members and has 23 locations through-out the United States, Canada, Mexico and Argentina.

The Toyoda (now Toyota) Boshoku Corporation was founded by Sakichi Toyoda in 1918, and became the foundation for what later evolved into the Toyota Group. Toyoda Boshoku helped establish Toyota Motor in the 1930’s by providing start-up capital and dispatching key executives to the car company. The famous Toyota Production System (TPS) was created with the former team members of Toyota Boshoku. In 2004, Toyota Boshoku merged with Araco Corporation and Takanichi Co., Ltd. to become Toyota Boshoku Corporation.

Toyota Boshoku Mississippi Project Rendering, Fulton, Mississippi

03gray.com

Seated: David Valentine, Isto Nurokivi, Rune Sandholt, Anthony Roy, Jonas Granstrom.

Standing: Jon Wright, Rikard Espling, Jukka Horkko, Jill Wilson, Jerrie Kristiansson, Veli-Veikko Elomaa.

How do you help your team deliver a product of consistently high quality no matter where they are in the country? If you’re Gray Construction, you give them “The Gray Way: quality management system,” a map that guides them from point A of the process all the way through Z.

“ ‘The Gray Way’ is an extensive flow chart that describes our systems, how different pieces and different departments come together to produce a product for a customer,” explained Jon Wright, Gray’s quality systems manager.

Wright and Anthony Roy, senior vice president of construction systems & resources, have spent the last several

months looking at and documenting the company’s processes for business development, proposal, design, construction, closeout and aftercare that have been developed by Gray over two decades. The result is “The Gray Way,” a living document that will evolve as the processes and company continue to evolve.

“For several years we’ve followed the Toyota Way, but we’ve never sat down ourselves and documented where we were,” said Roy. “We did that this past year with the help of Gray senior managers and developed ‘The Gray Way’ process mapping.”

Wright describes the document as “the successful template of each and every portion of our assembly line.”

“In construction, we don’t typically have an assembly line,” he says, “but if you were to compare it to automotive manufacturers, they start with a piece of metal and a car comes out the other end. In construction we start with documents, a concept, a view, a proposal and then when it comes out the other end it’s a building, a facility for a customer. So we look at it that way.”

Communication is the key to keeping the process map current, making sure it addresses what’s actually going on throughout the assembly line. So, Gray holds combined staff meetings where team members can ask questions, share solutions and stay informed on big-picture issues.

“That meeting is to produce information and disseminate it to all team members across the country via a webcast. Wright said, “The live, interactive participation of all team members enhances the communication and collaboration process of continuously refining and improving our process…it is truly a living document.”

MAPPING THE GRAY WAY

04

Jon Wright

Above are a few examples fromThe Gray Way: Quality Management System

According to Paul Bryant, CEO of Operations Associates in Greenville, SC, kaizen is an approach to improving overall production that “builds upon incremental process improvements.” Adopting kaizen is a long-term commitment.

“You can’t expect it to happen over night,” says Gray’s Anthony Roy, senior vice president of construction systems & resources. “There’s a Japanese saying, ‘you’ve got to believe it in your heart, then the mind will change.’ It’s a process. It has to happen with one believer, two believers, then a group of believers.”

Gray has practiced kaizen since first experiencing it at Toyota 20 years ago. It requires them to always be looking at their processes, analyzing flow, and, most

importantly, seeing mistakes as catalysts for improvement.

“We’ve tried to mirror Toyota’s philosophy by focusing on quality, looking at each one of our systems very methodically to see where we can be more efficient, do away with waste, provide a better product, all along mentoring and growing our people to build a company of talented and experienced individuals who look toward continuous improvement and pass it on,” said Jon Wright, Gray’s quality systems manager.

Kaizen has been around in manufacturing circles for a long time, but is relatively new to the construction industry.

GRAY MATTER

Slow, Steady, Continuous ImprovementEver since we were introduced to the concept of continuous improvement through our work with Toyota, we knew it made sense for our company and for our industry. So we made achieving it a company priority.

The Toyota model of continuous improvement (called kaizen) is all about revealing problems and problem-solving as a team. It takes a long time – incremental moves, changes to procedures and tweaks made to those changes, discussions among team members – to get a company’s culture to the point where it can accept that sort of self-examination and do it willingly, almost automatically. Sometimes we wondered if we were making any headway, but we believed, so we stuck with it.

Now, 20 years in, Gray Construction has matured as a company to the point that we have both the capacity for strategic thinking on this issue and the tactical, on-the-ground capacity to execute on this model.

We also now have Jon Wright, our quality systems manager. Jon has been charged with formalizing Gray’s continuous improvement process, and he has an ideal set of traits to succeed at the job.

Easygoing and approachable, Jon is also competitive and challenging. He pushes us to do things we wouldn’t otherwise do and make changes we wouldn’t otherwise make if we didn’t have somebody focused deliberately on the quality imperative. He’s also in the process of documenting what we’ve developed as an instinct – this commitment to continuous improvement, to operating systems that are based on Toyota’s model, to safety, to employee participation and collaborative decision-making.

This is not a program that you can create and then stop. What we’re doing is evolving and building on our best to continue to deliver a clean, crisp, easy, pain-free experience for the customer.

WHAT IS KAIZEN?

05gray.com

Stephen Gray and Jim Gray

Anthony Roy

WS Construction moves forward in building a Research and Development Center for Big Ass Fans in Lexington, Ky. Yes…the name is unique but more relevant to their growing list of customers is the valuable work the Big Ass Fans accomplish. The six to 24 foot diameter fans use their gigantic size not speed to move massive amounts of air over large spaces. The demand for these fans is international and growing. It’s uses range from warehouses to zoos. The cooling from the fans at a fraction of the energy cost compared to other means makes their appeal widespread.

The business began in 1999 as the HVLS (High Volume/Low Speed) Fan Company, a gesture to the technology. Things moved along well with that name but folks kept looking up and saying…well you know the rest of the story.

The 44,000 square foot facility will be ready for use in December 2008. It will be used to perform important testing and research to seek continuous improvement in the quality and performance of the fans. Like the fans that do more work with less energy, the facility will be environmentally friendly and will be seeking LEED certification.

By Bob Moore, PresidentGray-I.C.E. Builders Inc.

Economic forecasts are, understandably, front and center on most businesspeople’s radar screens. Amidst a flurry of negative reports, like the ones we’ve had lately, it’s helpful to temper today’s news with a historical perspective.

A recession is technically two consecutive quarters of negative economic growth. In spite of all the negative news about the sub prime loan market, rising fuel prices and construction industry job losses (mainly residential), our economy has not yet recorded two consecutive negative quarters of growth. Even if the economy is in recession, the average length of a recession since the end of WWII is about 10 months.Does anyone remember our last recession?

Our last recession was in 2000, during the final year of the Clinton administration. ICEB had solid growth and profitability during this time.

What strategies did ICEB employ to weather the last recession?

We focused on the same basic strategies that make us successful in good times and challenging times.

1. Taking care of our key customers2. Aligning ourselves with customers in recession resistant markets with repetitive business3. Growing relationships with supply chain partners who are equally committed to continual improvement, teamwork and accountability4. Executing our work more effectively than our competitors through our culture of continual improvement and accountability.

Since we employ these strategies on a regular basis, a large strategic change is not necessary for us to be successful. Dedication to continual improvement and insisting on total accountability, however, is mandatory for us to continue to be successful in any market. We must continually improve, adapt and perform to the best of our ability. If we take care of the ‘means’, the ‘end’ result will take care of itself.

Welcome Aboard Paul Bryant, P.E. has joined Operations Associates (OA), a Gray, Inc. company, as Chief Executive Officer of the Greenville, SC based operation. Chandra Weiss has also joined OA as Chief Marketing Officer.

Paul brings over sixteen years of experience in the design and construction industry including nine years in project operations at Gray Construction. Chandra brings over ten years of experience in the industry with a focus on business development and marketing initiatives.

Operations Associates is an Inc. 500 award winning management and operations consulting firm, serving mid-size to Fortune 500 manufactures and distributors worldwide since 1993. The company was acquired by Gray, Inc. in 2003.

SHADES OF GRAY

10 Quality Street Lexington, KY 40507-1450, USA T 859.281.5000

Alabama, California, Kentucky, South Carolina, Texas, Virginia and Tokyo, Japangray.com

Big Ass Fans Project Rendering, Lexington, Kentucky

Chandra Weiss and Paul Bryant

Bob Moore