diff --git a/lib/pipeline/webpackProcess.js b/lib/pipeline/webpackProcess.js
index f3f301c5..25b711f3 100644
--- a/lib/pipeline/webpackProcess.js
+++ b/lib/pipeline/webpackProcess.js
@@ -58,7 +58,18 @@ class WebpackProcess extends ProcessWrapper {
       externals: function (context, request, callback) {
         callback();
       },
-      plugins: [new HardSourceWebpackPlugin()]
+      plugins: [
+        new HardSourceWebpackPlugin({
+          cacheDirectory: fs.dappPath('node_modules/.cache/hard-source'),
+          // ufglify would still be saving under embark's node_modules/.cache
+          environmentHash: {
+            root: fs.dappPath()
+          }
+        }),
+        new HardSourceWebpackPlugin.ExcludeModulePlugin([{
+          test: /app[\\/]|contracts[\\/]/
+        }])
+      ]
     };
 
     let webpackOptions = utils.recursiveMerge(defaultOptions, options);
diff --git a/lib/process/processWrapper.js b/lib/process/processWrapper.js
index 82666a47..1a388385 100644
--- a/lib/process/processWrapper.js
+++ b/lib/process/processWrapper.js
@@ -62,7 +62,7 @@ class ProcessWrapper {
 
   _log(type, ...messages) {
     const isHardSource = messages.some(message => {
-      return (typeof message === 'string' && message.indexOf('hard-source') > -1);
+      return (typeof message === 'string' && message.indexOf('hardsource') > -1);
     });
     if (isHardSource) {
       return;