Bolstering Their Corps

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While the largest Giants use size to their advantage, smaller Giants, many of which compete head-on with the big boys, have learned out of necessity how to keep good people and how to seize unique niches and market opportunities.

April 01, 2002

 

Giants 2002
Bigger, Better, Stronger
Building to a Billion and Beyond

(Nos. 1-20)
High Volume, High Profit (Nos. 21-125)
Striking a Balance (Nos. 126-275)
Bolstering Their Corps (Nos. 276-400)
Consolidation: Swift and Massive
Consolidation Is Temporary
Pop-up Profiles:
Simpson Housing
Legacy Partners Residential
Wood Partners
Tarragon Realty Investors
Movers & Shakers:
Neumann Homes
Astoria Homes
Town & Country Developers
Palmetto Traditional Homes

 

While the largest Giants use size to their advantage, smaller Giants, many of which compete head-on with the big boys, have learned out of necessity how to keep good people and how to seize unique niches and market opportunities.

When asked to identify their biggest hurdles, smaller Giants overwhelmingly identified labor (47.7%) as a top concern, second only to a chronic short supply of lots, which happened to be the No. 1 hurdle for all 400 Giants (82.3%). By comparison, labor concerns for other Giant groups were relatively low: 25%, 11.4% and 20.7%, from big-gest to smallest.

In Green Bay, Wis., there are no national builders to compete with, but even so, skilled managers and tradespeople are always a concern for Giant newcomer Murphy Development Inc.

“We employ the same strategies that have helped us through the years — retaining our key employees, cross- training them and promoting from within,” says president Patrick Murphy, whose firm closed 180 rental units last year for $10 million in revenue.

“We can train good people to do just about anything, but we have to hire people with the right attitude,” Murphy says. “We have to have a solid work ethic as a raw material.”

Lean and mean is the focus for Steve Tucker, CEO of Canton, Ga.-based Custom One Homes. With $33.1 million in revenue on 206 closings last year, this is a company focused on getting the most from its human capital. With 22 full-time employees, it is a small company but one that likes to maintain large-Giant service levels.

“Competing against the big public builders like we do, I’d rather be smaller knowing that we can still be profitable,” says Tucker. “We are a small company that can guarantee 100 units annually, but we execute like a bigger builder and deliver 200 units. And by staying small, we are really positioning ourselves for longevity.”

For San Antonio-based Medallion Homes, the name of the game is niches, says president Jim Bastoni. Medallion falls into the 30% of small Giants that cited niche markets as a key opportunity. Toward that end the company has de-veloped a focus on delivering energy-efficient homes. Two years ago Medallion won an Energy Value Housing Award for an affordable, 1,200-square-foot home it built downtown. This year the firm is partnering with the city to add new housing stock in downtown areas and perhaps a brownfield site.

“These projects take an awful lot of effort, and that is the challenge,” says Bastoni, whose firm closed 306 homes for $47.2 million in revenue last year. “Half a dozen lots is not worth the effort, so the city, as it is starting to do, needs to assemble more land before reaching out to the private sector.”

The focus for Dave Cuthbertson, CEO of Craft Homes USA in Matthews, N.C., is finding the right land for his first-time buyer product. This is a particular challenge because low-density lots are so common in Craft’s marketplace and they tend to push the price too high for its homes. On the other hand, when higher-density lots are available, they are often not close to desirable high-traffic locations.

After finding land, Craft pursues every angle to keep prices down. Key staffers allow the company to do all its engineering and land development in-house, “and in turn, we pass those savings on to our home buyers,” says Cuthbertson.

Craft, which closed on 313 homes last year for $49.4 million in revenue, participates in a Housing and Urban Development program that lets builders offer homes for little or no money down.

Like many other Giants, Lombardo Companies in Washington, Mich., focuses on laying the groundwork for solid growth. With 231 closings for $44.8 million in revenue last year, fast growth is not as important as “steady, slow and stable” growth, says president Anthony Lombardo, whose company is implementing total quality management practices.

“Our goal is to make sure that all of our policies and procedures are followed thoroughly, because good growth needs good systems,” Lombardo says. “These systems really focus on communication to ensure that we can satisfy our customers and continue our very good reputation in this business.”

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