I saw some disturbing statistics recently regarding relationships between builders, suppliers and trades. Although they are from an individual home builder in its particular market, I can guarantee they apply in your city as well.
TrueNorth runs a survey called TradeCOMM that provides direct feedback from suppliers and trades on the builder's product, processes, leadership and training. The results that disturbed me come from one of the 50 builders using the survey that had previously scored near the top of the ratings.
Can you imagine the shock I felt when I viewed the graphs and saw not just low scores, but the absolute lowest scores overall in the history of the TradeCOMM survey? What went wrong?
The numbers show a trend that my colleagues have observed during the past year. Assuming you have your land positions and staff levels straightened out by now, these numbers speak to an issue that will have more impact on your ability to survive the downturn and perform well after the recovery than any other.
I have preached about the critical importance of strong builder/supplier/trade relationships for nearly 20 years. No one paid much attention until things got really hot in the early part of the 2000s. With trades in short supply, materials on allocation and J.D. Power and Associates' raising the quality bar, many builders made an effort to improve their relationships with suppliers and trades, leveraging them to make significant improvement in product, process and customer satisfaction. But things have changed, and many of these same builders have dropped these relationships as quickly as consumers abandoned their products.
A year ago, you had been on top, and now, according to your formerly-trusted vendors, you have not just fallen off the wagon, you have fallen off the planet. And be careful about rationalizing that in this market "that's just the way it has to be." There are a few exceptional builders out there beating this rap.
If these builders in your market are the ones earning loyalty and respect while you continue to run roughshod over your suppliers and trades, imagine the impact when things turn around. You kick your trades' butts now? They'll kick yours later. It's a classic case of what comes around, goes around.
Thousands of them are just waiting for the chance to get even, and you are building a case. It's already too late for many builders who have used the iron fist in trying to resolve the current crisis. I hope it's not too late for you.
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