By Joe Palenik. Getting mainstream recognition from the national business community used to be rare for building companies. In recent years, though, it's become a habit. What's caused the change? The companies' size? Partly, but not size alone. Here's what builders have to say about the achievements that landed them on America's most prestigious business lists:
Tech Wizards. Technology is a big help, says David S. Weiss, Beazer's executive vice president and CFO. "We think we're on the cutting edge," he says, noting that Deutsche Bank Securities and UBS Warburg have applauded the company's Web page and use of technology. Beazer is adding an interactive area to its site that will be personalized for customers, enabling them to find a home, apply for mortgages, get help with closing, and track construction progress.
The company also is implementing a software package for subcontractors and suppliers that will hook up supervisors in the field with subcontractors and suppliers. Besides the technology, Weiss says the company uses a value-created system to track how it exceeds its cost of capital, both to measure performance and compensate employees.
Beazer was included on the Fortune 1,000 and the Russell 2,000 Index and was just named by The Atlanta Journal-Constitution as the top performing public company in Georgia, joining the likes of Coca-Cola, Delta Air Lines, and United Parcel Service.
Workplace Savvy. For three years running, Fortune magazine has named the builder one of the "100 Best Companies to Work For," a tribute that CEO David Weekley says is tied to providing a challenging work environment for employees and "allowing each of them to reach his or her full potential."
Risk Averse. Bruce Karatz, chairman, president, and CEO of KB Home, says that paying attention to business and watching risks have earned the company a spot on the Business Week 50 list of best-performing companies, plus, among others, various Forbes and Standard and Poor's rankings, and Barron's 500.
"We are constantly focused on continued improvement of our operating model," he says, noting Project Pathfinder, a task-force program within the company geared to maintaining quality and reducing costs that is based on year-over-year comparisons of customer satisfaction surveys.
"There is no question but that KB Home, as well as many others in the industry, have become more disciplined, focused companies over the last five to 10 years," Karatz says. He credits risk-reducing strategies for producing higher levels of profits, higher returns on invested capital, and using less capital to grow business over the past decade.
Steady Focus. Centex Corp., which has landed on the Business Week 50 and several Fortune, Forbes, and Standard and Poor lists, continues to improve the basics of managing margins and stimulating growth, according to Tim Eller, COO. The parent corporation was listed first for the past three consecutive years on Fortune magazine's "America's Most Admired Companies" in the construction category, and for the past three years, Centex Homes has made the InformationWeek 500, which recognizes innovation in information technology.
"We're certainly not the only home builder on most of these lists," says Eller. "There's nothing we're doing different today than what we were doing five years ago. It's just that the results are there. It's the same strategies. We see no reason to change our focus or our business plan."
Efficient Growth. According to Mark J. O'Brien, president and CEO, Pulte intends to stay on Business Week's top 50 list as well as other top listings through increasing market share, diversifying the product portfolio in each market, leveraging purchasing power, and lowering total cost of products and materials to keep it on a track toward its projected $40 billion in revenue and $10 earnings per share in 2004.
The company's acquisition of Del Webb helped growth in 2001 and puts the company well into the running for attracting active-adult buyers, which O'Brien calls the fastest-growing segment in the housing industry.
In 2001, Pulte was ranked as the top corporate performer in the housing and real estate industry by Business Week's ranking of the Standard and Poor 500 stock index.
Standard Pacific Homes
Selective Strategy. The California builder was recognized for the second year in a row by Forbes as one of 23 "Fast Track" public companies based on earnings-per-share growth. Recently, the company appeared on the InformationWeek list of 500 technology innovators, and in 2001 it was listed by Fortune as one of the 1,000 largest U.S. companies. The CEO says the acclaim points to the company's successful market strategy.
"We believe [our inclusion on Forbes Platinum list] underscores the soundness of our long-range growth strategies and the viability of our chosen housing markets," says CEO Stephen Scarborough.
Well-Rounded Performance. Toll Brothers credits a combination of factors for being named to the Fortune 1,000 and Forbes "Platinum 400 Best Big Companies in America." Kira McCarron, vice president of marketing, says the mix includes excellent home designs, associates, customer service, land position, demographics, and record results for many years.
One-Two Marketing Punch. Lennar has appeared on the Fortune 500 and the Forbes 400 list of best big companies, among others. According to Bruce Gross, Lennar's vice president and CFO, the combination 'everything's-included' program and U.S. Home's design-studio approach have helped the company succeed and grow. "One of the things that we have clearly done that's different from the rest of the industry is that we have a dual marketing strategy," says Gross.
"Where one program had more than a one- or two-year supply of home sites available, the other marketing approach has been implemented to help increase the absorption of home sites," he says. "This program also helps market share and allows ... purchasing efficiencies in that particular market." And the dual platform helps bolster return on capital by delivering more homes off the same asset base.
--Joe Palenik is based in Pearce, Ariz.
Published in BIG BUILDER Magazine, July 2002