By Pat Curry. They called it "the perfect storm," after the book and movie that chronicled the convergence of three massive weather patterns. The maelstrom came about when the privately held Denver-based firm Sanford Homes was acquired by Beazer Homes USA in August 2001. With the purchase came the need to integrate Sanford's major computer systems — sales management, construction scheduling, and back office — into Beazer's.
All three were scheduled to come on line simultaneously, and the crew could only hope that, from the perspective of keeping dozens of daily activities humming along, the massive techno-storm wouldn't sink the ship.
"It definitely rocked our little boat," says Peter Simons, senior division president of Beazer's Colorado division. "Luckily, we made out better than the people in the movie."
If that weren't enough, the division expanded its product line and fast-tracked several deals. High-end communities will bear the Sanford Homes name, while entry-level houses will introduce the Beazer name to Denver's first-time-buyer market. Within six months, 10 new communities are scheduled to open. It's been like that pretty much since the day Beazer bought Sanford and created the Colorado division.
"We're definitely looking to grow this company, and we want to do it fast," says Simons. "That requires getting people to look outside the box and be open-minded. To their credit, there was a very savvy group of people here who understand the business and could grasp the things that are going on. It's a benefit to them to be part of a growth curve instead of holding steady with what Sanford had done."
Simons says the frenzied pace wasn't all intentional.
"We got lucky," Simons remarks. "We got some opportunities we wouldn't have had otherwise. The economy hit such a dramatic downturn, most people were stepping back to see what would evolve, and we had such a clear vision, we could keep going."
The company also could offer an attractive package of discounted prices and incentives to reduce fourth-quarter cancellation rates from 62 percent in September to zero in December. (The rate for the top 30 home builders in the Denver metro area was 50 percent in September and 37 percent in December.) Culture Shocks
The new systems, strategies, products, and procedures required continuous communication to keep the staff up-to-date and enthusiastic. Project manager Jim Sanford, the son of company founder Tim Sanford, says he's been pleased with the communication that flows from management down through the ranks. Still, he says there's been some culture shock as Sanford Homes transitions from a private to a public company.
"It's interesting to go from building 300 homes a year to working with a company that builds over 15,000," he says. "There's a little more of a corporate mind-set that has come to our company, which isn't a bad thing. It gives us policies and procedures and focuses employees on what they need to do on a daily basis to improve the bottom line and serve the customer."
Division COO Perry Cadman, who held the same position at Sanford and has been with the company since 1984, says he sees the process changes as enhancements to the core philosophy that guided the company for 40 years.
"As Sanford, we had a great deal of pride in the product we built, the value we tried to achieve, and the service we wanted to provide," Cadman says. "Beazer takes customer service a step further. We did an internal customer survey; they do an external one that gives us a relative judgment [compared with] other builders." Plus, the company has tweaked its homeowner orientation and quality inspections, and created new incentives for construction staff to improve customer satisfaction.
With the emphasis on boosting profits, Sanford Homes is shifting from its position as a semicustom builder to offering buyers a menu of options. That's shortened construction schedules by about a fifth, Sanford says.
Land purchasing has benefited too. As division vice president for land acquisition, Clarence Hughes' workload has increased dramatically. Once limited by a product line that needed a specific lot size, Hughes now has a house for nearly any community. He also has more buying power. "There are some developers who only want to deal with major builders nationally," he says. "We're now in that group. As time's gone on, we've gotten more opportunities and looked at more development and community opportunities. There's no question in my mind [Beazer's acquisition has] made a difference."
Between enhanced financial strength and the expanded product line, Hughes says, every day is exciting.
"It's the optimum situation for land acquisition," he says. "It doesn't get any better than this."
Cadman is in charge of creating the expanded product line. The first strategy was to revamp the company's lowest-priced series to offer nine plans that range from 1,800 to 2,900 square feet and sell for $250,000 to $350,000. The builder is also adding a line of townhouses from plans that are "tried and true in other Beazer markets" to give the company a product in the low $100,000s. It also has created BeazerMetro to build government-subsidized affordable housing in the city, and is involved in the redevelopment of Stapleton International Airport in Denver. Buyers are "standing in line" for the 31 houses Sanford will build there; another 50 lots have been set aside for a second phase.
On the sales side, Sanford now has two strategic advantages — its own mortgage company and an in-house design center — which enable the company to offer design options packages appropriate for the financing a buyer can qualify for. Additionally, a strong set of employee benefits, including better 401(k) and health insurance features than Sanford could offer before, gives the company a leg up on recruitment and retention. And it now can reward its longtime trade contractors and suppliers with increased business.
Hughes and Cadman both admit that, a year after the purchase, the transition process is still very much under way.
"I'm just starting to feel like my feet are on the ground, understanding the resources available to us," Cadman says. "I don't know if that's the norm or not."
It is normal, Simons says, and right on schedule. The lesson Beazer has learned from past acquisitions is that these things take time. "It is an evolutionary process," he says. "For now, we're in the middle of the mayhem, and it's exciting, but it's relentless. While it feels like we've made a lot of changes and charted a new course, it's taken some time. You don't check off boxes and say we're done with the transition."
Published in BIG BUILDER Magazine, October 2002