If you close your eyes for a moment, you can almost hear George Clooney from “Up in the Air”: “I kind of held on to people and operations and places probably longer than some of my … competitors. My failure was in being too compassionate, not facing the music as quickly as we potentially should.”
But these words were not George Clooney's, and they were not from a movie. They were spoken by David Weekley, chairman of David Weekley Homes, until recently a womb-to-tomb employer of very happy people, who seven times voted the company one of Fortune magazine's “100 Best Companies to Work For.”
Letting people go is not what David Weekley prefers to do, though, like all builders, he's had to do a lot of it over the course of the downturn. Still, he never got comfortable with it and allows that he delayed making one final round of cuts after business tanked, along with the stock market, in the fourth quarter of 2008. He waited until after the following weak spring selling season to finally cut more than 100 additional positions from the Houston-based company's workforce that at peak hit 1,660 “team members.” Employee count now is 630.
“For a company to have to lay off over 1,000 people after being on Fortune magazine's … list is a real conundrum and a challenge,” he says. (The company gave the employees triple severance and promised to keep track of them for when conditions improve.)
“It was an incredibly difficult decision, and we lost some great people,” Weekley says. “But we have to live for another day. We were very straightforward and honest about what was going on with them.”
Of the people who are left at Weekley Homes, many have taken pay cuts and have gained additional responsibilities, some well beneath their job titles. Division presidents became project managers. “People changed positions so that the company survives. From our standpoint, these folks are vital not just for our success on the way up but for maintaining ourselves.”
Weekley himself promised employees he would not take a paycheck until the company could reinstate its 401(k) match program. That just happened, 18 months later, after the company began turning a profit again. “I thought it would be a quarter or two, so it was much more significant a promise than I thought it was,” he says.
The cuts have put the company back in the black, at least for now. To be sure, it is not the same company it was. In 2009, according to BUILDER magazine's BUILDER 100 rankings, Weekley closed 2,229 homes, down from 3,213 in 2008, which fell 30 percent from 2007. Ranked No. 17 on the BUILDER 100 list and No. 2 out of the for-profit private builders for 2009, revenue was $690 million for the company, off from $982 million in 2008, which was down 26.9 percent from 2007.
The company has managed to whittle down its debt from $460 million at peak in 2006 to $30 million. “We are at a debt-to-equity that is the lowest debt level in the company's history,” Weekley says.
THE WORST IS OVER While, like so many home building executives, he calls the market's bottom “rocky,” Weekley thinks the worst is over for his company. “I feel like we are kind of through it now,” he says. “We are down to where we are operating at profitable levels. I can say we are through it, assuming there isn't another leg down.”
Weekley has less exposure than it had a couple of years ago. In 2009, it ceased operations in Phoenix and Tallahassee, Fla. Perhaps most significant is that two-thirds of the company's business is concentrated in Texas, where the housing downturn has been far less severe than it has been elsewhere in the Southwest and South. The rest of its 2009 closings were scattered throughout Atlanta; Denver; Jacksonville, Orlando, and Tampa, Fla.; South Carolina; and Raleigh and Charlotte, N.C.
“We have been geographically blessed that most of our buyers have been in Texas,” Weekley says. “It has been difficult here, with 50 percent to 60 percent drops, but it hasn't been 70 percent to 80 percent drops. Texas kind of held up the company for a number of years.”
Learn more about markets featured in this article: Houston, TX.