Ken Neumann is president, CEO, and founder of Neumann Homes. Now in its third decade of operations, the privately held company closed on more than 2,400 homes, generating revenue of more than $500 million in 2005. Based in Warrenville, Ill., and known for the quality of its products, Neu-mann Homes is a major builder in the Chicago area, Wisconsin, Michigan, and Colorado. Last year, the company bought Tadian Homes, a large Detroit-area home builder. Neumann has a master's degree in business from the University of Chicago. He and wife Jean have five children, aged 19 to 26. He spoke to us during November's BIG BUILDER conference in Las Vegas.
BB: Most of your home building is focused in the Midwest. Is it the “battered” market we hear so much about?
KN: Our background is primarily in the Chicago market and the greater area. We entered Detroit just less than two years ago with an acquisition, and it is miserable. [Detroit] is off 24,000 starts, down to under 10,000 starts. It is very battered. The rest of the Midwest markets that we are in have actually have held out pretty well.
BB: Are you especially glad, this year, that you don't have shareholders looking over your shoulder?
KN: I think we are [as] challenged as the public companies. We try to run our business very similar to how they run theirs: same fundamentals, same metrics, answer to ourselves, and certainly answer to our bankers as our financial partners.
BB: Could you be tempted to go public?
KN: The only possibility is when I'm about another 25 years older and it makes some sense to do it, [as a] transition, for our family at that point in time.
BB: Does the glut of unsold new homes hold a lesson for builders: Don't put up as much housing when you see signs of a slowdown?
KN: It has been a lesson for builders for as long as I have been in the industry. However, the last two or three years, we have seen very large builders building enormous amounts of spec homes—it is fueling the instability that is in the marketplace today.