Last year, Astoria Homes in Las Vegas closed only 60 percent of the 1,012 units it closed in 2005. Yet, Astoria had zero layoffs among its 155 associates, and recently it's been beefing up such departments as marketing and design in preparation for starting as many as four new communities in 2007.
Miami-based Century Homebuilders also held the line on layoffs last year. “Our closing department wasn't closing homes for three or four months, so we just had them do more organizing, which was okay with me,” says Century's president, Sergio Pino, who now projects that if market conditions continue to improve his company will hire two or three people per month through August.
Struck by a sharp deterioration in buyer demand, many production builders reined in construction and downsized their operations in the second half of 2006, which often meant reducing their staffs, sometimes dramatically. Beazer Homes, for example, reduced its head count by 25 percent; D.R Horton eliminated positions for three COOs and six regional presidents as part of a $220 million administrative expense trimming.
Still, some builders—particularly those that are privately owned, and therefore aren't harangued by nervous shareholders—made conscious efforts to resist staff cuts. By doing so, these builders believe they've positioned themselves to respond quicker if their markets rebound sooner than expected.
“Once you have a team, it's hard to replace them, and [layoffs] will cost you more in the long run,” says Pino, whose company chose to cut back hours for its 65 employees rather than let them go. Astoria kept employees busy during slow periods by having them make upgrades to its models and standing inventory, says Sia Howe, the builder's vice president of marketing. “Our president feels very strongly that people make the company and that layoffs can be counterproductive” in terms of morale.
Indeed, after Pageantry Communities let go seven of 75 employees in Las Vegas last fall, its Southwest division president, Bill Hoover, met with the remaining employees “to let them know what was going on,” and to assure them that the layoffs weren't a harbinger of the company being sold in the near future. In fact, Hoover recalls telling his workers that they would have to “step it up” to help Pageantry meet its longer-range growth objectives.
Warmington Homes prefers to maintain a consistent staff of around 500 people, and get the most out of its workers, instead of adding and subtracting personnel as the market shifts up or down. “We didn't bring on a lot of people when business was good,” says Allen Morris, senior vice president of marketing and sales for this Costa Mesa, Calif.–based company.
Warmington expects its production in 2007 to be about the same as it was last year—1,100 homes—but it's open to hiring more people, says Morris, especially with so much talent looking for work after being cut free from other companies. Charlotte, N.C.–based Eastwood Homes, which is coming off of a record year of 1,300 closings, picked up employees from public builders in its land acquisition and marketing departments, “not just people who were laid off, but also those who had jobs but were looking for more stability,” says Mike Conley, Eastwood's Charlotte division president.
Pageantry has also secured talent from larger competitors, in both Las Vegas and Seattle, in land development and customer service, says Hoover, who notes that his company needs more “bench strength” to meet its goal of doubling the number of markets it's currently in, to six, within five years. “We've looked at different growth scenarios, and now we need the talent to expand.”