While it's newsworthy that Taylor Woodrow and Morrison Homes combined under the Taylor Woodrow banner, which would move Taylor Woodrow up 17 spots to No. 15 on the 2006 BUILDER 100, what's really interesting is that it brings to light an important strategy for home builders.

Doug Schwartz, executive vice president for Taylor Woodrow's Eastern U.S. Division, says the merger broadens Taylor Woodrow's geographic reach and its product mix.

Schwartz says Taylor Woodrow specializes in mid-scale homes while Morrison's focus is on first-time and first-time move-up buyers. He says the new company covers California more thoroughly since Taylor Woodrow has a strong presence in Southern California while Morrison's strength is Northern California. The same holds true in Florida, where Taylor Woodrow does well in the Southeast and Morrison is strong in Jacksonville and Orlando.

When asked about the merger, Mark Vitner, a senior economist at Wachovia Corp., says he expects to see many more mergers in the housing industry.

"Companies would be wise to broaden their geographic and product mix without boosting land holdings," he advises.

According to Schwartz, that's precisely what Taylor Woodrow did.

"Since we're owned by a British parent, our land buys are much more conservative, so as the market turns we're not as land strapped as other big builders," Schwartz says.

Taylor Woodrow PLC and George Wimpey PLC officially became Taylor Wimpey PLC on July 3. In the U.S., the new Taylor Woodrow will be based in Bradenton, Fla., and headed up by John Landrum, who will serve as president and CEO for North America. Taylor Woodrow will still keep the Morrison Homes brand name in the U.S. and Monarch Homes in Canada.

On the operations side, Schwartz says Taylor Woodrow will be converting Morrison Homes over to Constellation's NewStar construction management system. This is of interest considering the multi-million dollar investment Morrison Homes put into SAP during the past five years.

Learn more about markets featured in this article: Bradenton, FL.