Pulte Capital is in the business of cleaning up your supply chain.
Founded in 2011 by Bill Pulte, whose grandfather founded the Pulte Group, the private equity firm is bringing lessons learned from production home building to its investments in product manufacturers.
“My grandfather gave me a good piece of advice when I was young: hire smarter and better people than yourself," says Pulte. "We’re really focused on getting the best team together and having a lot of fun building big businesses."
In a recent conversation with Builder, Pulte talked about one of the group’s most promising assets—Carstin Brands, the largest manufacturer and distributor of countertops in the Midwest. Since its acquisition in 2011, Pulte and his team of builders have made significant changes to its operations, resulting in a lean business model that supports the company’s single-source value proposition.
The strategy reflects a broad rethinking of cooperative efforts as the construction industry moves away from the recession. On the builder level, tighter profit margins have encouraged a discerning eye for workflow inefficiencies, driving builders to change the way they hire and who they align with. On the building-component level, streamlined touch-points between stakeholders take center stage.
“The entire stakeholder system is a closer amalgam of decision-makers and collaborators,” writes Bryan Kucinski in the latest FMI quarterly report. Successful building product stakeholders, Kucinski says, are adapting by delivering on three key areas: operational health, market leadership, and aligned human capital. What Pulte is doing with Carstin reflects all three, though he would describe the strategy more simply, as taking a big business approach to small business.
Leah Drake, whose 10 years of purchasing experience within the Pulte Group befits her current role as Carstin's vice president of external operations, says she encountered zero formality upon her arrival at Carstin in 2013. In the big picture, she says, they are filling the need for process and sophistication within the countertop industry.
“With the right processes, you start to see real savings from a purchasing perspective," says Drake. "Because we have contractors in place, competitive pricing, and online scheduling, it leaves less room for people purchasing countertops to be on the phone with their trades.”
The team has also instituted more rigorous standards and contract reviews for new-hires. Clearly defined expectations outline how labor providers should appear on site, right down to where to step, take off shoes, and how to be mindful of people’s appliances.
“There’s a higher regarded expectation for our labor providers,” says Drake. “As an arm of Carstin Brands, they bring life to our name.”
Pulte envisions builders relying on Carstin Brands as a regional, single-source provider of countertops.
“The thing that is important for distributors, showrooms, and builders to understand is that they will be able for the first time to buy from a one-stop-shop. We do cultured marble, solid surface, granite, and quartz," says Pulte. "As they look at managing profitably through these challenging, albeit better times, we’d like to allow margin dollars that they otherwise wouldn’t be able to have.”
Carstin has also armed its distribution based with marketing literature and support, taking a larger role in market demands than previously expected of the commodity supplier. The largest manufacturer of cultured marble in the Midwest, the company is looking to revive that segment of the market by communicating the product’s value from a cost standpoint.
On the granite and quartz side, it has aligned with five suppliers to offer 24 propriety colors. This offering, called Carstin’s 24, enables the distributor to compete strongly on price as well as service.
“In order to single-source, a builder has to be confident that they are partnered with the best on products, service, and price,” says Pulte. “If we can’t win on products, service, and price, then we don’t want to do business with builders and they shouldn’t pick us.”
We first became aware of the business acumen of Bill Pulte through his work with the Detroit Blight Authority, a non-profit he bullheaded in 2013 before turning the initiative over to the city mayor. This year he was honored as one of Forbes 30 under 30 for industry and energy. With his focus at the helm of Pulte Capital Partners, we can expect to see the group bring economies of scale to more building component makers.