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The results of Builder’s 2009 “State of the Industry” survey are in, and they show an industry grappling with the toughest times builders have faced in decades. Across the board, companies are smaller, prospects are bleaker, and the mood is decidedly darker. From solo operators to big publicly held firms, companies are cutting staff and shifting focus to whatever strategies will keep them afloat. But 2009 promises a rough ride for everyone—and many builders say that simply staying in business will be a major accomplishment.

Shrinking Volume

Compared to 2007’s data, one change stood out in 2008: Across the board, companies are smaller. Reflecting a national crash in building activity (starts in October 2008 were down 40 percent from October 2007), the proportion of builders in our survey who reported starting fewer than five homes has swelled from 45 percent to 54 percent. The percentage of builders who started 20 homes or fewer is now at 70 percent, up from 61 percent a year earlier.

Dollar-volume changes mirror the results for home starts: From the largest firms to the smallest, everybody is earning less. Only 8 percent of respondents in 2007 reported less than a half a million dollars in receipts, but by 2008, that proportion had jumped to 13 percent. In 2007, 62 percent of respondents grossed less than $10 million; in 2008, that share had grown to 70 percent.

Cutting Staff

Personnel cuts show a similar pattern of drastic downsizing. In 2007, 44 percent of companies reported laying off staff, while 9 percent had boosted payrolls. This year, job losses are accelerating: 57 percent of companies now say they have laid employees off, while only 3 percent report adding workers. The layoffs are changing the face of the industry: Firms with only a handful of workers now make up a larger segment of the total, while the ranks of companies that employ hundreds are thinning. In 2007, 51 percent of respondents reported having five or fewer full-time employees; in 2008, that proportion was 57 percent. At the other extreme, companies employing more than 50 people made up 22 percent of the firms in 2007; by 2008, their share had shrunk to just 14 percent.

The Outlook

As their firms scale back, builders are taking a gloomier view of the overall economic situation. In the rear-view mirror, 2007’s majority prediction of a rebound in 2008 seems almost naïve. This year, 37 percent of builders think the market will touch bottom in the first half of 2009 and 26 percent in the second half of 2009, but 14 percent expect the slump to continue until 2010.

Beyond the Numbers

In survey comments and phone interviews, Builder readers describe a situation that has grown increasingly difficult. A small upper Midwest builder remarked, “We are currently out of ideas. This area continues to experience huge job losses without anything new to create jobs.” Commented ­another small builder, “I am down to a one-man show with no money.” Another said simply, “Nothing is working.”