The economic downturn has claimed another builder. Walter Industries, the parent company of Jim Walter Homes, announced Tuesday morning that it would close the home building subsidiary and stop selling homes immediately. Approximately 230 employees will lose their jobs.
"The story of Jim Walter Homes began as World War II ended and soldiers came home to pursue the American Dream. Regrettably, it ends at a time when the fundamentals of the home building industry have deteriorated in ways never seen before," Walter Industries Chairman Michael T. Tokarz said in a statement.
According to Walter Industries' financial filings, its home building subsidiary generated $102.4 million in revenue for the first nine months of 2008, which represents a 45.7% decrease compared to 2007. While revenue was dropping, profits were evaporating. During this same nine months, the subsidiary recorded a $30.6 million loss, nearly 10 times the $3.2 million Jim Walter Homes lost during the first nine months of 2007. (This $30.6 million figure also includes a one-time charge of $6.5 million related to the builder's 2008 restructuring.)
Founded in 1946, Jim Walter Homes has been a mainstay of the housing industry for decades with its on-your-lot home building model. In 2006, it was one of the elite group of just 11 companies who have qualified for BUILDER’s annual ranking of the 100 largest home builders every year since the list’s 1986 inception. As recently as 2007, Jim Walter Homes closed nearly 2,600 houses, a performance that made it the 26th largest builder in the country, according to last year’s BUILDER 100 listing.
But longevity couldn't save Jim Walter Homes, whose parent firm has been slowly but surely exiting the home building industry for several years.
In 2007, Walter Industries sold Crestline Homes, which produced modular and manufactured housing. It restructured Jim Walter Homes in February 2008, closing nearly half of the builder's 83 sales offices. In May, it separated the builder's financing and construction businesses, selling the financing division while retaining--for the moment--the home building side of the business. But it wouldn't be for long. Last spring, Walter Industries said it would spin off the home building division by year-end, although specifics were unclear at the time.
Walter Industries, which has been emphasizing its natural-resources operations, expects to record a fourth-quarter charge of $8 million to $10 million due to the closure of Jim Walter Homes.
Alison Rice is senior editor, online, at BUILDER magazine. John Caulfield also contributed reporting to this story.