Big Builder spoke with Nordstrom just two weeks after he took over the helm of Pringle, a builder of active adult communities in Central Florida. Pringle built 401 houses last year and 574 the year before.
Nordstrom lives in Oveido with his wife, Allison and their two children, R.J., 16, and Madison, 12.
BB: You were with Jim Walter quite a long time.
SN: I actually joined Jim Walter Homes in Georgia, in Atlanta. That is the kind of company it was, and I presume is, there was at the time a lot of opportunity for moving through the ranks, and once I realized that I felt that it was a good place to stay. It was a very interesting run. My main background is in the construction end of the business, and so I started as an assistant construction manager and moved through and when I exited, it was as president of the eastern region.
BB: That is your college degree, too?
SN: The title of the degree has been enhanced somewhat. Rather than just good old building construction, now it's construction sciences right after I left.
BB: What sets Jim Walter's business model apart?
SN: Jim Walter has a fascinating, very unique business model. I don't think any company has done it on the scale of Jim Walter Homes successfully. I mean, I am sure there are plenty of on-your-lot and scattered lot, which are actually two different things, but nobody had ever done it to that scale and to that breadth and depth.
BB: Do they still do that?
SN: When I was with Jim Walter homes, at one time the company was comprised of 16 or 17 companies. When you have a company as diverse as coal mining, ductile iron pipe, home building, etc., it's very difficult to analyze in the financial markets, and so I think they have gone on a very long-term strategy to narrow that. So now there they are with coal mining and home building.
BB: And Pringle?
SN: It's a fortuitous business opportunity, and very fortuitous given that there are plenty of talented executives out looking. I've always kept a fairly robust business network and so the opportunity presented itself.
BB: You are coming here at a low point in the market.
SN: Challenging times? That would be the euphemism.
BB: You started out in challenging times.
SN: I was with two other companies before I was with Jim Walter. It was so brief that I don't even have it on my resume.
BB: Because you were starting out in RTC times in the late '80s?
SN: That is exactly right. The way I like to describe it more on my terms is that oil took the banks and the banks took home building and that was pretty much it. I was a young construction manager within General Homes at the time. I got laid off four days after I got married.
In hindsight, that was formative for not just me from a career standpoint, but for my wife and I. Up until that time, I don't think either one of us had been out of the state of Texas in at least the preceding 10 or 15 years.
BB: What part of Texas?
SN: I grew up in the Houston area, and she was from the Dallas area. My father had been with Shell Oil for 36 years and, to me, that's what you did, find a company, stay with them. It's just naïve. This is a volatile industry. I chose a profession that has significant ups and downs, I was just too young to realize it.
So, when suddenly, there were no home building jobs to be had in Texas, ? I was very fortunate, actually. To this day, I have no idea how my resume got picked up by another Aggie in Atlanta, Ga. We spent every penny we had moving, because they don't say to you, "We'll pick up the tab." So it was a pickup truck and a U-Haul and this is a matter of four months after we were married, maybe five or six months. The look on her parents' faces said, "What's this guy doing?" And I got laid off from that job after six weeks.
It had happened so quickly, and the move to Atlanta had been so traumatic, that I didn't tell my wife that I got laid off. I got laid off at like 2 p.m., and I went home and I opened up the newspaper and found the ad for Jim Walter Homes, called them, set up an interview for the following day, didn't tell my wife. So when she got home it was completely normal. "How was your day?" And the next morning I got up and put on my Dickies, and my white shirt and went out to my truck and went to the end of my apartment complex. I waited for her to drive off. I went back in the apartment, got on the interview uniform from college--I think it was khakis or gray pants, the red power tie, the blue blazer--drove over, interviewed with Jim Walter, got the job. That evening I came back and said, "I've got bad news and good news."
BB: Well, after getting fired within six months twice, no wonder you stayed at Jim Walter for so long.
SN: I think my wife might have told me that it was my last chance to be in this industry. "You better get this figured out."
BB: So what made you decide to leave Jim Walter?
SN: The then-president of the company who had mentored my career was retiring. That was Mike Roberts. One of the reasons I had a successful career with Jim Walter is that they had a habit of promoting from within. Terrific opportunity for people to move up in the organization. But there is also a downside to that. If you don't proactively put new ideas into the organization, you will stagnate. So when Roberts was exiting, Walter Industries, the parent company, was very proactive about finding new blood from the outside. Well, with new blood comes new ideas about structure and focus, etc.
At the time, I was senior vice president of construction. The new president asked me to become president of the Eastern Division, and that was a new structure to have big regions and then division presidents below. I agreed to do it, seeing it as a challenge, but about a year later it was clear that the structure was not the way to go. My next move would have required a move out of state, and so we are talking about 2004 in Florida, arguably the hottest market in the industry.
BB: You were in Florida at that time?
SN: I was in the home office in Tampa. So we parted friends with regrets, and I still have a lot of good business contacts and friends over there. And so I went out and looked around.
BB: And you did something very different. You went to work for a small company.
SN: I was completely ready to do that. It was interesting because I had a lot of offers and interest for somebody of my skill set at the time from very big companies, and after interviewing three or four times I felt there was something really missing in what I had envisioned. And a very good friend of mine within the industry was kind of coaching me about my transition, and I kind of confided with him that I wasn't sure what I was missing. And he said, "It's culture." He said, "You always talked about how you were steeped in that culture over there at Jim Walter Homes." And it's an incredibly powerful thing, the history and the legacy, and I couldn't find that with some of the companies I was talking with. And so then along comes Condev. A recruiter picked up my resume and called me and said, "We're a small developer/builder in Winter Park, and we need somebody to come in and help grow the business, work on the operations." All of a sudden I realized I was very comfortable with the company and the opportunity. This was the way to grow a business. And so I accepted.
BB: And it was a good fit.
SN: It was a great fit.
BB: And then this opportunity came up.
SN: I was particularly attracted to Pringle because of what I kind of see as a thread that runs through my career, which is this legacy and heritage. Here's a company that, to me, combines the depth of legacy of a Jim Walter Homes and the family values and commitment of Condev Homes. And it's interestingly about in the middle of size.
BB: It's significantly bigger than Condev, but much smaller than Jim Walter?
SN: Yes, and, frankly, with a very targeted business model and a niche operational strategy, so that's attractive to me.
BB: Do you think that very, very targeted business model has been a good thing in this downturn? When you pick a niche, you have got to hope you pick a niche that will hold up well.
SN: Absolutely, so the over 55 market, here's a company that has been inside this market since 1981 and, frankly, before that with Pringle Development. How could it be more fortuitous with the ending tsunami of retirements from the boomer generation?
BB: I think I saw the numbers for last year--a little more than 400 homes? Is this the kind of company that is going to be able to retrench and survive this decline? Clearly, not everyone was poised to do that.
SN: Exactly right, and here with Pringle there are some operational challenges that we need to overcome. But the thing that is really terrific about this company is that this company has become over the past few years a real student of business process management. And I don't think there is enough of it in the industry. If you look at the operations inside Pringle, the founders John and George Pringle were dramatically ahead of their time because the business processes, the discipline are all in place here. This company has some of the most robust business operations I have ever seen.
The business metrics that are available to management are top tier. And the depth of the information available and the data mining operations that make it so much easier to see what to do, where to go, etc. So it has an inside, even the age-targeted market, it has unique operations, and they predate me by 15 years. This company courts its prospects for 18 months prior to inking a contract. The operation is incredibly sophisticated when it comes to seeking and communicating with its target audience, and it's incredibly patient.
BB: So what is the biggest challenge Pringle faces, in your estimation during the short time you have been there?
SN: Operationally, what I see is probably common to every successful builder. If you were to look at Pringle's production numbers, it's a classic hockey stick model of a company that was doing 200, 250 units of production for 15 years, and then suddenly, starting in about '03 this dramatic hockey stick increase to numbers that, if I am not mistaken, approach about 600 units. I think there are some scaling issues associated with the organization being able to manage that dramatic an increase. But, that aside, my point is more along the lines of what happens to highly disciplined processes in the face of this tsunami of demand. And sometimes I am a little bit simple in my illustrations. But as I explain to my folks here, if you open a sales office in the morning and there are a dozen people standing there with a pen in hand saying, "Where do I sign," it's not unexpected that your discipline in sales processes might erode to a certain extent. I think that the most important thing we have to do here at Pringle, and my franchise and challenge, is somewhat of a back-to-the-future operation. We have to examine, and we are examining, where we were that brought solid, steady success to this company, and those tremendously solid business processes and reinvigorate them, reintroduce them, and train and train.
BB: Back to the good old days?
SN: Absolutely, you have to go with those who brought you to the dance.
BB: Do you see Pringle's future as being what it was before, that good steady pace, or do you envision it growing much beyond that?
SN: Sure, we could, in the short term and the mid-term, it's to make sure we solidify the fundamentals and the base operations, but, beyond that, there's tremendous opportunity for this. As I pointed out before, I am very impressed and believe that one of the greatest assets of the company is the Pringle story. These are Scottish immigrants who have been in Lake County since 1912. That is a powerful, powerful legacy. I think that name and that brand could be incredibly powerful to demographics beyond the age-targeted market in which we operate. There are, obviously, some geographic diversifications that would be a potential. But that's the future.
BB: But right now, you're shoring up your processes again, going back to the future,e and learning how to sell again--some things that the company was really very good at, but might have lost sight of at the time when they were tripling their development.
SN: I want to emphasize that I don't think that's a Pringle issue. I think that's an industry issue. That was some go-go stuff. It was more an issue of what's happening to my cycle time.
BB: Cycle time was key, and you had people who didn't have to sell anything.
SN: That was right. It wasn't a situation where you were having to sell. Now, everything that I have seen about the staff that is here at Pringle, they are top-notch people, just terrific people. And a lot of them have been around for 10, 15 years and that is very important; that institutional knowledge of previous operations is very, very important to us.
BB: So you feel like you have landed at a good place, even if it is a bad time.
SN: I don't know how I could have found a better fit and a better challenge.
BB: Is there one particular thing that you came in and right away said, "Okay, we need to change this," or are you still sitting and watching?
SN: This is the end of my second week. Certainly, coming into such a sophisticated company, there is an awful lot to learn. And while I have tinkered around the edges a little bit saying, "Why don't we do this? Why do we do this? How could we do this?" it's mainly a learning experience right now.
BB: The big issue right now for everybody is whether they have enough cash to survive. Pringle is employee owned now since '04. But does Pringle have the dry powder to hold on during the downturn and also maybe pick up land at good prices as it becomes available?
SN: We have some land inventory, and we are not seeking any land acquisition. We have some that we would like to divest, as a matter of fact. Some really, really pretty properties, but probably too big a bite. They looked fantastic in '04.
BB: Two years ago, there was talk of expansion and even going beyond the active adult market into the first home market.
SN: And that would absolutely be an opportunity at the end of the current strategic plan. Obviously cash flow is a challenge for all builders. We are very fortunate that we remain a very profitable company. The biggest challenge that I see, when you are courting your customer for 18 months and then the next interesting part of the value proposition, is that we will contract to defer construction for two years, and that is a very, very powerful part of the value proposition here. One of the things we want to make sure that we message to future retirees right now is that you don't have to bring it out of the ground in 90 days. We can build you a custom home. We can defer construction for a couple of years. But if you look over the past two years with sales being off, that gives us a tremendous gap in pipeline. That is something that we have to deal with. That is going to be somewhat challenging. But, again, I'm very, very confident that we are going to be one of the companies that will be positioned to take advantage of an upturn immediately. And that's what we are seeking to do. Nobody can change a down market, and the important thing is to have a company positioned to minimize the down and be ready to come out strong as the market returns, which will be a several-year process.
BB: Has there been any talk of changing that two-year construction?
SN: We have kicked around a couple of ideas, just from a marketing standpoint. Two years has been entrenched for a long time. One of the things I asked was, "Would one year be as attractive?" And so we are going to test a few of those things. Absolutely.
BB: Especially to deal with that gap.
SN: Two years is incredible. When I first heard about it I was going, [whistle] Wow. But this is something that has worked year after year after year after year. And it is something about the value proposition that has made this company very steady and very successful, and so will we explore tinkering with that value proposition? Of course we will. You have to either validate it or change it, etc. So my question was: Is one year equally valuable to the customer? Does it work as well as two years?
BB: How many people actually wait two years?
SN: You would be surprised.
BB: Do you have any hobbies other than building houses?
SN: Does anybody in this industry have any hobbies? Yeah, as a matter of fact, every opportunity I get I like to be outdoors. I am a hiker, and as of a year ago my wife and I bought kayaks for our anniversary, and we really enjoy that.
BB: There are lots of places to do that here.
SN: Absolutely. We enjoy travel. Kind of inline with the outdoors thing, our family really enjoys national parks, and so we try to do as much unusual venturing as possible.
BB: You have children.
SN: We have two. Our son is 16. His name is R.J. That's Russell and James for our fathers. And our daughter is 12, Madison. It's a small thing, but it meant a lot to me--every day I drop my R.J. off at school, every single day. That's really meant something. Russell is going to be a senior next year.
BB: Where was the last family national park trip?
SN: We were in Alaska last year. We took a cruise, and we went to several parks that were actually Alaska state parks. We did some really cool things. We dog-sledded on a glacier whidh was tremendous. And we kayacked in Canada. And then, we did the Southwestern trip, four corners. We went and did the Grand Canyon, we went to Arches National Park, we went to Mesa Verde. Oh, this tremendous trip that we took in a week.
BB: You did all that in a week?
SN: Well, you know in home building, you don't get more than that.
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