Pulte Homes, a strong advocate of vertical integration, put its money where its mouth was in late 2003 when it entered into a joint-ownership deal for Phoenix-based Pratte Development. That business, now called Pratte Building Systems, provides turnkey installation of concrete foundations, framing, plumbing, and millwork for all of Pulte's construction in Phoenix, Tucson, Ariz., and Las Vegas, where it closed 9,500 homes last year.
The builder's cost savings from employing Pratte's services have been “profound,” asserts Alan Laing, 43, a 13-year Pulte veteran who became Pratte's president on Jan. 1, 2004. While he wouldn't translate that into dollars, Laing illustrates his point by noting that value engineering—“one of Pratte's core competencies”—helped Pulte reduce by between 10 percent and 15 percent the framing that goes into its homes in these markets.
Pulte expects to close 10,000 units in Phoenix in 2007, and that growth in Arizona and Nevada “will tax Pratte's resources,” says Pulte's COO Steve Petruska. Consequently, to bring this business model to other markets—California is one long-range possibility, as are Denver and Albuquerque, N.M.—Laing suggests that Pulte may need to either create or strike partnerships with existing local businesses.