A House Kit

BMHC is offering to do more than supply building materials to high-volume production home builders. The San Francisco-based company wants to help build the homes, too.

BMHC, which had $2.9 billion in sales last year, unveiled its SelectBuild Construction Services division at the recent Pacific Coast Builders Conference, rebranding its division formerly called BMC Construction. The newly named division's ultimate goal: Provide big builders with a finished house—from trench to trim.

“We're betting that high-volume, production builders will want to focus on land acquisition, product design, and marketing, while outsourcing the construction process to a company like us,” says SelectBuild's CEO Michael D. Mahre.

The Construction Services division may have a new name, but the company has spent the last seven years acquiring skilled labor in one of the fastest growing markets in the country. BMHC kicked off its buying spree by investing in Phoenix-based framer Knipp Brothers Industries in 1999. Since then, BMHC has joined 16 different construction services firms under the Select-Build umbrella and now has operations in 15 markets, eight states, plus Washington, D.C. (BMHC previously operated those companies as separate units within its BMC Construction division. BMC West, which constitutes the other half of BMHC's business, remains the firm's traditional material distribution arm).

DELIVER AND ASSEMBLE: SelectBuild crew members assemble rough framing during construction of a housing development. Rough framing is one of 13 services the firm offers in 15 markets. SelectBuild, in some markets, can now form a home's foundation, erect its walls, hoist trusses into place, plumb it, install its heating, ventilation, and air conditioning systems, mount the windows, nail on interior trim, and trowel on the exterior stucco. Other services, such as electrical, roofing, and drywall, are to be added to that list soon. The company is tapping into $150 million in financing as new buying opportunities emerge in the ever-consolidating construction material supply business.

“We don't need to stop [there],” Mahre says. “We can go beyond production builders' needs today by realizing jobsite synergies and integrating the labor force. Eventually, there's an opportunity to integrate entire project management activities, as well as some portion of the supply chain.”

Builders of new residential housing account for 94 percent of BMHC's total sales, and the company specifically focuses on production builders, serving 19 of the top 25 builders, including KB Home, Standard Pacific Corp., and Woodside Group.

SelectBuild is building 60 percent of the frames, pouring 80 percent of the slabs for homes in KB's Phoenix division, says Jon Doherty, the division's executive vice president. Plumbing is now offered in that area as well.

“It's just a better model,” says Doherty. “The more that you can have under one umbrella; the easier it is to manage the process. Right now, [SelectBuild] is doing our slabs and our framing, and there's value in that. But when you look at what they want to do long term, that's the real winner. Then, it's really just them, and having one trade partner that you can call on to manage your business.”

SelectBuild's services can cost more. “Today, I probably pay a little bit of a premium,” Doherty says. “You're always going to be [looking] to find another framer who's willing to come in for less, or another foundation guy who's going to come in for less, but when you look at the total package, I think in the long run, I'm getting a better deal.”