The move gave McFarland, whose background before he joined C.P. Morgan more than two years ago was on the building product side of the business, a chance to develop and flex new muscles.
His focus: refining the company's building processes so that, when the market does improve, the company—ranked No. 25 on the Builder 100 list—will be ready to grab more market share.
McFarland took some time out to speak with BIG BUILDER senior editor Teresa Burney in late September.
BB: C.P. Morgan has been using even-flow or, as you call it, “x per day” manufacturing processes for 20 years.
How are you improving on that?
SM: We try to tighten down our schedule, improve our quality, take some of the “just in time” concepts in real manufacturing and bring them to home building as well. … [We try to] take time and costs out of the process and use the Kaizen lean manufacturing concepts.
BB: A lot of builders talk about taking advantage of the downturn to buy land and gain market share. Any plans along those lines?
SM: I wouldn't say so in the short term. There is too much uncertainty right now. … We aren't ready to put any money in dirt right now.
BB: Are you spending a significant amount of time negotiating with your banks?
SM: As a private builder, of course, we rely on our banking relationships. We have always had a pretty close relationship and been involved with our bank group. JPMorgan Chase is our lead banker. Everything's tighter in this market, so banks are highly alert and keep an eye on everything. We have always been very efficient, and they've had good things to say about our model and how we work—and that has always been good. If we would just generate more sales, everybody would be more happy.
BB: The advantage of having a reputation of being a good operator is that you may get some additional business from the banks.
SM: That is a possibility. It hasn't all materialized from the banks yet. … We have had interest from hedge funds that have said, “Hey, when we dive in, if we buy land, could you help us turn this into homes?” They don't have a home building company. They have to figure out a way to turn that dirt into houses. We are a good manufacturing model that can help them do that if and when they ever dive in, instead of just circling.
BB: When you are not busy refining the C.P. Morgan home building machine, what do you like to do?
SM: I think my biggest hobby has been coaching my kids. I played sports in high school, so I've coached my daughter and my two sons. My daughter's in college now, one of my sons is in high school, and one is in middle school. I have coached football and lacrosse and girls' basketball and soccer. I love coaching. That has been my passion my whole life.
BB: Are there many parallels between coaching sports and your job now?
SM: There are a lot of similarities between the two—a lot of differences, too. This is not a game. These are peoples' lives we are working with. … When you allow people to fix their own area, get involved, and problem solve it, and give them the tools and the empowerment—that's a lot of fun. That kind of goes back to that whole coaching thing. It's fun to turn people loose, and once you do, that you give them the power to think like an owner.
For a complete transcript of Teresa Burney's one-on-one interview with Steve McFarland, please visit www.bigbuilderonline.com.
