Erosion Control:
Home Builder Profit Margin Enhancement

In his recent New York Times Op-Ed “The New Untouchables,” Tom Friedman lays out the case that the new global economy has created a Darwinian dilemma for the American workforce. Those who are incapable of creating new services, new products, recruiting new customers or conceptualizing and creating new businesses will be relegated to low wage careers with little stability or hope for advancement. On the other hand, those who do have those capabilities will become “The New Untouchables,” in other words, they will always have a place at the table because, in effect, they have created it.

Our consultants see a similar scenario emerging in the home building industry. Companies are challenged with a combination of significant short-term challenges such as foreclosures, capital markets failures and unemployment and “seismic” long-term trends like green building, sustainable development, hyper-inflation, a disappearing skilled trade workforce, increasing construction defect litigation and changing customer demographics.

Like the workers who fail to develop the capabilities that are valued by the new ultra-competitive global labor market, companies who fail to nurture, acquire and deploy the skills to understand and leverage the short and long-term challenges and trends will struggle to survive. This month’s issue of Erosion Control includes perspectives on how to leverage key trade contractors, green building, sustainable development and options management to drive profitable operations. As you peruse the articles, think about how quickly and easily your organization could acquire and implement any of these processes, ideas or concepts. The answer to those questions will help you determine which category you are in.

Clark Ellis
Principal
cellis@fminet.com

Trade Contractor Pricing Will Rise in the Next Two Quarters: Find Out Why and What Can be Done

The business of construction trade contracting is unique. While it is one of the most closely aligned businesses to macro-economic conditions, it also features some characteristics that are not just unique, but downright counter-intuitive - unless you understand the industry structure in which they operate. Download Full Article >

Discovering a Green Goldmine

In this industry, and especially in this economy, it is difficult to turn a profit building homes, let alone spend extra money to make them green. What if you could find enough gold in your current building process to make green pay for itself? What if going green did not have to add incremental cost to building a home? Builders can add value to each and every home they build, create a competitive advantage, develop a marketing opportunity and sell a higher quality home, all for the same or lower price per square foot. Download Full Article >

Green Homebuilding: The Last Holdout or the Next Frontier

Judi Schweitzer presents an article on the merits and costs of green home building and the tendency of home builders to lag behind other real estate sectors in embracing sustainable development. Incorporating “green” elements successfully and cost effectively into any project is an “art” that requires a multi-disciplinary, integrated approach as well as a long-term view of “value.” It also requires at least one powerful stakeholder who makes “going green” a requirement of the project. Download Full Article >