For most people, losing one's job can seem like the end of the world. To be discarded after spending years in dedicated service to a company can be extremely demoralizing. And the job market can be a very uninviting place for those in their late 40s or early 50s.
Anyone working for a home builder these days has to be feeling anxious about job security, as companies have slashed their workforces and consolidated their operations to adjust to current business conditions that aren't improving. One research firm, Macroeconomics Advisers, estimates that the industry will lose 250,000 jobs by the end of 2008, and that construction employment, through July, had already fallen well below what current payroll data are indicating.
Photo Credit: Dan Coogan
A lot of those cuts occurred in the field and include legions of immigrant laborers who may not have been on builders' or contractors' books. But senior and mid-level managers haven't escaped the scalpel, either, and find themselves on the street pondering their next career move.
How people respond to the circumstances of unemployment has a way of shedding light on their survival instincts. Sometimes, survival can be eased by a person's financial situation after departing from or being spit out by a company. When John Landon resigned suddenly as co-CEO of Meritage Homes in May 2006, the $52 million–plus that Meritage paid to buy back his 1 million shares of company stock provided a pretty good backstop for when he subsequently launched Landon Development Co. in Dallas. But unemployment can also motivate people to take their careers in new directions, as was the case with Charles Irsch, Centex Homes' former CIO, who resigned during a corporate housecleaning last year, and later formed Dallas-based 10point2 Consulting, which provides technology and strategy advice. (Irsch declined to comment for this article, as did Landon.)
In the four profiles that appear here and the two additional profiles available on our Web site (www.builderonline.com), Builder takes a look at how six home building managers and executives are coping after leaving or being let go by their companies. Four of them, by coincidence, are 47 years old and had been with their former employers for nearly two decades or more.
It's taken some longer than others to get back on their feet. Their ordeals, though, don't seem to have shaken their self-confidence. (Three of the executives started their own businesses.) They are careful to avoid badmouthing their former companies, possibly because all but one has either stayed in the housing industry or wants to. But unemployment clearly has given each of them a new outlook about not only where he's been, but also where he's going.
Photo Credit: Dan Coogan
The Waiting Game
Artisan Homes' founder, Eric Brown, would prefer to stay in the industry. But finding a position that offers the right challenges and compensation has been tougher than he expected.
It's 113 degrees on one mid-July afternoon in Phoenix, and Eric Brown is outside landscaping a 1961 vintage home he recently purchased and is renovating. A year after leaving Artisan Homes, a company he founded in 1998 and sold to Engle Homes in 2004, Brown is ready to come in from the swelter and get his career going again. But he's not desperate enough yet to take just any job that comes down the pike.
Brown left Artisan when Engle, part of Technical Olympic Homes USA, ran out of infill projects, “and there was no room left for my department.” Artisan specialized in innovative condominiums, and its crowning achievement may be Lofts on Central, an award-winning mixed-used design concept Brown developed in 2001 for downtown Phoenix that proved wildly successful and spawned five separate buildings. But in a telling finale to the product, Engle sold the land for what would have been the latest iteration of that design—the six-story, 80-residence Artisan Haus—to a company from Argentina, which is going with its own design, says Brown.
At 47, Brown says he's financially secure, but not to where he could retire, even if he wanted to. “I'm already getting bored, and I can't let this stretch on for another year,” Brown told BUILDER in July, when he started putting his name out into the employment arena. Brown calculates his odds of getting back into home building at 3 to 1. But he was reluctant to light out on his own because “that might be suicide right now” with the housing market as soft as it is. In this economy, he wonders if there's a builder or developer out there willing to ante up for someone with his talent and experience, which dates back to 1979. That's when he first got into the housing industry as a real estate agent. Over the next 29 years, he worked for several builders and developers, with a three-year stint as partner with The Meyers Group (now Hanley Wood Market Intelligence) thrown in.
During his latest hiatus, Brown says he can't help but remember advice he got from his boss at Pacific Scenic Homes: Get out before you have to. The waiting game has allowed Brown to mull professional and lifestyle alternatives, such as opening a restaurant in Australia or New Zealand. He's already designed a 10,000-square-foot pad for it and would consider investing in such a venture. Brown also recently received dual citizenship from Ireland, his wife's native country, and he's not averse to packing up the family—which includes three young children—and starting over abroad. “My wife would like to teach yoga, and I could sell ice to Eskimos, so perhaps we'll do something together, like opening a restaurant/deli with a yoga studio,” he says playfully.
If he were to get back into the business in the U.S., Brown says he'd be receptive to joining a company “that wants to make a radical change” to its business model. He believes the downturn has afflicted too many builders with what he calls “Mikey syndrome,” recalling the famous Life cereal TV commercials that featured two brothers who refused to try a new cereal until their youngest sibling, Mikey, did. Brown also relishes his reputation for being something of a maverick and thinks it might be “fun” going back to home building for a company that's struggling to turn things around when business conditions are less than ideal.
Movin' On Up
This former Wieland CEO is expanding high-end neighborhoods for a golf-course community developer.
“I 'm a male dancer now.”
That's Terry Russell's droll response to the question about what he's been up to since being cut loose as president and CEO of John Wieland Homes and Neighborhoods last February. The dance analogy isn't totally off base, though, as Russell has stayed light on his feet, picked up the pieces after 22 years with Wieland, and this summer launched his own self-financed development firm, Atlanta-based Sanctuary Homes. Around the same time, he also began his term as chairman of the Urban Land Institute's Atlanta chapter.
For the half-year before he started his own company, the 47-year-old Russell took advantage of his time off to play more golf and begin running five days a week. He recently took an eight-day mission trip with his daughter to Guatemala, where Global Soccer Ministries was building a soccer field. “I was so impressed, I wrote them a check.”
But Russell has long been a high-profile housing executive and was a hot commodity almost immediately after Wieland released him. “I got calls from just about everyone in the industry about one thing or another.” He considered job offers from several builders, including a regional presidency with one of the top 10 companies, but turned them all down. He says he also looked at 40 to 50 projects that developers wanted him to move forward, but he spurned these, too, “because it became clear to me that we'd be building for practice” in a “miserable” market. Russell also couldn't see how he'd benefit financially from these jobs, which sometimes left him scratching his head in disbelief. “There's a story to be written about all the dumb projects out there. I saw one with four drive-unders, off of a common drive, priced at $900,000 apiece. Not one of them sold, and you have to ask yourself, ‘What were they thinking?'”
Photo Credit: Bob Mahoney
Russell planned for Sanctuary to focus on infill projects that served under-supplied markets, and as of late July it had one such project in the works in Cobb County, Ga., with 12 lots on 9 acres. Homes there will be priced at more than $1 million each, with no significant road frontage, says Russell.
But just as he was getting Sanctuary off the ground, Russell received a call from Mercer Reynolds, chairman and CEO of LingerLonger Communities based outside of Atlanta, whose 10,000-acre Reynolds Plantation on Lake Oconee between Atlanta and Augusta, Ga., is one of the premier golf communities in the country. Reynolds asked Russell to join the company to manage its projects outside of Reynolds Plantation and to expand the LingerLonger Communities brand. Russell accepted and is now the company's executive vice president. (He hired a general manager to complete the Sanctuary project but isn't pursuing any more deals under that entity.) Russell is also responsible for Linger-Longer's new, home building division, which specializes in “ultra high-end homes,” says Russell, and is on track to build around 125 houses this year. “It's a real ground-floor opportunity,” says Russell, who is already talking about expanding that division's annual production to 500 homes.
Breaking New Ground
A job-hopping construction manager in Atlanta comes to rest selling grading and excavation services.
After bouncing around to four different companies in six years, Chet Mirabal thought he had finally found a home when he joined David Weekley Homes in 2005 as its Atlanta division's lead builder. “I had won some awards and turned around some communities,” he recalls. His salary wasn't bad, either. Then suddenly, Mirabal found himself to be “a man without a community” when Weekley, like virtually every other builder, scaled back its production and laid off field staff last year in response to softer buyer demand.
On the street again, Mirabal flooded the job market with his résumé, which highlights a varied background that includes project and supervisory positions with Smithfield Homes and Ryland Homes, as well as field rep stints with Owens Corning and Perimeter Bobcat, a construction equipment supplier. He even used some headhunters, including the one who placed him at Weekley. “I was pretty much told the same thing: They could place me in a minute, in a construction job with even more responsibility, if I was willing to move.” Weekley, in fact, offered to relocate him to Dallas. But moving “wasn't an option at that point,” says Mirabal, because he and his wife had just had their first child, and she is a teacher in Gwinett County, Ga.
He did get some offers from a few builders, such as Levitt and Sons, but decided instead to take a sales rep job with Alpharetta, Ga.–based stair parts supplier Southern Staircase. Mirabal says Southern is a good company, but the job itself “was nothing special”—he doesn't even include it on his résumé—and would never have been more than a stepping stone, at best.
Photo Credit: Bob Mahoney
Mirabal's fortunes turned for the better when he contacted Scott Padis, who owns Sterling Concepts Grading, a Covington, Ga.–based provider of grading, excavation, and infrastructure installation services. Mirabal had used Sterling when he was with Ryland Homes and had become good friends with Padis, who offered him a job as sales manager. He started there last May.
At Sterling, Mirabal, who is 32, says his responsibilities are a bit different from managing a construction jobsite, which he refers to amusingly as “an adult day-care center.” He now deals mostly with senior-level operations and development managers, “but it's still about customer service.” His degree in marketing from Valdosta State University, plus his sales training with Owens Corning and Perimeter come in handy. And it can't hurt, when negotiating with customers and suppliers, that Mirabal referees Southeast Conference college basketball games in his spare time.
Mirabal says he intends to stay at Sterling “for the long haul.” He's already earning as much as he did at David Weekley, with better perks; he says the builder did not offer a truck allowance, for example. Mirabal also is encouraged by the fact that Sterling is still growing and could, eventually, become a small custom builder. “The opportunities are just greater here,” he says, concluding, after so much job hopping, that residential development isn't what it used to be.
Crossing Over
Lennar's former design studios director is helping Masco expand similar programs for U.K. builders.
Brian Hutt is a testament to the power of networking, as he was able to parlay the job he lost at Lennar last year into his current position with Masco Corp.
Hutt had been director of Lennar's design studios since January 1997 until the builder let him go on March 1, 2006. But Hutt knew as far back as the fall of 2005 that the design studios—32 of them at the time—weren't long for this world once the Miami-based builder shifted toward its “Everything's Included” marketing program, which limits the options available to home buyers. “Stu Miller [Lennar's CEO] was the creator of Everything's Included, so it was a fait accompli,” says Hutt.
Lennar's late chairman Bob Strudler had been an advocate of the design studios, and he and Hutt had worked together in Houston since their days at US Home, which Hutt joined on March 7, 1989, and which Lennar acquired in 2000. US Home was one of the first builders to sign up for Masco's Design Solutions program. And even though this relationship waned after US Home merged with Lennar, Hutt maintained his contacts there. As project manager for the design studios, Hutt met annually with Masco's executives, including its creative director Linda Kirby, with whom he established a professional bond. At IBS several years ago, Edwin de Silva, director of marketing for Masco's business unit in Great Britain, asked Hutt to make a private presentation about Lennar's design studios to Persimmon Homes, Masco's biggest customer in the United Kingdom, which Hutt remembers delivering in his hotel bedroom.
Photo Credit: Jonny Fletcher
After he left Lennar, Hutt had every intention of staying in home building, but more on the support side. He did some consulting work for a while and went on several interviews with builders in Florida, Arizona, Texas, Colorado, California, and Pennsylvania, a process that sometimes lasted months. “One company flew me out four times, and I spent the whole day with its industrial psychologist.” But by July 2006, the market had softened “and the positions I had applied for disappeared.”
He approached de Silva about joining Masco in October 2005. And two days after leaving Lennar, Hutt and his wife flew to England for what turned out to be a week-long interview and audition, during which he drove all over the country making presentations to home builders and Masco operating companies. Apparently Masco liked what it saw, because it offered him a job there. On Dec. 3, 2006, Hutt became director of builder solutions for Masco Onestep, the supplier's version in the U.K. of its Masco Contractor Services division in North America. Hutt oversees Masco's “Option Center” program for builders, and he has his work cut out for him because design centers don't have anywhere near the market penetration in the U.K. that they do in America. There's also relatively little brand recognition there. He notes that only recently has Masco started marketing itself as a corporate entity to British builders.
That being said, the 47-year-old Hutt has already scored a victory, as one of Britain's top five builders plans to roll out 40 option centers. As for living abroad, Hutt says it's been an adventure. “It's like joining the armed services, but you don't have to worry about going to war.
From Seller to Buyer
Former Taylor Woodrow CEO seeks new horizon in private equity firm's land division.
Breaking up is hard to do when you've spent more than half your life with one company. But that was the tough decision John Peshkin made when he resigned suddenly from Taylor Woodrow Homes on June 16, 2006. Peshkin, now 47, had worked for that company 24 years, and during his last six years there served as CEO of its North America division. During his tenure, Peshkin had been instrumental in establishing Taylor Woodrow as a leading regional home builder in the Southern and Western U.S. (It ranked 32nd-largest in closings last year.) He also claims to have played a major role in cultivating a corporate culture that, he says now, had become less recognizable to him over the last few years.
"The culture and direction of the company were no longer the same as when I joined it," says Peshkin, without elaborating. "It was just not the right place for me anymore." Indeed, the position he left remained vacant for eight months before London-based Taylor Woodrow hired John Landrum away from The Related Group as its North America CEO on Feb. 12. Landrum's reign was short-lived, though; after Taylor Woodrow agreed to merge with George Wimpey plc in late March, Landrum subsequently resigned and was replaced, in the second week in August, by Sheryl Palmer, formerly of Wimpey's Morrison Homes division.
Peshkin couldn't cut the cord entirely after he resigned and stayed on as a consultant with Taylor Woodrow for four months. He then took some time off to spend with his family, which includes a 21-year-old son and 19-year-old daughter. But Peshkin always intended to get back into the business in some capacity. He did consulting work for other builders, including some top 10 companies (he declined to name which ones). He also interviewed for jobs with a few builders.
Peshkin's home building career detoured when Starwood Capital Group, the Greenwich, Conn.[ENDASH]based private equity firm, approached him in the fourth quarter of 2006 about expanding its residential real estate holdings. This August, Starwood hired Peshkin to be CEO of Starwood Land Ventures, which he currently operates out of Sarasota, Fla. Merrick Kleeman, a senior managing director and head of acquisitions for Starwood Capital, tells BUILDER that Peshkin's hire is part of Starwood's plan to become a much bigger land development player. Kleeman says Starwood's investment in its Land Ventures business could be "several hundred million dollars a year, or more," and might eventually include an acquisition of a big builder.
Starwood likes Peshkin for his "thoughtful, unemotional approach" to management, says Kleeman, as well as his experience in land development. It has built a team around Peshkin that includes two former Taylor Woodrow executives and expects to open a second office in Phoenix this year. Peshkin and Kleeman confirm that Starwood is looking for land acquisition opportunities in Phoenix, Las Vegas, the Carolinas, Central and Southern Florida, and Washington, D.C. When asked about land prices in these markets, Kleeman doesn't think the "staring contest" between buyers and sellers will last and prices would inevitably come down.
Peshkin calls his move to Starwood a natural progression from a builder that "probably does more land development than any other public company outside of WCI." Peshkin also thinks land could become the "fun" part of the business, given how builders have written off so much of their own assets and might be gun shy about land risks. "Land has become a dirty word to builders, and most of them are going to need [land development] partners. Who's going to do the big deals? I think private equity is going to step in."
After leaving Taylor Woodrow, Peshkin explored some employment opportunities with businesses outside of the housing industry. "But not seriously," he says. "I love the housing industry. It gives you a chance to create a product and see a community come to life. I don't think I would get as much satisfaction from anything else."
Fish Out of Water
Kimball Hill's former CIO feels more at home returning to consulting.
Frank Scaramuzza got his first computer, a TSR-80, when he was 12, and founded his first company, Orion Consulting Services, when he was 27. This combination of technology enthusiast and entrepreneur has served him well over the years, and he's lent his expertise to numerous businesses, including Kraft Foods, Motorola, two pizza chains, and a waste management company. But his greatest challenge, and frustration, may have been his 5 1/2 years with Kimball Hill Homes, where he was director of information technology (IT) and then CIO until his resignation in September 2006.
Scaramuzza had his share of successes at Kimball Hill, where he hired better-qualified associates for his department, saving the builder over $1 million in costs related to using outside consultants. That department revamped Kimball Hill's phone system, automated its sales department (which helped the company double its size during his tenure), and introduced an in-field construction scheduling system. But his departure is evidence that he and Kimball Hill saw the builder's level of investment in technology differently. Scaramuzza, in fact, observes a "lack of urgency" about technology throughout the housing industry, which "spends only about one-half of 1 percent on technology and doesn't seem to realize the opportunities missed" by not using it as a strategic tool, he says. For example, he believes that if more builders used technology to track buyer demand, they would have spotted the influx of investors sooner and might have adjusted their operations to cushion the impact of the downturn they're mired in now.
After leaving Kimball Hill, Scaramuzza says he gave some thought to exiting the IT field entirely, which he says can be "brutal, because it's still maturing." He looked into restaurants and food service, but ultimately decided they weren't for him. With spare time on his hands, he built a home theater in his basement, with a 92-inch screen and high-definition projection system, surrounded by walls lined with Acoustiblok, a sound insulation product he came across at one of the builder trade shows.
The 41-year-old Scaramuzza isn't opposed to working with a home builder again, but he's not marketing himself in that direction. Since leaving Kimball Hill, Scaramuzza formed a consulting firm called Gold Apex and initially found work with churches and faith-based organizations. But the job market has changed considerably since the last time he was out on his own. "Businesses have gone through Y2K and ERP [enterprise, resource, and planning] implementations, and there's a lot of H-1B talent [a visa program allowing U.S. employees to bring in highly skilled people from other countries] in companies, so there's less need for project management."
His marketability is also limited somewhat by his desire to remain in Chicago. Scaramuzza signed up with Barrington Career Center, a suburban nonprofit that helps out-of-work professionals re-enter the workforce, and wound up getting his picture in a story about the Center that the Chicago Tribune published July 1 on the front page of its business section. This summer Scaramuzza was weighing several job offers, including vice president of technology for a large educational institution, director of applications for a technology distributor, and advisor to a CIO whose company provided services to Kimball Hill.
In late July, he accepted a consulting job on a software integration project with a local Internet- and catalog-based sales company (whose name he declined to identify). His hope is that this will lead to a long-term assignment.