My blog droughts have been long, but I have something to show for it. When October 2008 happened, our near future looked extremely bleak. I stood up in an anxious company meeting to tell our associates that we would do everything and anything necessary in order to “opt out” of the impending recession. I meant it. Our team responded with an astounding effort…and for now, we have done it.
About seven months later, I can say with certainty that we have successfully fought off some of the worst effects of the bad economy. Last week, we even had a modest (honorarium level) mid-year profit sharing. Recognizing that in the business of homebuilding, big losses are the norm, Chapter 11’s are common, and thousands of homebuilders have simply gone out of business, we had a happy celebration over the good fortune from our efforts.
How have we accomplished this? “The old fashioned way” is an essential part of the answer. There has been an extraordinary hard work effort throughout the company for months on end, but there are other reasons too. We also responded with one of the most creative and innovative periods in our company history (36+ years). We turned ourselves around quickly; in months, not years, we have simply become much better at what we do.
We have long been adherents of Lean Production principles and strategies. Most of our associates have taken a course on the subject and in the past several years we have also held several Lean educational forums at our facility. Like many things, though, the ultimate success of Lean requires both knowledge and motivation. What we learned recently is that while we’ve had the knowledge, the critical level of motivation had to be thrust upon us by outside forces.
Waste has always been the enemy, but seeing its many facets with clarity sometimes requires a different perspective. A deep homebuilding recession cleared the scales from our collective eyes. There are now many fewer elements of redundancy, inefficiency or waste in our process and products than there were even a few months ago. We have done little things like reduced the steps taken to get a tool and the number of times a piece or element is handled, but we have also done big things, such as eliminating unnecessary construction documents and automating layout.
Sometimes it is necessary to literally invent ways to circumvent waste because it’s so embedded in how things have always been done. In homebuilding, wasteful systems and processes are the norm, not the exception. So we have been creating and inventing in software innovations, new tools, better work stations, and improved building system details. Only the quality goal at the end is unmovable; all else between the starting point and the end point has been fodder for improvement, upgrading and reinvention--whatever it takes.
As a result of intense company-wide efforts, we are already accomplishing highest quality work, with significantly increased cycle times. Better work; less time. It turns out that even in extremely difficult times for the homebuilding industry, a formula that offers the possibility that quality, time and cost can all be optimized simultaneously will draw potential clients like bees to honey. It’s not as if we didn’t know that before last October, but we had to be jerked out of our comfort zone to get there as quickly as we have in the last few months.
What is the definition of quality? This has long remained the same for us: finely crafted, high performance buildings with the features and amenities our clients need and want. We are building homes that range from the low $200K range up to several million. Each client gives us a unique quality goal that becomes its own “no plan B” target. We customize ourselves to fit them. We are also aware that people are looking for a life improvement that goes well beyond the physical aspects of a building. In all that we do, we aspire to improve the quality of lives, which is the ultimate reason new homes are built.
What is the definition of faster time? Through prefabrication and parallel processing, we can cut typical on-site construction times by two-thirds or more. Our off-site fabrication methods are the most creative and innovative in our industry. Our Open-Built systems allow us to take a unique approach in the fabrication of building elements that includes everything from rough framing to fine finishes, without submitting to the dull architectural constraints of modular boxes.
What is the definition of cost control? Our immediate intention is to meet or beat the cost of typical on-site construction. While we eventually hope to achieve costs that we expect to be much lower eventually, for now higher quality and much faster delivery are the primary goals.
As a result of these accomplishments, we now have the same backlog we’ve had in banner years in the boom economy. It would be foolish to say that we have become immune to the travails of this hard recession (actually a Depression in homebuilding), but our team is rightly proud of having “opted out” of the recession (at least for now), exactly as planned!
Next time: back to "How to build in a Recession"
