San Antonio Showdown
Our CEO spotlight this issue shines on Frank Foster of Fieldstone Communities, a Newport Beach, Calif.-based private builder riding the Rayco model to fast growth, especially in Salt Lake City and San Antonio. Fieldstone jumped 32 builders in Professional Builder's Giant 400 rankings this year, and Foster expects to grow closings in San Antonio from 333 in 2005 to 752 in 2006. By next year, Foster says he'll have his version of the model churning at a drumbeat of seven houses a day.
This is interesting because the namesake of that model — the hugely profitable 1990s remnant of 1980 PB Builder of the Year Ray Ellison's land and housing empire — once topped 60 percent market share in San Antonio by pushing production to 10 houses a day. Stacking its payroll with former Rayco employees, Fieldstone looks intent on cranking up to that level again. Can it?
Not likely, simply because the secret to Rayco's dominance rested as much on huge land holdings as on its innovative marketing and production methods. I doubt Fieldstone wants to tie up that much land. But there's another reason. The public builders are a lot more powerful today than a decade ago, and they have discovered San Antonio. Bruce Karatz's KB Home is there, and the company is much bigger today than when it bought Rayco in 1996. And then there's the current market leader; D.R. Horton president Don Tomnitz claims his firm's share in San Antonio now tops 20 percent. That's not Rayco, but it's nothing to sneeze at.
This could be worth watching over the next year: Fieldstone's Rayco model versus Horton's Wal-Mart model. A showdown at the San Antonio corral!
Who delivers more compelling value to buyers? Before you write off Fieldstone's chances, look at what Foster has to say about competing with Goliath:
"The public builders may have some advantages in materials costs. But if we design a house that costs a dollar a square foot less to build — and I know we can do better than that — we more than make up for any advantage they hold in purchasing power."
Hide and watch!
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