Won’t You Please Come to Chicago?
Here is a direct quote from last Wednesday night from one of the principals embroiled in a conflict the Wall Street Journal reports today is “a firestorm that could cost [National Association of Home Builders CEO Jerry] Mr. Howard his job.”
As a close observer of the recent legislative activities and the subsequent give-and-take that has occurred, I know you can appreciate the importance of unity for the future success of our industry. That’s why we are actively engaged in a constructive dialogue with our trade association. We all want to ensure that home builders are recognized for the important contribution they make to the economy and to our way of life here in America. Having a cohesive voice in Washington has never been more important.
- See two previous Housing Crisis.com posts on the NAHB/big builder struggle over laws that would extend NOL tax carryback provisions. One is “BIG HOME BUILDERS VS. NAHB BRUSH-UP UPDATE,” and the other is “HOME BUILDER TRADE GROUP GOES PUBLIC, OR RATHER, GOES AT ITS PUBLIC MEMBERS.”
Conciliatory, careful almost to the point of mincing, this from-the-horse’s-mouth phrasing–which we believe will rule the day amid more hot-tempered militant voices–concludes with this line:
While we would differ with the approach that was taken and with the characterizations contained in the information published by NAHB recently, we believe it is best to focus on the future and how we can be more effective and successful as an industry. We are looking forward to having solutions-based conversations with the leadership of NAHB and anticipate a productive outcome.
You’d scarcely read into those words the stunning speculation reported by Michael Corkery in the WSJ article:
Executives from some of the trade group’s largest home-building companies are scheduled to meet Monday in Chicago with the NAHB leadership to discuss the possibility of ousting Mr. Howard, according to people familiar with the meeting. An NAHB spokesperson declined to comment.
At the meeting in a private club at Chicago’s O’Hare International Airport, representatives from KB Home, Centex Corp. and Pulte Homes Inc., some of the largest home builders in the U.S., may call for Mr. Howard’s ouster or threaten to break away from the 200,000-member trade group, these people said. A Pulte spokesman declined to comment. Executives from Centex and KB Home couldn’t be reached.
“According to people familiar with the meeting” could mean many things. Last week, we talked to some home building company senior level executives who were so aggrieved by the NAHB leadership’s behavior that they mentioned calling for his ouster as a condition to their agreeing to remain part of the trade association. But as we reported more extensively among public company leaders, we were told calmer heads would prevail, and that a very likely outcome would be a note of compromise.
Among the issues are economics. Association members pay dues according to a sliding scale, which puts a disproportionate onus on larger companies to ante up more for local home builder association and national dues each year. Big companies think that since they pay so heavily into the association’s interest, the last thing they should expect is the kind of treatment they received as the net operating loss tax carryback measure surfaced for final consideration as part of the $787 billion stimulus program passed by Congress and signed into law last month.
What’s more, the association went for a referendum among its 200,000 members last week, seeking support for its lobbying strategy and tactics as a point of proof to the largest companies that rank-and-file builders fear the big guys will get unfair advantages with an extension of carryback allowances to five years.
Ultimately, we believe that the big builders’ conversations with NAHB will be “solutions-based.” We’re just not certain that the solutions can or will be status quo solutions. In so many ways, the top 10 or 11 public company peers in home building resemble other Fortune 500 manufacturing and marketing organizations more than they share kinship with home builders who construct 10 or 12 homes a year.
Now that there’s talk of yet another gargantuan stimulus package in the planning, there’s not a shred of doubt that as one of the key players in the drama says above, “Having a cohesive voice in Washington has never been more important.”
If policy on housing hopes to offer a measurable improvement over the next couple of years, it’s certainly going to need to get high volume home builders back into the business of high volume building and marketing more affordable home products to home buyers. If that means getting rid of land that cost too much before, and buying it back at a lower price later so that the entire cost base of a home can be lower, then that may be what it takes for all of housing to claw its way back.
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[...] You Please Come to Chicago? From HousingCrisis.com is a direct quote from last Wednesday night from one of the principals embroiled in a conflict [...]