Staff
Centex Homes, Pulte Homes, WCI Communities, Bonita Bay Group, Stock Development, Meritage Homes, D.R. Horton, Ryland Homes, Elias Brothers Communities and First Home Builders of Florida have all cut staff in the past 18 months, and the still-robust commercial industry isn’t absorbing them all. Displaced employees and self-employed subcontractors looking for work are leaving the industry—and Southwest Florida—and executives and senior managers are among them.
"The challenge
with this area is there’s about zero jobs available," says John Goodnight, formerly a division construction manager for Centex. The 41-year-old Lehigh Acres resident combed employment Web sites for four months after he was laid off in March along with about 150 others—nearly half the company’s staff.
A cocktail of the subprime-lending fiasco, spikes in tax and insurance bills and the collapse of investor demand is responsible for today’s industry hangover, senior real estate executives agree.
"Two years ago, it was insane," Goodnight recalls. In the hot competition to fill positions, employers were raising salary offers by $10,000 to $20,000. "We could hardly get contractors. I interviewed people every two or three weeks nonstop."
Then, quite abruptly, it unraveled. The phantom demand from investors evaporated. Goodnight saw "200-plus people walk away from their contracts" after the market started to sour. Centex’s annual home sales fell to about a third of previous years’ sales, he says.
Employees knew layoffs would come, but they still were a jolt, in spite of a good severance plan, Goodnight says. With the scarcity of work in Southwest Florida, many were suddenly facing the prospect of uprooting their families and leaving the area.
Goodnight watched former colleagues, construction managers and field supervisors, move to Tennessee and the Carolinas. Relocating was feasible for Goodnight and his wife, whose daughters are in college, so he studied the market and targeted Utah, Texas and New Mexico.
He had begun to think leaving Southwest Florida inevitable when, in late July, his networking paid off. Goodnight parlayed his managerial experience into a job at Chico’s FAS, the Fort Myers-based national retailer. In August he began work as a special projects manager, overseeing the company’s commercial construction projects.
Some senior managers, sensing that the industry was on the edge of major transition, decided to leave on their own terms. Mitch Hutchcraft, Bonita Bay Group’s former regional vice president, watched fundamentals of the real estate market change and knew the time to leave Bonita Bay had arrived.
Like Goodnight, he was able to switch tracks and stay in the area. Hutchcraft left the Bonita Bay Group earlier this year and took a position as vice president of real estate for King Ranch, parent of Consolidated Citrus and one of the largest private landowners in the country. His new position leans heavily on his real estate background, but focuses more on long-term stewardship and strategic planning.
"Fortunately for me, this was a decision I got to make," Hutchcraft says.
But it was bittersweet. "I had built a great team at Bonita Bay, and walking away from those guys and gals was very difficult," he says. "I felt like they were my family."
Small companies are feeling the squeeze, too, and some 90 percent of Southwest Florida employees work for a business with no more than 10 employees, says Bernice Kertavage, director of the Collier County office of the Career and Service Centers of Southwest Florida.
For the owners of those businesses, laying off employees can be particularly rough. "It is the single hardest thing to do in business," says John Smarge, owner of Ray the Mover moving company.
The slide in the real estate market rolled over the moving business, and Smarge let 10 people go last year—almost a quarter of his staff. Business dropped 40 percent last year for Ray the Mover, which provides local and out-of-state moves. His business volume has dropped to 2001 levels. Prior to that, he saw his business growing at a rate of nearly 20 percent a year.
Smarge has seen an exodus of working-class people, more last year than this year, with many going to South Carolina and Georgia, where the cost of living is lower.
Prior to 2006, middle-class workers sought to cash out on the real estate run-up of 2004 and 2005, industry watchers say. Now, with sales only slightly better than last year, workers connected to the housing industry are leaving the area to survive.
HELP FOR HOME DEPOT
If layoffs and departures take an emotional toll on the corner office, they’re invariably harder on middle- and lower-level workers who have a smaller financial cushion.
Kelli Faulconer, a manager for the employment-services agency Randstad, has seen a huge increase in job seekers since the end of May. Many are construction project managers and workers in the skilled trades. Out of work for several months now, some are getting more desperate.
"People who’ve been in good-paying jobs are willing to take anything just to work," says Faulconer. She’s placing workers who had been making $25 an hour in positions that pay $10 to $15 an hour.
Southwest Florida’s economy has relied on the construction industry to produce many high-paying jobs, says Barbara Hartman, spokeswoman for the Lee County office of the Career and Service Centers of Southwest Florida. "Now that the housing sector is in a slump, it’s harder for [displaced workers] to get comparable wages."
National chains expanding into Southwest Florida and other employers are taking advantage of the sudden abundance of qualified applicants. Home Depot has added 18 new specialty positions in recent months, tapping the pool of displaced skilled-trade workers. Publix and Target are among other major companies that have expanded and added managerial positions, says Hartman.
Job-placement case workers are trying to steer some displaced construction workers to re-training programs for jobs in healthcare, an industry with a chronic labor shortage, but it’s not an easy sell, says Jim Wall, a manager of the Southwest Florida Workforce Development Board. "It’s a bit of a struggle to get the macho male ego to be a caregiver."
The situation is particularly acute for Latino immigrant workers who have recently made Southwest Florida their home and who don’t have unemployment compensation to help.
Immigrant laborers who previously found work in construction are moving to Tampa, South Carolina and Michigan, says Reyna Pino, who oversees Catholic Charities’ Refugees Employed and Productive program.
"The [local] employers who are hiring now are requiring English skills," she says. Since December, Catholic Charities has seen an increase in the number of immigrants needing assistance with food, prescription medications and utility bills.
MOVING ON
Some laid-off executives declined to comment publicly because of gag agreements that accompanied their separations. One said he feared comments perceived as negative could hurt his future job prospects.
Privately, though, they acknowledge a "game over" feeling in the air and a growing recognition that the market here may never return to the fast-and-furious pace of 2005. The fact that many executives and senior managers are among those out of work signals a longer road to recovery than expected, real estate industry watchers say.
"There are homebuilders who are clearly leaving the market," says Ross McIntosh, a land broker and industry analyst.
Meritage Homes, based in Scottsdale, Ariz., announced in July that it will cease to build new communities in Southwest Florida and that it has abandoned options and its $25 million investment in 2,500 home lots in Naples and Fort Myers, including some in its existing communities. Meritage officials declined to go into detail about specific communities, but a company spokesman says it will complete homes for which it has existing contracts.
Meritage also announced that it will write off as a loss the $28 million in goodwill that the company paid as part of its $66 million acquisition of Colonial Homes of Fort Myers in February 2005. The company, which entered the Southwest Florida market with the Colonial purchase, says its home sales in Naples and Fort Myers have dropped 70 percent from last year. CEO Steven J. Hilton told investors the company expects that the area’s housing market will remain "severely depressed in the foreseeable future."
Numerous area builders failed to return calls seeking comment regarding layoffs.
Eric Bruner, a spokesman for Dallas-based Centex, says that despite the staff cuts, Centex sees long-term opportunity in Naples and plans to fill the division president position vacated by Tim Ruemler following the March layoffs.
"Centex is not alone in dealing with a very difficult housing market," says Bruner, adding that some analysts have called it the worst nationwide housing market in 30 years.
Mark Loeb, who was laid off in May as Bonita Bay Group’s head of architectural design implementation, says the housing downturn is particularly acute in the Naples-Fort Myers area because sales rely so heavily on second-home buyers. "Second-home buyers are discretionary homebuyers," says Loeb. They will continue to delay a purchase because they fear the market could go still lower, and they don’t want to overpay.
Loeb, 47, left the area to take a similar position in July with Newland Communities in Orlando.
Unlike the Naples area, new job creation in Orlando is fueling housing demand by primary buyers, he says.
Although signs of shaky industry conditions abounded in late 2006 and early 2007, employees at Bonita Bay felt a certain immunity; they believed they’d somehow make it through the downturn, Loeb says.
He joined Bonita Bay in late 2006 after being laid off from a real estate industry position in north Florida. When he came to Southwest Florida, he decided to rent. Still, he didn’t expect layoffs at Bonita Bay.
"It’s a company that really cherishes its employees," Loeb says. "Even Bonita Bay couldn’t weather the storm at the end of the day."