Leading Homebuilder Reduces Workforce

[Jun 29, 2007.]

The nation's housing slump apparently has another casualty: Pulte Homes Inc., one of the nation's leading homebuilders.

The company has announced that it is reducing its workforce by about 16 percent. That figures out to 1,900 jobs.

The reduction is part of a restructuring which appears to be tied to this year's disappointing housing market. The restructuring is expected to save the company $200 million before taxes.

In a news release, Richard J. Dugas, Jr., the company's president and chief executive, summarized the problem this way: "The homebuilding environment remains difficult, and our current overhead levels are structured for a business that is larger than the market presently allows."

Pulte reported losses of $85.7 million and revenue of $1.9 billion in the first quarter of the year. During the same period last year, it earned $262.6 million on revenues of $3 billion. The company's workforce has declined considerably since the 13,400 it had on staff in 2005. Following the reorganization, Pulte expects to employ a little more than 10,000 workers. The builder operates in 26 states, delivering more than 40,000 homes in 2006. But Pulte is far from alone in its dilemma. A number of homebuilders are reporting similar difficulty selling homes in this year's weak real estate market.

In April, privately-owned housing starts were running at 1.53 million, down 16 percent from last year's total of 1.82 million, according to the U.S. Census Bureau. Meanwhile, the supply of unsold homes is expanding across the nation, affecting a number of seasoned homebuilders.

The National Association of Realtors has reduced its projections for existing home sales to 6.29 million, a decrease of 2.9 percent. Previously, the association predicted a decline of 2.2 percent. The housing downturn is affecting a number of other sectors of the economy, including motor vehicle sales.

Julie Ann Amos
June 29th 2007

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