News: "Lennar seeks cuts from subcontractors"

I found this gem thanks to Saving in LA on Lansner’s Blog. Full article at:

OC Register

Here are some snippets:

“The builder, one of the biggest developers in Orange County with 8,000 to 14,000 homes on the drawing board, began circulating letters and meeting with subcontractors earlier this month, seeking cuts that reflect lower home prices, said Jeff Roos, Lennar’s Southwestern U.S. regional vice president.”

“Lennar’s demand is the latest example of how falling home prices are sending ripples through the entire housing economy. The missive is at least the second Lennar has sent out since June seeking price cuts. And industry officials say most homebuilders are pressuring contractors for reductions in future bidding.”

” “It’s almost like asking your employees after they’ve done the work … to take a pay cut,” said Brad Diede, executive vice president of the California Professional Association of Specialty Contractors, with 500 member companies in the state. “It’s kind of an unjust tactic to ask for retroactive concessions.” “

3 thoughts on “News: "Lennar seeks cuts from subcontractors"

  1. irvinesinglemom

    I have posted previously that I am interested in the Lennar housing development planned to debut Summer of 2008. I am troubled by news like this with respect to the shortcuts and poor craftmanship that would logically result from such extreme actions on the part of Lennar.

    I’m thinking that the houses built during the 2001-2006 bubble will be of higher quality than those that are built during the next 3-5 years for reasons entirely associated with cuts like this one Lennar is making. God forbid they dip into their gigantic profit margins once prices come down from the stupid high levels they have been able to charge in recent years!

  2. oldsharecropper

    I would not worry about it. There has been little “craftsmanship” since the late 60s. Construction projects are given to the lowest bidder, usually using semi-skilled workers. If the piles of sticks (houses) that were built in SoCal in the 70s are still standing today you don’t have anything to worry about.

  3. graphrix

    irvinesinglemom – I agree with oldsharecropper that the builders have always taken the lowest bid, trust me I speak from inside knowledge. Even when times are good they want to maximize their profit. This cut will only make things worse. Personally I am not a big fan of Lennar but I know of good things about John Laing and Taylor Woodrow. Take a look at JD Powers suveys from the divisions of the builders you are looking at. The ones that have high scores are the ones that really care about those scores and know how to make people happy.

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