Home Builders Miss Boat on Production Process Improvement

A few months ago I had coffee with the management department chairwoman at one of the top-rated business programs in the country. She lamented an enrollment trend, describing how the great majority of students now major in one of just three specialties: marketing, accounting or finance. She observed that the goal for most students is to either "manipulate money or manipulate minds." The majors that focus on production, operations, supply chain and management garner just more than 10 percent of the enrollment. It seems no one wants to actually make things anymore.

This conversation came during a big push at my firm toward the introduction of lean production concepts to home building.Our findings are disturbing: during home building's mega-run from the early '90s until last year, 90 percent of our efforts focused on two things: finance and marketing. Sound familiar?

Process improvement in the production discipline has been on the back burner for a majority of builders. Production times are rising, scheduling is a lost art, genuine process improvement is rare and relationships between builders, suppliers, trades and manufacturers are deteriorating. Other than directives and demand letters to keep pounding the trades, the attitude of most builders is that production is what it is.

I was contemplating this when I picked up a book on Ford's B-24 bomber plant at Willow Run Airport in Michigan. With rudimentary knowledge of aircraft production and no experienced workers, in 1942 Ford engineers took a greenfield site and 55,000 workers to full production in less than two years. Consolidated, who originated the B-24, produced three bombers per month and was more amused than insulted when Ford projected it could build one per hour. By early 1944, Ford achieved that rate and shortened the war.

Ford focused on production — building better and faster. There was no marketing; the military was already waiting for every bomber Ford could deliver. There was no finance; the government gave Ford an open checkbook.

Home building market analysts say if you get the prices right, homes still sell. So you have three choices to make the numbers work: cut your margins; keep pounding your suppliers and trades; or learn how to build better. Choice one is a loser. Choice two gets short-term gain at incalculable long-term damage. Choice three is a win for all, and it works. Yet almost no one is choosing that route — we have so forgotten how to produce, we don't even know what's possible.

There's a reason why today's business students chose marketing, finance and accounting over production. That's where American management spends its time and money. As important as those fields are, the oft-maligned business of production is critical in this environment. The lack of open checkbooks and insatiable markets notwithstanding, it's time we re-examined the fundamental core of our business.

After all, they still call us builders.