Supply Chain Connections

Apr 14 2009 2:53PM | Permalink | Email this | Comments (1) |
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By Glenn Singer

Last week we were all rocked by Pulte Homes’ acquisition of Centex Homes. Pulte will now be by far the largest home builder in the United States. Many industry experts are telling us that this is just the start and that we can look for other industry giants to merge and acquire each other. Nothing stays the same!

I will be observing how this new industry trend will affect the building material manufacturers since prior to the housing downturn most manufacturers focused on the industry giants. When the market dried up the manufacturers found that they needed to sell the smaller local, privately-held builders but they didn’t really know them since they focused on the giants and left it up to their distributors to service the smaller builder.

I am hoping that the manufacturers have learned a lesson and won’t flock to the giants and mega-giants once the market begins to turn up. Now I am not saying that they shouldn't have strong relationships with the giant public builders but I am hoping that the manufactures will maintain a balanced builder portfolio consisting of all sized builders. After all most of us strive to maintain a balanced investment portfolio so why shouldn’t this same principle apply to our builder customers? Hopefully this recession has taught all of us some lessons but, time will tell, won’t it?