Quality Achievement Requires Consistent Focus
by Kevin Egan
With the recent announcement of T.W. Lewis' recognition as the only builder in America to achieve the 2009 National Housing Quality Gold Award, I have been asked how T.W. Lewis has continued to be successful in spite of the challenging market. The primary reason for our success is due to the fact that we are able to adapt to the market quickly.
T.W. Lewis is a company that is used to change. Because of our company values, small size and private ownership, our company is more flexible, and since 2007, T.W. Lewis' leadership has adapted all facets of our business to respond to declining demand. The most creative solution implemented in this timeframe is "Trade Up to Luxury"-a sales program modeled after the automotive industry in which buyers can trade in their current homes for new T.W. Lewis homes. Not only has this been a paradigm shift for the industry, it was and still is a successful sales program.
In addressing the needs of our customers, we found that while many buyers desired new T.W. Lewis homes, their current situations prevented them from buying. So, in addition to our "Trade Up to Luxury" program, we designated 75 completed homes as lease or lease/purchase properties. These homes are an attractive option to help buyers overcome lending issues.
We have been proactive in reducing hard costs and overhead expenses. Unfortunately, this began with significant reductions in our staff last year. The reduction in staff meant vacancies in our corporate headquarters' office space, which we were able to reconfigure and rent out to third-party businesses. In the field, we reduced the number of model homes from 38 to 14, which still provides at least one model home in each community and is supported by a variety of spec homes within the neighborhood.
Another part of our success is that we employ a sophisticated business planning model that is supported by some very good accounting processes, allowing us to more accurately project future business. Our finance department was creative in limiting our financial risk by renegotiating a lot of take-down requirements with our land bankers.
Also in the area of finance, we restructured our credit lines with banks for more favorable terms. Elsewhere, we reduced department spending by reviewing all accounting line items and adjusting budgets accordingly. We also reduced construction base home costs by revising our included features, which had previously been adjusted to meet the rising demand for new homes.
Even though there has been significant change in this market, the key is that T.W. Lewis has remained consistent. Our company values provide the groundwork for our daily operational success, and because of this consistency and our leadership, T.W. Lewis associates know what they are responsible for.
Also, we have improved our communication to associates so they also understand where we are as a company and what is required for the future. This consistent focus-combined with our ability to be nimble-has allowed T.W. Lewis to achieve our intended results and be recognized with NHQ Gold in the process.
Kevin Egan is President and COO of T.W. Lewis, based in Tempe, Arizona.
