Other Home Builders in the British Invasion
In addition to Costain, these British home builders have moved into the Southern California housing market:
Taylor Woodrow Homes California Ltd. The first British home builder to land here--in 1977--the company is building 250 houses this year. Taylor would have built more, it says, but found its landholdings depleted after strong sales last year. It has spent much of this year buying more land.
The company has a large project in Laguna Niguel, Marina Hills, where buyers have been camping out when homes go on sale. The company has two projects in Rancho California, one a joint project with Costain.
That is not its only link with Costain. The parent company, Taylor Woodrow PLC, resembles Costain in its engineering and construction business and is a partner with Costain in construction of the tunnel under the English Channel.
“All of us have been more real estate-oriented, given the downturn in the international engineering market,” said Gordon Tippell, president of the Southern California subsidiary.
“Fortunately we’ve had the diversity to counter that.”
The publicly traded parent had revenues of $1.6 billion last year and earnings of $73 million.
In Southern California, Taylor Woodrow tends to shy away from the extreme ends of the price range. It doesn’t build any truly inexpensive houses, nor does it build the million-dollar monsters. Prices range from $150,000 to $450,000.
Taylor Woodrow differs from its British cousins in a few important ways. For one, it is also building in other U.S. markets, including Las Vegas, Florida, Georgia and Texas. It is also the only local subsidiary headed by a Briton; the other British subsidiaries have hired American chief executives.
Tippell, who opened the subsidiary 11 years ago, was recently elected president of the Building Industry Assn. of Orange County, the builders’ local trade association, and helped defeat the slow-growth initiative in the June primary.
Barratt American Inc.: A subsidiary of Barratt Developments PLC--one of Britain’s largest home builders with an astonishing 15% of the market in the United Kingdom--Barratt opened for business in California in 1981 when it bought a local home builder. It now builds the widest range of housing of any of the British builders, and probably more than most American builders.
Prices range from $80,000 condos in the Inland Empire to $950,000 behemoths in the exclusive South Peak project in Laguna Niguel.
“The other British home builders are niche builders, looking for one or two places in the market,” said Mark L. Frazier, president of the Irvine-based subsidiary. “Our philosophy is a little different.”
It wasn’t always that way. Barratt entered the U.S. market with garage-size condos that sold for as little as $35,000. But Barratt had vastly overestimated the market for the matchbox condos and soon found that it needed to diversify into more expensive housing.
Barratt moved in by acquiring two California companies but soon alienated the head of one of the companies, Dale Stuard, an El Toro builder who went on to start another company and is now president of the National Assn. of Home Builders.
Now Barratt is building houses at 15 different projects around Southern California, including Palmdale, Victorville and San Diego County, where it says it sold more houses through the first half of the year than any other builder.
The company this year bought a big chunk of land in Mission Viejo, where it plans to build houses worth up to $500,000 in a neighborhood called Pacific Hills. Barratt said it will build 1,150 houses in Southern California this year--up 20% from last year--and expects to build 1,250 next year, making it by far the largest of the local British home builders. U.S. revenues are $230 million.
While Costain and other British builders have struggled with flat revenues and profits from their worldwide engineering businesses, Barratt’s problems have been different. Barratt was hit in the early 1980s by a British television program that alleged shoddy construction of the company’s houses. With some other problems, it changed the once high-flying Barratt stock into a plodding performer.
The parent company reported revenues of $714 million last year and profits of $45 million.
George Wimpey Inc. Wimpey landed here the same year--1981--as Barratt, which is fitting, because the two companies battle for first place among home builders back in Britain.
Like Costain and the others, Wimpey is also an international contracting and engineering firm but is feeling the same pinch as Costain in the Middle East construction markets.
Like Barratt, however, it has a much heavier emphasis on home building than some of the other companies.
Wimpey also builds in Texas--where the market has been lousy after the decline of oil prices--and in booming markets in Orland, Fla., and Atlanta. It also builds in Northern California.
Wimpey began building in Southern California only last year and has one small project in Riverside and another three modest projects in San Diego County, where the U.S. firm is headquartered.
All the California projects are built by Morrison Homes, a local company Wimpey bought.
George Wimpey PLC had revenues of $2.4 billion last year and earned $117 million. U.S. home-building revenues were $80 million.
With Costain and Taylor Woodrow, Wimpey is one of five big British contractors building the tunnel under the English Channel.
John Laing Homes (California) Inc. A relative newcomer too, Laing California is a subsidiary of John Laing PLC. It landed in Laguna Hills in 1985. Like Costain, John Laing is a venerable company: It has been building homes for 140 years.
And like its British cousins, Laing is a conservative business strategist, as Laing Homes president Robert Fritts freely admits: “The company has been building houses a long time, and it’s still a family-owned company. Sure, we tend to be conservative.”
The founding family still owns more than half the stock in the publicly traded parent, which had revenues of $2 billion last year and profits of $85 million.
While it is one of the United Kingdom’s five biggest home builders, Laing does a lot of business in big civil engineering projects as does Costain and Taylor Woodrow. But housing is becoming increasingly important to the company. “Civil engineering is one of those businesses with high sales but not very high profits,” said Fritts.
In the United States, Laing prefers to build inexpensive homes for the first-time buyer or the person moving up to a bigger house for the first time, a more stable market than more expensive homes. That means most of its projects are in Riverside and San Bernardino counties, in cities such as Corona, Fontana and Moreno Valley, where land is much cheaper, although it also builds in Orange County’s Rancho Santa Margarita.
At the end of the year, Laing will have built 1,000 homes in its three years here, 550 of them this year. Next year the goal is 800.