Founder of Lusk Steps Down as CEO in Restructuring
In a move that underscores the fundamental changes occurring in the recession-wracked development industry, John D. Lusk has resigned as chief executive of the Lusk Co.--a position he has held since he began the huge construction firm in 1946.
The company’s top three senior executives have also resigned as part of what Lusk, in a prepared statement issued Friday, called a management restructuring designed to help the company cope with “the same recessional economic pressures impacting the entire industry.”
Lusk declined through a spokesman to be interviewed.
The 85-year-old Lusk and his son, William D. Lusk, own the private company that carries their name. Lusk will remain as chairman and his son will retain the position of vice chairman.
“John is one of the giants of the business and the community and it is a watershed day when someone of that stature steps down to save his company,” said Donald Moe, president of the Building Industry Assn. of Orange County and a senior vice president of Santa Margarita Co., developer of the Rancho Santa Margarita planned community.
Taking over as chief executive at Lusk is longtime Southern California construction industry executive Jim D. Johnson.
John. C. Hall, a 16-year Lusk executive and senior vice president of the company since 1989, has been promoted to executive vice president.
Johnson will also serve as the company’s chief financial officer and Hall will head operations. The two men will comprise the company’s entire top management under the restructuring and, with John Lusk, will also comprise the board of directors, Hall said.
Hall called the restructuring “a downsizing effort” and said it was not done at the insistence of the company’s banks.
Instead, he said, John Lusk himself ordered the shake-up to “make sure that we don’t get into a major problem with our lenders.”
Like many builders, however, Lusk Co. has been hurt by the recession, which has slowed housing sales dramatically and caused raw land values to plummet. The faltering economy has also combined with overdevelopment in the 1980s to create a glut of empty commercial and industrial space in Southern California, crippling that part of the construction industry as well.
The Lusk Co., while best known in Southern California as a major home builder, actually has been more active in commercial and industrial development.
Among its holdings are 2,800 apartment units, 1,300 acres of industrial buildings surrounding Ontario International Airport, and dozens of office buildings and shopping centers, including the Whittwood Mall in Whittier.
In Orange County, the company’s residential division is developing the Marblehead project in San Clemente as well as a number of smaller residential tracts. Lusk Co. also is master developer of the 2,000-acre planned community of Menifee in Riverside County.
Company officials will not divulge financial information, but Hall did concede that Lusk Co. holdings are valued at several billion dollars.
The home-building division of the company, Hall said, “actually is pretty small.”
Last year, Lusk Co. built 305 homes and condominiums in Southern California and was ranked as the Southland’s 16th largest residential developer in the Los Angeles Times’ annual builder survey, with about $99 million in sales.
Since 1989, when the Southland building boom was at its height, Lusk Co. has laid off more than 450 employees, Hall said, and now carries a payroll of about 400.
He said that restructuring plans call for the company to sell some of its assets and that some additional layoffs could occur as properties are sold. Hall would not specify which properties or disclose how much smaller the company plans to become.
As part of the management shake-up, which Hall called “a streamlining to get in shape for better times ahead,” Lusk Co.’s former president, Donovan D. Huennekens, its former chief financial officer, Carl Quinn, and its former financial vice president, Rick Talciott, all resigned.
In his statement, John Lusk said the company’s new management team will focus on restructuring the company’s debt.
Johnson, who was a Lusk Co. vice president from 1963 to 1966, brings substantial experience in financial management to the firm.
Since 1979 he has been vice president and real estate partner of McCoy Construction Co., a grading contractor in Calabasas.
Before that, Johnson oversaw development of Westlake Village in Los Angeles County as well as numerous overseas construction projects in the late 1960s and early 1970s as vice president of D.K. Ludwig Organization. From 1974 to 1979, he was director of real estate for Occidental Petroleum.
