Steve Klein is a very good friend of mine and he is one of the three business owners that wrote the forward to my book, Contractors: Doing it Right Not Just Getting it Done. In our most recent check-in to touch base with each other he shared what is going on in his local economy and how it is affecting his business. Since it is such a great snapshot as to what is happening in the Victoria, Texas area I had asked if I could share it with you. So enjoy and if you are in Texas, say Hi to Steve for me!
Oil Boom is on full bore! Tens of hundreds of billions are being spent. The eight largest oil play in North America was discovered a few years back. Victoria, TX where I have had operations for 25 years is at the epicenter. (For more information: Pioneer Energy, Dallas TX and read about The Eagle Ford Formation). Also Caterpillar is building a new world class 700,000 square foot manufacturing facility and is going to start to hire in Jan 2012. They plan to hire 800+ people at a very high wage, and have just announced another phase that should double the original investment and hiring intentions here.
As a result, there are “zero” motel / hotel rooms. All of the hotels are leased by oil companies on annual contracts. There are also “zero” lease homes or apartments. Inventories of existing homes are very low and the conditions are below buyers expectations.
As the regions oldest, largest and most respected developer and builder, The Klein Companies are positioned perfectly to capitalize on all of this good news. Also the Feds have continued to tie up the banking industry to the point that developers and builders are still not able to borrow money to join the growth effort. Developers and builders are still profiled on The Feds list. They cannot force banks to not lend to our industry; however they have made the practice of such so laborious and over regulated that it is just easier for bankers to not participate. We have plenty of capital, and have been picked by numerous large regional bank operations to lead the local economy out of the ditch.
Our ability to place large deposits in each bank and our “Brand and Culture” reputation for design, development, systems, processes, purchasing and scheduling control and most importantly knowing how to market, sell and service corporate accounts and their transferees such as Alcoa, BP Chemicals, Cat, Dow Chemicals, Formosa Plastics Group, Invista, Tyco Plastics, and many other companies has us in the front of the parade.
As we talked earlier . . . Slow uncertain, challenging times are when one looks at who we are, where we are at, and where we need to go. As you know I have scrutinized every piece and part of all my companies, redesigned all new product line that was fresh, more livable, more flexible, far more energy efficient, reformatted any systems and processes, upgraded all of our technology, sent key people back to school, and in general got our house in order to be sitting in the batter’s box when the game started again.
Now, the game is on!
I developed a new master planned development in a new up-and-coming northwest area. I have been able to get our local ISD to purchase land on our 200 acre site in order to build a new elementary school, plus the new middle school and new high school are within 2 miles.
My team finished the first 42 lots in March 2011 and 7 months later we were 70% sold out. We then started 25 more lots and have not even opened our model home or had a Grand Opening of the development yet. Two months following the GO, I started Phase III of another 25 home sites. Phase IV is starting next week :)—needless to say, I am excited!
I have also designed a stand-alone age restricted development, “55 and Better” called Viva at TerraVista. All of the marketing and product design is in place. Now we just need to build the development. When I researched age restricted and retirement communities around America and figured out that they all were called The Arbors, The Gardens, The Meadows etc… In other words “All you old people go live over there before you end up in assisted living” I wanted something that was exciting, celebratory, and active!
We are currently building lease homes as fast as we can to try to fill the void in the current housing market to help short term. Read more here: Client Lease Program. It’s pretty awesome.