Headcount reduction

Home builder Beazer reported this week that it cut 650 positions -- or 25 percent of its workforce, in October (see Inman News). Since peaking in March 2006, the company's workforce has been slashed by about 50 percent "through reductions in force and attrition," the company reported this week. The company referred to the major layoff and dramatic downsizing in workforce as "recent headcount reductions."

Meanwhile, an investment group that works with pension funds sponsored by affiliates of a group of unions that collectively represent about 6 million members is asking for another head to roll at Beazer: that of the CEO and president.

In a letter dated today, CtW Investment Group executive director William Patterson recommends that Beazer swiftly replace CEO and president Ian J. McCarthy, charging that a "combination of improper practices, compliance failures and poor corporate governance ... constitute a stinging indictment of Beazer's leadership in general and of Mr. McCarthy in particular."

It wasn't CtW's first jab at home builders. In September, the group issued a letter charging that builders "are not passive victims here," and calling for the boards at each of the 11 largest home builder companies to establish legal and regulatory compliance committee of independent directors "to conduct a comprehensive review of the company’s compliance status and implement a compliance program to detect and prevent material compliance failures."

Beazer has been beset by troubles in the past year, including federal and internal investigations, the attempted destruction of documents, an admission of business practices in violation of U.S. Housing and Urban Development Department regulations, shareholder lawsuits and the pending restatement of earnings. Heap onto that a dwindling stock price, a national credit crunch and an ailing real estate and mortgage market.

Beazer reported a cancellation rate of 68 percent for the fourth quarter of the fiscal year ended Sept. 30, and a 53 percent decline in net new-home orders for the quarter compared to the same quarter last year.

Beazer, though, is not the only builder that is in trouble, and some analysts have said that one or more major builders could go belly-up during these market doldrums.

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