Massive ramp’ for builders, but supply chain drives home challenges

Stephen MacLeod, a reporter for the Memphis Business Journal published this article about Meridian Premier Homes (MPH). MPH is the real estate and developing partner for Astoria Square. It is great to see our company getting so much positive press about our new construction. We have a highly experienced team that has been able to work through supply chain issues and continue to build beautiful homes on schedule.

Memphis-based builder Meridian Premier Homes is constructing new homes at its Mallard Park development in Walls, Mississippi.

The company, like many others, is dealing with supply chain and labor supply issues as it tries to develop properties. It is mostly struggling with lumber, windows, and concrete.
“One of the key components of making sure that you get what you need is to forecast well,” said Jeff King, Meridian’s co-founder and principal. “That requires very tight partnerships [with] your subcontractors and your suppliers.”

Meridian president Kent Coykendall said that companies need to be “better customers” in order to succeed in the current in-short-supply market. That means providing consistent work and paying well.

“You need to instill loyalty in your subcontractors and the people who are working for you,” he said. “If you can give them predictable work and pay them on time and treat them well, they will treat us well.”

Coykendall said that the new market dynamic hasn’t brought change to how they do business. He said that the company has always strived to be transparent to both its subcontractors and its customers.

To that end, Meridian does not price a house until it has secured lumber, and the company is very clear on a build time frame. The company also keeps 30- and 60-day extensions in case of delays, but makes sure to always explain to the customer why the delay is happening.

“[We] let them know we’re in a different world; this COVID world is different than anything we’ve ever dealt with before,” said Roxanne King, acquisitions manager at Meridian. “We used to have a lot more predictability than we do now.”

The challenge of the current market lies within trying to navigate the unpredictably, she said.

“Sometimes we think that we have to wait on lighting, but then it turns out that we now have to wait on paint,” she said. “Keeping [customers] abreast along the way is saying ‘We thought you were going to be done on [this] date. We don’t have the paint, but we’re [now] shooting for [this] date.’”

Challenges aside, the market for homes is lucrative. Jeff King said that Meridian’s Q4 numbers are likely to double the company’s Q3 numbers.

“We’re on this massive ramp, and as I look at some of the other builders, they’re in the same position,” he said. “Lots are finally coming out of the ground, and you can see a lot more building. Of course, that complicates the supply chain issue as well because the demand is growing and growing and we’re actually able to start building things now.”

Coykendall said that new interest from national builders in the market also complicates the supply issue, especially as the impact of Ford Motor Co.’s Blue Oval City becomes more clear and what housing demand it could drive. Coykendall said that as other players enter the market, a long-term view needs to be taken while focusing on Meridian’s core business.
“Not only is everybody ramping up to build, all the same people are getting tugged [in different directions], but there’s not as many workers out in the market,” Roxanne King said. “So the materials might be in, but it’s harder to get somebody to install them.”

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