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caused uneasiness in the marketplace
for some time. But adjustments are
good. Ultimately, they result in a
more efficiently operating business
structure," he said, although the
process can be painful.
"I have a sense that this adjustment
will not manifest itself in a severe
recession. A slowdown will allow us all
to retrench and catch our breath and
figure out what we can do a little bet-
ter," said Burton.
"It is a good time to be careful. For
the last year, we've been cautious
about starting new projects. So we've
positioned ourselves. That's because of
the validity of the admonition of 'once
bitten', especially after you get the life
beat out of you with a bad recession.
"The scars on my soul will always
be there from the days of not knowing
where to find the money to pay bills.
Those were scary times. That tem-
pered our operation. No matter how
smart we are and how well we plan,
the recessions will happen," said
Burton.
Staying The Course
Burton cautions that fears of recession
could easily become a self-fulfilling
prophecy. He concedes that since the
DaimlerChrysler "trauma," he has lost
a dozen deals. "They may be tempo-
rary, they may be permanent," he said.
But, "there's no hysteria. We're as busy
as we've ever been."
Stuart L. Michaelson, a partner in
the Windmill Group in Farmington
Hills, is very upbeat. "I think that in
1999 and 2000, we had absolutely
record years. But even with all the talk
about a slowdown and recession, we
are still writing deals. Sales are still
strong, we are selling $250,000 to
$280,000 houses in our Walden
Woods PUD (planned urban develop-
ment) subdivision in Van Buren
Township," said Michaelson.
Although banks are getting very
conservative on development loans,
builders such as Michaelson have to
keep looking for lots. "We have to
keep building as long as business is
out there," he said.
He also has noticed that it is easier
to get building tradesmen.
"Subcontractors are looking for work,
and the process is not as long. And
the cost of lumber is down," said
Michaelson, who is secretary of the
BIA.
Barry Stulberg of Stulberg
Development Co. in Farmington Hills
views the economic slowdown from the
developer's standpoint. He develops lots
to sell to to builders, but they are
becoming cautious about committing.
"I know I have to have some lots
ready to bring to market. I plan two
years ahead of time. I may not put the
streets in, but I need to have the lots
ready to go. Sure, I'd like to wait to
see the economy turning around, but
I can't wait too long. I need to have
lots ready for delivery to builders.
"If I'm not faster, someone else will
step in, and prime lots may not be
available."
Stulberg says in order to survive, he
needs to have holding power.
Historically, he said, prices come our
higher about six months after a reces-
sionary period. "But after there's a
turnaround, things are always better
then when you went in," he said.
Looking Ahead
Stulberg sees a big difference this
time. "We're not going to have the
typical cycles like we used to have in
the industry over the past 40 years.
The Federal Reserve Board is more
sophisticated."
Richard Komer, president of
Wineman & Komer Building Co. in
Southfield, is optimistic about the
National Association of Home
Builders' economic forecasts. They see
a further cut in the Federal Reserve
rate of a percentage point by mid-
2001, and the enactment of President
Bush's tax cut bill in the second half of
2001 retroactive to July 1.
Under those assumptions, they said
the nation would narrowly avoid a
full-blown recession although the
economy would be weak for the first
half of the year, and gain momentum
during the second half.
Komer said that nationally, the
building industry is holding up well
with 1.6 million housing starts. Low
interest rates have helped, but the
industry is softening from the frantic
pace of business during the boom
years. He cautioned that it might be
up to a year before the economy is
back on track.
One problem that Komer sees is
consumer confidence or the lack of it.
But as he points out, "I survived 1981
with its 17 percent interest rates.
There's still business out there, but
you just have to fight harder for it.
And it is more of a challenge after 7-8
years of prosperity.
"This is a good time for doing long-
term planning and acquisitions.
Whoever has it all in place when the
economy comes back will take the
first wave of business." said Komer. El
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2001
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