Ryland undergoes alterations

January 15, 1995|By Kevin L. McQuaid | Kevin L. McQuaid,Sun Staff Writer

The future of the Ryland Group Inc. may very well lie within four spacious, elegantly decorated model homes about a mile from its Columbia headquarters.

Beyond their amenities -- large windows, higher ceilings and option packages ranging from entertainment rooms to offices -- the homes represent Ryland's revamped attitude and one of its first attempts to shed its generic image.

The Trails at Woodlot, a 66-acre site where 56 single-family, detached homes and 32 townhouses are slated, also marks the first involvement in a Ryland project by R. Chad Dreier, the firm's president and chief executive since November 1993.

"The Trails is the first visible, physical manifestation of what we're doing differently," said Mr. Dreier, 47, who joined Ryland from California homebuilder Kaufman & Broad Home Corp. and was elevated to chairman last month. "And a lot of its significance is because it's right in our backyard. Every banker, employee and customer is going to see it. I think the models exhibit newness, brightness and a willingness to take risks."

Like the changes being implemented in the Trails at Woodlot project, Ryland -- the nation's third-largest homebuilder with 3,300 employees and operations in 19 states -- in many respects is a company in the midst of a deep, far-reaching and even cultural transition.

In addition to the changes in the home construction operation -- new marketing techniques which respond to consumer trends, land acquisition strategies and cost-cutting measures -- Mr. Dreier has pledged to focus less on the mortgage banking and servicing that had become a key fixture of Ryland's earnings.

The devotion to the core business results from a belief shared by Mr. Dreier, Ryland's board and industry analysts that long-term, most of Ryland's profits will be derived from its home construction operations by better cost management and by building on its national presence and expertise.

Ryland's changes were prompted by a series of market misadventures, the economic recession of the early 1990s, poor commitment to its core customer base and a lack of direction, according to industry analysts, company executives and developers familiar with the company's operations.

Ryland's lack of direction and decline in the early part of this decade came as large competitors, such as Pulte Home Corp. and Centex Corp., posted significant domestic homebuilding gains after the early 1990s recession.

Furthermore, under Mr. Dreier's predecessor, Roger W. Schipke, General Electric Co. executive with little homebuilding experience, Ryland's customer satisfaction rating declined. The rating, which asks buyers if they would purchase another Ryland home or recommend one, fell from a high of roughly 85 percent in the late 1980s to under 70 percent during 1991-92 in the six regions, or 19 states, where Ryland operates.

Ryland's performance failed to raise red flags, however, because much of its decline in homebuilding sales were masked by record gains in the company's mortgage operation, which last year had pretax earnings of $55 million.

"When I came, there was no sense of urgency," Mr. Dreier said. "I found two companies, one a homebuilder whose policies were outdated and had a vacuum of leadership. That created a situation where the homebuilding side was afraid to make a decision inspired by innovative ideas. They were following the status quo of the 1980s, only it was the 1990s."

Mr. Schipke, who left to become chief executive of Sunbeam Oster in August 1993, deflects criticism by noting that many of the company's troubles were well under way when he arrived three years earlier, and that some of the current changes were put in place during his tenure. He added that the differences between his management and Mr. Dreier's are largely philosophical.

"Whether they want to admit it or not, Ryland is a manufacturer of consumer durables," Mr. Schipke said recently. "And I tried to instill that. It sounds like the direction they're moving is back to being a homebuilder. It's certainly a shift, resulting from a change in chief executives with different philosophies."

Today, Ryland's monthly index of customer satisfaction has crept back to an average of over 80 percent in virtually all of its geographic divisions. Mr. Dreier attributes the climb to an

emphasis on both customer service and improved design, as well as an improved bonus package for employees that will tie positive results to compensation.

"Gone are the days when we would say, and did say, 'Here's our house. If you want it, buy it. If not, tough,' " said Mr. Dreier.

Timothy R. Doyle, president of Ryland Homes' Mid-Atlantic region, agreed that there had been a change.

"His coming has had a dramatic impact," said Mr. Doyle. "It was quite simply one of the greatest things to happen to Ryland, and that's coming from someone with 20 years of experience. He has clear vision, and he's instilled it."

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