In announcing their merger, Lawrence M. Macks of Macks Homes and Martin K. P. Hill of Masonry Contractors Inc. boasted of their increased vitality as a new homebuilder in the Baltimore market.
It would give them increased market share and a higher profile.
It would give them more muscle to secure financing.
It would allow them to contain costs and be more profitable as Masonry Macks Homes.
"We are probably two of the strongest financially of any of the independent building firms in the area," said Hill, whose company was the largest builder in Carroll County. "We probably have more landholdings than any of the private or public companies, and it was a recognition of our strength that made us look at putting our two companies together."
Yet, almost in the same breath, both spoke of the ever-increasing presence and power of larger public builders.
And they faintly suggested that other, smaller independent builders take a hard look at the Macks-Masonry merger, because as they see the future, the larger companies are only going to expand, perhaps causing the smaller independent builder to go on the endangered species list.
"There is a move toward the public companies, or the ones who are trying to become public, needing to grab more and more market share," Macks said.
"And so we're finding that there are only so many first-tier [building] markets, and once those major companies get those covered, they need to grow, so they need to move to other markets, and the Baltimore-Washington market is a pretty big market. And in some ways it's a little scary to see how many of the national builders aren't here yet."
So, is this perceived threat something that should concern other smaller or medium-size private builders? Will it spur other mergers or acquisitions locally? Will mega-builders such as Ryan, Ryland and Pulte -- which account for one of every four new homes built in the area -- see their market shares continue to climb?
The answers vary according to builders, both large and small, as well as industry analysts.
Jim Joyce, president of the Baltimore division of the Ryland Group Inc., says the bravado and ego of the smaller builders may impede other mergers, regardless of the market conditions.
"It's an industry of entrepreneurs and mavericks," Joyce said.
"The reason the merger stuff hasn't happen in the past [locally] is that there is the conqueror and the vanquished in most of these deals. You went in and bought out a company.
"It's hard to find a builder who would admit to you that he would comfortably go to work for somebody else.
"When you get down to small companies, these are guys who like doing their own thing. They like building houses, it's still a relatively rough-and-tumble business. Maybe it would drive some [to merge], but I just can't imagine a lot of these guys getting together."
But for Macks and Hill, who got his start working for Macks' father in 1971, the "corporate culture" -- as Hill described it -- of the two companies meshed and in turn would have made the new company the fifth largest builder in the area for 1997.
"They are very smart," said Ken Sugarman, regional operations manager for Myers Housing Data Reports, a Washington firm that analyzes new-home sales.
"These guys are very intuitive. They are reading the market, looking at the numbers and are making sound decisions."
Meyers Housing Data Reports annually releases its list of top builders in the area based on sales and market share.
In 1997, Ryan Homes Inc. commanded 14.4 percent of the Baltimore market, up from 12.5 percent in 1996. The Ryland Group Inc. grew modestly from 6.1 percent to 6.7. Pulte Home Corp., the nation's largest builder, although still No. 3 in the area, saw its share drop from 5.6 percent in 1996 to 4.7 percent last year.
Harford County's largest builder, Bob Ward Homes, maintained its No. 4 position with 3.4 percent.
Sugarman said a move toward mergers would not surprise him.
"The larger national and larger volume builders have stronger marketing and deeper pockets and are able to obviously live with smaller [profit] margins," he said. "And so to remain competitive, it's just inevitable that you will see these smaller builders merging or starting to specialize in product offerings and niche their product lines to specific target markets."
It's that kind of specific thinking that got Macks and Masonry thinking of a marriage.
"We are believers that the homebuilding industry is a mature industry in this country and that we are seeing across the country a consolidation in the industry," Macks said.
"And our prediction is that consolidation will continue at an even greater pace and that the result of it will be felt in several ways for private builders and even for public builders," he added.
