Five years of recession changes a business.
Just ask Tim Murphy, founder of Presidential Pools and Spas in Gilbert, Ariz. “We’re not the same company that we were at the height of the boom,” says Murphy, whose firm has shifted to rely more on subcontractors versus employees for various stages of pool construction.
Neither is Shasta Industries, which shed its six-store retail operation in 2012, selling it to Leslie’s. Today, the firm is concentrating on its core construction business while keeping a watchful eye on the economy. “Just what we can expect in the future is still iffy,” says Skip Ast, president of the Phoenix-based company. “We go on the coattails of the home building industry.”
The same goes for Cody Pools, which qualifies as the youngster of these top three with “only” 13 years in business. Despite the downturn, the Georgetown, Texas-based pool firm has continued to expand geographically beyond its Austin roots, entering the Houston and Dallas markets in 2011. “We’ve had steady growth every year since 2009,” says Mike Church, Cody’s president. The recession “seems like it’s behind us now.”
Still, none of the three are quite ready to celebrate just yet, even as the pool business improves, thanks to notable gains in consumer confidence, home values, and the availability of financing. “I can’t accept that the economy is back and business will be increasing every year,” says Murphy. “I just don’t look at it that way.”
Such skepticism makes good sense in a business cycle that’s still in the shadow of the recession. Indeed, by remembering the difficult lessons learned in recent years, these top pool builders are setting themselves up for success once the recovery seems solidly in place.
Cody Pools, Georgetown, Texas
Unlike many other firms, Cody Pools wasn’t devastated by the recent recession. The Georgetown, Texas-based pool builder was able to maintain and even grow its business during the downturn largely due to its location in the more economically stable Lone Star state.
As the overall market recovers, multi-time Top 50 Builder Cody is seeing even more signs of improvement. “At the end of April, we were up 53 percent over last year,” says Mike Church, Cody’s president, who projects the firm will build 600 pools in 2013, an increase of more than 100 digs compared to last year. Cancellations, once as high as 15 percent, have dropped to a very low 3 percent, says Church, thanks to rising home values and less tight-fisted banks. “When they come in, they’ve got financing,” he explains.
Cody, whose typical pool runs about $65,000, will build in four different Texas markets this year — Austin, San Antonio, Houston, and Dallas/Fort Worth — with the same standards they developed in their home market of Austin, where they were founded in 1994.
Both outside researchers and company statistics agree. Cody was recently named as one of the 100 Best Companies to Work for in Texas by the Texas Association of Business and the Society of Human Resource Management. The results were published in Texas Monthly magazine. Cody Pools ranked 29th among employers with 15 to 99 workers, based on the results of employee surveys and other metrics.
Meanwhile, productivity has soared. In 2007, Cody did $20 million worth of business with 52 employees, but in 2013, it expects to do $33 million with 65 employees. That translates into a 65 percent increase in revenue with just a 25 percent increase in workers.
“I think everyone’s taking things more seriously now,” Church says. “It seems like we all do more than we used to, after the scare with the slowdown.”
Shasta Industries, Phoenix
Skip Ast has seen his share of downturns, but even he admits this one has been difficult. “I’ve been through eight of these recessions, and the average one lasts nine to 13 months,” he says. “We’re now into the fifth year.”
It’s left Shasta, a perennial Top 50 Builder, with some challenges to overcome. While the company still expects to do a healthy 600 to 700 pools this year, that’s essentially the same as last year. “We’re not where we’d like to be,” Ast says matter-of-factly.
Staffing is one of those challenges for Shasta. In addition to residential and commercial pools, the firm also handles service, makes decking, and maintains its own pool product manufacturing firm. Overall, it adds up to a workforce of more than 230 people.
But like many pool firms these days, Shasta could probably use a few more good men and women. The sustained weak job market in Phoenix in recent years forced many underemployed or laid-off workers to look elsewhere for jobs, leaving Shasta and others now searching for staff as the market picks up. “There were a lot of skilled people in the pool industry, but because of the long-term recession, they have gone into other vocations,” says Ast, whose firm is also dealing with the retirement of a number of experienced salespeople.
But Shasta’s president remains undaunted. “We’re just going to focus on what matters most, which is astonishing our customer,” says Ast, whose firm has built more than 80,000 pools in the Phoenix area since its 1968 founding. (Today, its pools start around $20,000 and go up from there.)
That emphasis on the mission is a reflection of Ast’s — and Shasta’s — embrace of leadership guru Stephen Covey’s “Seven Habits” philosophy, which focuses on being proactive and achieving mutually beneficial solutions to problems.
It represents an approach that Rick Mortensen, Shasta’s director of customer care, feels has helped the company during the downturn in terms of taking action and working together. “Whether you are in manufacturing or sales, the chemistry of the team has to come first, not just all the skills,” he says.
Those principles have guided other major decisions as well, such as the choice to sell Shasta’s retail stores to Leslie’s last year. “Our competitors are telling people that we needed to sell it. I’m the one who made that decision,” Ast explains. “Our number-one vision is to astonish our customer, and I couldn’t honestly say I was astonishing the customer when they had to drive 10 to 12 miles to a store. … It was a big part of our business, but at the same time, I had to be honest with how we were fulfilling our mission.”
Presidential Pools and Spas, Gilbert, Ariz.
Tim Murphy can hardly believe the numbers he’s seeing for 2013. “It’s absolutely crazy. … We’ve already sold almost 450 pools this year, and every single week, we’re gaining traction. … I predict we will do 1,000 pools this year.”
That represents a 40 percent increase compared to last year’s figure of 665 pools at Presidential, where the vast majority of sales are for projects under $40,000.
It also qualifies as a welcome rush of business for the firm. Founded in 1991, Presidential’s volume rose to more than 2,000 pools annually during the 2000-2006 boom and then plummeted by 75 percent, to just 500 pools during the bust. The company’s workforce dropped from 350 people to 80.
That experience continues to shape decisions at Presidential today, especially when it comes to adding employees for responsibilities that could be farmed out to subcontractors. “We used to do our own shotcrete and fieldwork,” says Murphy. “We don’t do as much of the work in house today. I’m not sure if we ever will.”
For those positions that he does bring on staff, technical expertise remains critical. Pool designers, for example, “can’t just be pool designers. They need to know how a pool works,” says Murphy, who started in the industry as a cleaner and repairman in 1983. Innovation matters too. Two of the products Presidential uses are produced by Blue Square Manufacturing, a company affiliated with Presidential.
As demand for pools has rebounded in Phoenix, so has the company’s marketing budget, growing by 25 percent this year. Among the strategies are extensive radio spots and a creative “Carpool Giveaway” promotion with a local Ford dealership that promised the winner a free Presidential pool or a free Ford vehicle. The firm also uses the well-known voice of an Arizona Diamondbacks’ baseball broadcaster for its advertisements.
The investment made sense to Murphy, who saw an opportunity to gain share in the post-recession Phoenix pool market. “Forty percent of the pool builders have left, so we have less competition,” he estimates. “That is a huge deal.”
Despite all the progress, though, Murphy remains wary. “I don’t think we’re out of the woods yet,” he says. “I think we need to learn from what happened.”