WCI confirms layoffs
news-press.com
By Laura Ruane
Originally posted on July 11, 2006
Bonita Springs-based builder WCI Communities has slashed an undisclosed number of jobs, as the residential real estate market continues a rapid cool-down in Florida and across the nation.
On Tuesday, a spokesman for the luxury builder confirmed people had been laid off, but wouldn’t give a number.
Chat on the Yahoo.com Finance message board — but not confirmed or denied by WCI — said companywide layoffs totaled 400. The company Web site lists a total
work force of 3,800.
Responding to a call from The News-Press, company spokesman Steve Zenker read from a prepared statement: “WCI has adjusted the size of its work force to be more consistent with the current business environment.”
Asked about the geography of the layoffs, Zenker said they had occurred to some degree in WCI’s primary markets of Florida and the northeast and mid-Atlantic states. The Yahoo message board mentioned 40 layoffs in Fort Myers and 40 in Fort Lauderdale.
Shares of WCI (NYSE: WCI) closed Tuesday at $17.82, down 24 cents from Monday’s close. Over the past 52 weeks, shares have ranged from $17.69 to $35.96.
The job cuts came as no surprise to people following the real estate and construction markets. They said builders couldn’t scale back production as quickly as investors in new, multifamily developments got cold feet.
“In Florida, we have the potential for seeing a downturn that could rival that of the ’70s,” said Jack McCabe, chief executive with McCabe Research & Consulting in Deerfield Beach.
And, it’s not just WCI workers who are at risk, McCabe said: “It will affect a number of builders, lenders, appraisers, title companies — even the people who sell furniture, and interior decorators.”
The chill in the market hit the mortgage industry months ago, McCabe said, noting that national lender Countrywide had laid off thousands of people in mortgage loan origination.
Florida isn’t alone in its vulnerability. “It’s soft everywhere,” said Ed Bonkowski, a Fort Myers-based commercial real estate broker.
“I was just in northern Virginia and in Cleveland,” Bonkowski said. “Both of those (residential real estate) markets have come to a standstill.”
Sluggish home sales in northern states have a trickle-down effect in Southwest Florida, Bonkowski said. Many baby boomers want to retire here, but some of them need cash from selling their northern homes to realize their dream.
These days, “cash is king,” Bonkowski said. “For those who have cash, there are going to be some good buys.”
Meanwhile, commercial real estate is bracing for some share of the pain, according to Bonkowski. Tradespeople working in residential construction have to tighten their belts, and might move their businesses back into their homes. Vacancy rates increase, lenders notice — and get more cautious when companies propose new commercial developments.
“So many speculators jumped into the market, that there is an oversupply,” said Frank D’Alessandro, a locally based commercial broker who also writes a column on real estate for The News-Press.
The good news is that with the region’s yearly population growth running at about 5 percent, “we’ll be out of excess inventory by the third quarter of 2008,” D’Alessandro said, adding: “Once this surplus is absorbed, you’ll see (price) appreciation again.”
Signs of WCI scaling back were numerous in recent months.
In June, the company reported that, for the first two months of the 2006 second quarter, home-building orders declined almost 50 percent from the same period a year ago. Traditional home-building orders were down 42 percent from a year ago, while tower condominium orders dropped 84 percent.
The same report said WCI officials believed that orders for 2006 likely would fall at least 20 percent below 2005 order levels, in part due to the company’s expectation of releasing to market only three to five high-rise towers during the year compared to its prior expectation of 11 to 13.
In May, the company lowered its earnings forecast for the rest of the year to $4.50 to $5 per share, down from $5 to $5.50. |
