Asahi Kasei Adds Vegas-Based Focus To Its Super-Supplier Stable

Just shy of one year since

As we telescope to the North American homebuilding, residential real estate, and distribution landscape, the “pros” of multi-scoped under-one-roof contractor solutions platforms – whether or not a new residential construction downturn becomes severe and extended include:

• A builder’s gotta build: homebuilders mostly don’t do that – i.e. build. Rather they secure land, secure house designs, hire contractors, and market and sell completed vertical homes at a premium. Right now – think supply chain shock, labor constraint, and lot supply limits – builders need “capability” where they can get it, and super-subs, on paper, represent gate-keeper access to that capability. A “core-competency” pivot is underway.
• The labor cliff: People who “know-how” to build are an endangered species, and getting rarer, as a trickle of newcomers can’t offset a stream of experienced, skilled skilled workers aging out. Super-subs – as it turns out – are magnets for reliable access to crews with track records of competence and quality. Alternatives for builders range from bleak to grim to existential.
• Follow the money: Wall Street and global investors continue – albeit cautiously — to seek “safe haven” yield in residential real estate, and as build-to-rent new construction remains an active channel, integrated contractor solutions can add a dashboard of predictability/reliability and pricing leverage due to deep local scale and buying clout.

Capability and core competency tend to shadow each other in homebuilding, but now may have entered an inflection point where operators better choose what they’re best at and draw on capability as a service for those activities they’re less proficient and efficient at. Of course, when market conditions shift suddenly from highly accelerated to rapidly decelerating, the risks of an undiversified, unhedged symbiotic dependency on the new-construction housing cycle, and the staying power opportunity of diversification become evident, as we’ve noted here:

The question of whether this time’s different forks into three correlated challenges around the burgeoning growth prospects for the super-subs.

• Fit to thrive, come what may – In the past, these multiple scoped subcontractors did well on the upswing in volumes, but coming off the peak into the downturns “they got eaten up by their overheads.” They need more elastic, more bi-directional scalability, to work as sustainable, resilient pan-cycle businesses.
• Beyond the big builder – A related issue, for a future-proof business and operating model, super-subs need customer diversity, not just in new residential construction, but in commercial, i.e. multifamily, and possibly “after-market” opportunity, in which case they’d need to evolve customer support, customer care and service capabilities not currently in their wheelhouse.
• The endgame: people and tech – A design-thinking business model would elevate the architecture, engineering, construction, modular, prefabrication, componentization, industrialization, and transportation platform in such a way as to attract the highest level talent as well as the investment in both research and capital spending in rationalization of the building lifecycle.

Speaking to the cyclical challenges, here’s a prepared remark from Focus Companies’ owner and founder Steve Menzies on the new combination and its long-term resources and plan:

Being a part of the Synergos family gives our team at Focus Companies an immeasurable boost as we look to capitalize on upcoming opportunities and more deftly maneuver through current market challenges. We believe Synergos’ development of industrialized building systems gives us a market advantage through pioneering more innovative and integrated building standards. This is a mutually beneficial opportunity to expand our multi-family business across additional markets and strengthen the flexibility of the Synergos model. Lastly, but most importantly, we recognize that the culture and vision of Synergos Companies are a perfect fit for our teams.”

Here’s a prepared statement from Synergos Companies ceo Rich Gallagher on the expansion of Synergos’ footprint into Nevada, with strong relationships potential for later moves into Utah and Southern California:

We are thrilled to begin the geographic expansion of our Synergos business model with Focus Companies and their incredible leadership team,” states Rich Gallagher, Chief Executive Officer for Synergos Companies. “The Focus group has an impressive breadth of capabilities and active projects, allowing for the Synergos model to be quickly and effectively saturated within the organization and the broader Las Vegas market. This is a strategic and synergistic first expansion step given Las Vegas’ similarities to the Arizona market and its location relative to the existing Synergos companies outside of Arizona.”