Buffett’s New CEO Calls Housing Gain ‘Start of Something Good’
Mary Rhinehart, who was named chief executive officer of Berkshire Hathaway Inc. (BRK/A)’s Johns Manville building-products unit yesterday, said that a pick-up in housing starts shows that the U.S. real estate market is reviving.
“It’s still off of a very low base, but we really believe that this is a start of something good,” Rhinehart said yesterday in a phone interview. “We’ve had a lot of glut in housing with all the foreclosures and hangover and whatnot and we really are optimistic that 2013 will be stronger than 2012.”
U.S. housing starts jumped 15 percent in September to an 872,000 annual rate, the fastest since July 2008, Commerce Department figures showed last month. Rhinehart, 54, said she projects 850,000 starts next year and as many as 1.6 million five years from now.
“We still have the uncertainty of the fiscal cliff” of automatic federal government spending cuts and tax increases at the start of next year that may limit building for the next three-to-six months, she said. “That will all get resolved, but not easily.”
Warren Buffett, Berkshire’s billionaire chairman and CEO, said in July that the U.S. residential real estate market was rebounding even as other parts of the economy flattened. His Omaha, Nebraska-based firm has expanded its bet on housing by buying a loan portfolio from bankrupt lender Residential Capital LLC, adding to a stake in Wells Fargo & Co., the largest U.S. mortgage lender, and forming a venture between its real-estate brokerage and Brookfield Asset Management Inc.
Rhinehart said she was offered the CEO role on Nov. 11, and travelled to Omaha to meet Buffett, 82. She has worked for the company since 1979, most recently as chief financial officer.
She replaced Todd Raba, who led Johns Manville since 2007, the Denver-based unit said in a statement yesterday. The Berkshire unit has about $2.5 billion in annual sales and employs approximately 7,000 people, with manufacturing facilities in North America, Europe and China. Johns Manville makes insulation and roofing products and has customers in industries including aerospace, building and wind energy.
Raba, 55, “worked diligently during a tough economic environment to effectively position the company for future success,” Buffett said in the statement. Rhinehart will “add tremendous value.” Buffett didn’t return a message left with an assistant seeking additional comment.
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