The Atlanta area welcomed an overall decent year after small signs of improvement began to spring up in the first half of 2011, but lawn care operators remain cautiously optimistic.
Atlanta saw an increase of 33,900 jobs, according to the Bureau of Labor Statistics. That said, according to a report from 24/7 Wall Street, the region still holds one of the country's most sluggish housing markets with a 5.4 percent homeowner vacancy rate and an unemployment rate of 9.7 percent, surpassing the overall nation's unemployment rate of 9.2 percent.
Lawn care companies note that consumers remain prudent, but they are beginning to see a light at the end of the tunnel. The economy was hit hard enough in 2009 and 2010 that companies were forced to take on clients even if they weren't profitable, if they were lucky to find enough clients to begin with. But 2011 showed signs of hope.
"It seems we have found some pricing strength and we have been able to pass costs along to the customer when it comes to installations and add-ons," says Ben Elliott, president of Oak Hill Landscape Group in Kennesaw, Ga. "People are still in 'save' mode so you don't want to raise their prices so much they find a cheaper company to maintain their property. However, this year is the first year in about three years that we have had the luxury to discontinue clients because they are not profitable and never want any add-ons."
Although severe storms ripped through the state this summer, causing major damage and headaches for residents and maintenance crews alike, Georgia actually experienced a drought throughout most of the summer. This decreased the amount of bugs but created a fungus surplus, adding to demand for services such as chemical treatments.
Companies are still feeling the pinch from high gas prices, but are able to tap into their client base to help cover those costs as well. "I charge them the cost of one gallon of fuel extra per week when gas prices are higher than $3 per gallon," says Edward Gross, owner/operator of The GroundsKeeper in Grayson, Ga. "First year clients are waved, and I give a two month notice in a newsletter."
The biggest fear for contractors in 2012 tends to be the economy and the threat of a double-dip recession. If customers are tightening their budgets, lawn care operators will lose the add-ons and go into survival mode.
– Heather Tunstall
Chris Downer sums up pretty nicely how people will spend their money in the Boston area.
"They're not dumb," says the owner of Downer Brothers Landscaping in North Andover, Mass., which is about 20 miles North of Boston. "They're not going to spend it if there is uncertainty (with the economy)."
That seems to be the sentiment throughout the Boston area. Even though 58 percent of contractors in the East experienced client cutbacks, service reductions or spending reductions in 2011, according to a Lawn & Landscape survey, some landscapers in the Boston area had an equal or better year in 2011 than in the past three years. But they, along with their customers, aren't sure the country is out of the woods yet when it comes to the tough economy.
"I think this year it kind of felt like they knew what the worse was and now we're slowly starting to move away from that," Downer says. "But there is still some uncertainty as to we haven't seen the worse yet."
Joseph Crowley, owner of Crowley's Concepts in Medford, Mass., which is about five miles north of Boston, says he has also seen some hesitancy, but also almost doubled the number of bids he's winning. In the past seven or eight years, Crowley said he'd win less than 30 percent of the bids he put in, but this year he is close to winning 50 percent of them.
He attributes the success to no longer giving an estimate on the spot. Instead, he takes some time to really get an accurate estimate and then follows up.
In Hollis, N.H., about 35 miles outside of Boston on the Massachusetts border, Doug Gagne, co-owner of The Mixed Border, says his year started out slow, but eventually got busier. Gagne says the mindset of the area confuses him because New Hampshire's unemployment rate (5.2 percent in June) is a decent amount below the national average, but people are still hesitant to spend.
"There are a lot of psychological affects that are carried over," Gagne says. "Even though most people seem to be working, there's a great deal of caution. We also operate a retail nursery, and we found that to be true in the nursery as well."
While Gagne hopes things will get better next year, he's anticipating the same kind of trepidation amongst his clients.
"The optimist part of me wants to say things are going to be better, but I've been saying that for three years now."
– Brian Horn
Heat waves and drought produced a year unlike any other for Houston.
As of Sept. 11, the region had about 40 more 100 degree days than in a normal year and was experiencing a rainfall deficit of about 24 inches, according to the National Weather Service.
The extreme weather increased demand in services for some and began new trends around water conservation.
"Houston and much of Texas seem to be unique in that our economy and irrigation market is pretty strong," says Wade Martinez, president of CBS Services. The drought increased demand for his company's services, but the new sales, which he expects will fall off in 2012, also required flexibility.
"The biggest challenge we found was that with the extreme conditions, customers were a bit impatient and demanded immediate service," Martinez says.
The unusual weather called for customer education all around. Dean Carpenter, president of Houston Landscapes Unlimited, says the weather conditions resulted in helping customers understand it was OK to still install plants and irrigation.
"We're recommending to our customers to use drip irrigation, and we're recommending using native plants that require less water," he says.
One thing is for sure, water conservation will be a trend for the foreseeable future.
Besides irrigation tools, Carpenter says he predicts more installs with low-maintenance materials, basically yards subbing turfgrass for rock and synthetic turf.
Houston has largely escaped the brunt of the recession, but it doesn't mean that homeowners aren't watching their spending. The housing and building markets are down. Carpenter says his numbers are down 10 percent for 2011.
"Our business is off, but not as bad as the rest of the United States because we still have the oil industry here," he says. "The black gold has kept Houston's economy doing much better than anywhere else in the United States."
– Carolyn LaWell
In today's economy, Chicago-area landscape companies have had to reinvent themselves. Despite having less work, lower margins and increased competition, they're finding niche markets that allow them to be successful – or at least stay in business.
One solid area of growth has been Chicago's revitalized neighborhoods, says Brian Shea of Voltaire's Gardener, a design-build firm that specializes in the urban market.
"When I first started in this market, I rarely noticed companies with local numbers because most of them were based in the suburbs," says Shea. "Now many firms are moving to the urban market because it is still an area where people have the interest and resources to invest in their properties, and because the cost of quality landscape design and installation is modest relative to the entire property investment."
Christy Webber of Christy Webber Landscapes, a 20-year-old company located in a 12.5 acre industrial park on Chicago's west side, says her company has benefited from a slew of construction projects that broke ground this year in Chicago.
"Our business is up this year," she says. Nonetheless, she says that increased competition and fewer jobs have forced her to lower her margins to stay competitive. "Too many companies out there are lowballing to keep thier guys busy," she adds.
For some Chicago-area companies, the design/build market is slowly returning to its former levels of prosperity. "Many clients called last year and initiated design discussions but then hesitated to commit or chose someone else," says Shea. "This year, more and more clients have returned to the table ready to invest."
For other companies – particularly those that concentrate in suburban Chicago – maintenance work is just about the only thing keeping them busy. "Our installation work is down 75 percent from last year due to the recession and construction standstill," says Jan Wemple of Moore Landscapes in Northbrook, Ill. "We are thankful for maintenance and enhancements being only slightly down, if not even."
– Lee Chilcote
South Florida has had it rough. Among the nation's highest rates of foreclosures in 2010, real estate sales are still recovering. Slowly but surely, the housing market is stitching its wounds. According to a report by RealtyTrac, in the first six months of 2011 Miami's foreclosure activity decreased 60 percent over last year, with a rate of one in every 65 housing units. But there's still a long road to recovery.
Miami Dade County had one of the higher jobless rates in Florida at more than 12 percent in July, according to the Bureau of Labor Statistics. However, Florida Tax Watch says the year-over-year employment is up by 56,500 jobs, a modest increase of less than one percent. Not really statistics to jump for joy over, but lawn care operators aren't giving up yet.
"Unfortunately, what we do for a living is a luxury," says Rudy Alemany, president of Illusion Landscape & Design, in Miami. "Here in Miami, we're a different animal. Miami is a tough, tough, tough, tough market to survive."
Lawn care operators have seen a significant drop in business thanks to the housing market collapse and decreased consumer spending. But 2011's slight increase has been better than nothing at all.
"Business is a little bit better, about 5 percent over last year," says Ben Bistrong, owner of Jungle B's Landscapes in Homestead, Fla. "But, it's still a bit sluggish."
Contractors are looking to trade shows, marketing and thrifty budgets to help them sustain and get through difficult times, because they don't feel like they're ending anytime soon. Their biggest fear is that 2012 will be even worse than what they've seen already.
Florida – and particularly Miami – is no stranger to hunkering down and weathering the storm.
To keep costs down, some LCOs are planning to run on a business model of maintenance services only rather than added services. Others are considering passing costs on to customers, and still others plan to cut personnel to offset low incoming revenue.
Still, some economists are projecting a rebound for Florida next year, pointing to a budget surplus balancing on a knife's edge as their catalyst. Shaky reasoning has not comforted lawn care operators; only time will tell if 2012 will bring relief. Consumer confidence still has a long way to go, and business will be a tightrope walk for many months to come.
It seemed like everyone wanted to be a house flipper at the peak of the housing boom in Southern California. Today, it has one of the highest foreclosure rates in the nation, housing prices are down, and few investors have the capital to tackle risky projects.
So it seemed like a good omen to Anne Phillips, an L.A.-based landscape contractor, when a group of investors contacted her to bid on a house they were rehabbing.
"Just the fact that there are people out there that are able to buy a home, fix it up and resell it for a decent profit within a four- to-sixth-month period – that's a good sign for the market," says Phillips, who owns Paradise Contained in Studio City, Calif.
After a tumultuous, up-and-down year for Los Angeles landscape contractors, Phillips is hoping that this is indeed a sign that the market here is finally improving. And while unpredictable workflow has made it tough for landscapers to plan for the year ahead, those that specialize in water-saving landscaping tap into customers' interest in sustainability and align themselves with savvy investors are seeing success.
"The biggest problem I have is trying to foresee how many workers I need," says Phillips. "Just because I'm busy now doesn't mean I'll be busy two months from now."
To address this problem, Phillips has been hiring independent contractors rather than adding employees. "As a business owner, you have to be creative during this time," she says. "I don't feel confident hiring new employees, but I don't want to turn work away."
One growth area for Paradise Contained has been homeowners seeking to replace their lawns with low-maintenance plants. Such a move helps them save on their water bills and help the environment.
"People say to me, 'I want to get rid of my lawn,'" says Phillips. "They want it to look nice – not like a desert – but also to save water."
Although traditional lawn and landscape companies in L.A. face stiff competition – especially from out-of-work builders that entered the industry after the housing market soured – at least one eco-friendly company has found a successful niche market.
Whisper Landscape Maintenance, a start-up company that uses zero-emission, solar-charged electric mowers, blowers and trimmers to maintain clients' lawns, has grown from one part-time employee to five full-time employees in three years.
"It's a real niche market, and it was underserved in the past," says Chuck Carr of Whisper's steady growth. "While the service costs more than a neighborhood 'mow-and-blow' gardener, there's a niche market of people that care about the environment."
Carr also owns a traditional lawn and landscape company called Carr Landscape Management. While business is still tough, he says that he's seen a recent uptick in commercial maintenance business as investors snatch up low-priced, vacant commercial properties and then hire him to do simple, profitable clean-ups.
"We'll go in and clean up the weeds," he says. "Sure, it's one-time dollars, but it's something, and hopefully you'll be around when they develop the property."
When they say everything's bigger in Texas, this includes the economy, too. Job growth in the Dallas-Forth Worth metro area has outpaced the U.S. economy in recent years, and the area has an unemployment rate below the national average. This year, it was named one of the top 10 Best Places for Business and Careers by Forbes Magazine.
Yet landscapers here have their share of problems, too. Obstacles such as high fuel costs, labor woes and the worst drought in Texas history are reshaping how companies do business.
Ed Manning, owner of Barefoot Lawn Solutions in Arlington, Texas, said he was tired of absorbing the cost of gas prices now approaching $4 a gallon, so last year he introduced a fuel surcharge. So far, he says his customers have swallowed it.
"When gas hit three bucks a gallon, I added 50 cents per week, and no one has backed off," he says. "Gas prices make a big difference when you're mowing 30 lawns a day."
Manning's equipment repair costs have also risen, in part due to weather. "We typically get two, three seasons out of mowers, but because it's so dry and the ground is so hard, we're ruining blades at a faster clip," he says. "Some of these yards are just dust."
Despite an unemployment rate of 8.6 percent, many Dallas-Fort Worth landscapers also continue to be plagued by a shortage of reliable, local workers for entry-level jobs. Jody O'Donnell, president of LMI Landscapes in Carrollton, Texas, hires immigrant workers through the federal government's H-2B program to fill a gap in the labor pool.
"We've tried to fill these jobs with American workers, but they don't want them," he says. "Many of the H-2B workers have been with us 10-plus years, and they're very reliable."
Although business is strong enough that LMI is opening a new office in Austin, Texas later this year, O'Donnell fears increased regulation of the H-2B worker program. The government has been too slow in processing worker applications, he says.
Asked about the drought that is afflicting Texas, Gary Jeanes of Ground Maintenance & Landscaping in Wills Point, Texas, simply says, "We're burnin' up."
Yet beyond the obvious fact that it's more of a struggle to keep plants healthy and green, he says one of his company's biggest problems are wild animals. "Armadillos have been coming out of drought-stricken areas looking for moisture," he says. "They tear everything up. So we're putting out traps, catching them and relocating them."
The drought has also had a drastic impact on the maintenance business, forcing companies to diversify their business. Although Manning had always concentrated in maintenance work, his company has delved into the installation business this year.
"People are not putting as much money in maintenance, so they started requesting quotes on other projects," he says. "I'm down 30-35 percent on residential mowing, but my irrigation and installation business is up more, so it's offsetting the drop."
Although he was initially afraid of taking on too much, Manning has embraced the market. "It's a future line of business that we actively market and sell," he says.
The drought has also spurred greater interest in low-maintenance, native plants. This year, Manning has done a number of jobs where he ripped up non-native Bermuda grass and replaced it with St. Augustine or Raleigh grass, which require less water.
New York and New Jersey
While many contractors in the Tri-State area experienced a welcome uptick in business in 2011, revenues have not returned to previous levels and price competition remains a real threat.
To adapt to changing times, these companies have expanded their services, lowered prices while maintaining quality and capitalized on the popularity of outdoor living. That has meant developing a specialty in lower-maintenance, sustainable landscaping.
"We saw an increase in sales of about 8 percent, mostly in the irrigation division of our company," says Brian Klimek, president of Greenworld Landscape & Irrigation in Monroe, N.Y. "We pushed irrigation efficiency with weather sensors, changed spray nozzles to matched precipitation rate nozzles and performed irrigation audits."
Yet despite growing their irrigation services and launching an in-house technician training program, Klimek says qualified contractors continue to face threats from fly-by-night companies. "Customers get estimates from unqualified contractors that provide low prices just to secure work, and then say, 'If you match his price, the job is yours.' We try to educate the homeowner on the 'right' way to install an irrigation system."
"Low pricing has hurt everyone, especially as more companies enter the maintenance market," adds Chuck Rupertus of Nature Scape in Barrington, N.J.
One way contractors can deal with downward price pressure is by reemphasizing the importance of quality workmanship, says Adam Myles of Topaz Design Group in Oceanside, N.Y. "Our biggest problem is customers that are only concerned with a number as opposed to quality of design, installation and materials," he says. "We're stressing to our new leads that they should speak with our past customers, so they can get a better feel for what it's like to deal with us, and how great our work is."
Although the market's volatility has made it hard for companies to plan for next month, let alone next year, one consistent area of growth has been in hardscapes.
"We see outdoor living as a trend, and we've been incorporating everything from fireplaces to outdoor kitchens into our designs," says Myles. "We've also gone strongly into masonry work as planting has dropped off in the past few seasons."
The Philadelphia metropolitan area, which is home to some of the wealthiest communities in the Northeastern U.S., continues to be a strong market for many lawn and landscape companies. This year, firms here experienced double-digit growth as the installation market began to come back and homeowners started spending again.
Nonetheless, Philly-area contractors this year also battled weather swings, a mid-year slowdown, underbidding from competitors and a rocky installation market. These factors and others made 2011 a schizophrenic year overall for many contractors.
Landscapers here struggled to find a rhythm in 2011 after a deluge of spring rains and a parching summer drought. "In the spring, we could have cut the grass every three or four days," says Matt Young of Matt's Lawn Care in Souderton, Pa. "Then we had a drought in August – knocking us out for three to four weeks – and more rain."
Although hardscapes continue to be a profitable market in metro Philadelphia, many contractors reported increased competition and an overall slowdown in work.
"In our area, I don't see any large projects being requested, and the hardscape trend may be winding down," says Harry Downey of Downey Landscaping in Bensalem, Pa. "We try to work with homeowners to do projects in phases."
The hardscape market has also gotten tighter because many homeowners simply can't afford to take on big, new projects, says Drewe Schoenholtz of the Green Scene in Hopewell, N.J. "I see the biggest problem as tight credit – homeowners no longer have huge equity in their homes to tap for landscaping projects," he says. "And the few people who do have a lot of equity can't get loans from banks."
One creative tool Schoenholtz has employed to address this problem is offering in-house financing to customers with good credit and payment history. "I'll sign a note, and they make payments," he says. "I don't do it for everyone, only when it makes sense."
Although Schoenholtz foresees 2012 as being another rocky year, he's hopeful that the gradual improvement of the economy and the end of election season will boost business. In the meantime, he's diversified his services to earn new revenue.
Washington, D.C., led the nation in consumer confidence for the first half of 2011, according to a Gallup poll released in mid-August, with 26 percent of respondents rating their economic condition as "excellent" or "good." The region also has a low unemployment and foreclosure rate. All of this combines to form a healthy business climate for landscapers in and around the capital.
"We're doing very well. We had an increase in business in 2011, we're booked through the end of the year and selling into 2012 already," says Bob Jones, owner, Carroll Landscaping, Randallstown, Md. "With the proximity to D.C., they are government workers and they're spending more. They have a high income and job security."
Though it sounds rosy and bright in the region, it's only relative to the overall abysmal outlook in the rest of the country. Landscape contractors are still wary, concerned with competing with undercutting start-up companies and battling government regulations.
"I anticipate our biggest problem in 2012 will be excessive government regulations, especially the H-2B interference," says Ricky Hoybach, CEO, American Lawn Brothers Professional Landscaping and Grounds Maintenance, Leesburg, Va. "I'm not sure what we are going to do yet."
Jones agrees that the federal government is not small-business friendly. But he plans on marketing and maintaining a professional position with each client to maintain a strong business in 2012. He sees the D.C. market continuing the trend of creating an outdoor living space, a personal ecosystem with hardscapes and water features. With families opting for staycations over road trips, they are spending money on transforming their backyards into resorts. "Fear makes people not spend. They want their own environment," he says.
Overall, the Washington area is faring much better than the majority of the United States. Confidence is high, people are spending – albeit cautiously – and landscapers are busy. Though smart business practices will determine who stays swimming and who sinks, the outlook is positive for D.C. and the surrounding areas.