Cautious Optimism

Features - Cover Story: State of the Industry

Irrigation contractors face increasing water restrictions and licensing requirements, but look to 2013 with hope.

October 11, 2012
Lindsey Getz

While most irrigation contractors report an upturn in business, they do admit the economy is still having an impact. Consumers have a tighter rein on their purse strings and most companies have accepted that business may never boom the way it once did. But as contractors begin to adjust to the new normal, they still remain hopeful that business will continue to improve as they move forward.

Recession Remnants. Across the board, L&L is hearing from irrigation contractors that things are improving, but those that survived the economic downturn are wary of getting overzealous just yet. Any optimism has been approached relatively cautiously.

“There’s no question the industry took a heck of a beating with the economy and although it’s coming back, it’s coming back slowly,” says veteran industry consultant James Dowd, chair of the Irrigation Association’s Ambassador Group. “You see some bright spots but for the most part, people aren’t ready to jump up and down for fear of jinxing it.”

In many parts of the country, the impact of the recession lingers. “The economy is definitely still impacting what we’re doing with irrigation here in Florida,” says Judith Benson, president of Clearwater PSI in Winter Springs. “However, there are pockets in Florida that are starting to get some new home construction and some activity on smaller commercial properties so we’re hopeful things are starting to push forward.”

In the Northeast, the economy has left its mark as well. “We’re still dealing with the remnants of the recession,” says Bill Gallagher, president of Summer Rain Sprinkler Systems, in Greenwich, Conn. “Quite frankly I still wouldn’t call these ‘good times.’ There are still markets that are really struggling here. In the end, it all comes down to jobs and our government isn’t creating jobs. If people can’t find work, they certainly aren’t going to invest money into an irrigation system.”

Although most of the country still feels those lingering effects, in Texas, where the economy never really tanked, business appears strong. “Here in Houston, we certainly outpaced the nation this year,” says Wade Martinez, president of CBS Services. “Our economy has stayed pretty strong over the last few years and we were never really impacted by the downturn that the rest of the industry felt.”

“We’re seeing a slight uptick in residential builds and even commercial builds,” says Dowd, who’s based in Dallas. “But even though Texas didn’t get hit as hard as the rest of the country, we did still get hit so everyone is cautiously optimistic. We’re hoping for the best but from a money standpoint, most are still holding back. If they need to hire more people, maybe they’re hiring two instead of 10. Or maybe they’re investing in training instead of hiring at all.”

John Newlin, owner of Quality Sprinkling Systems in North Ridgeville, Ohio, says that his business had an exceptionally good year. “Unlike some of the negative talk I’ve heard, I feel the economy has improved dramatically,” he says. “I think part of it is that people are just tired of being tired and they’re starting to spend again. I definitely see people spending money in areas where they weren’t two years ago.”

Newlin says he’s seen growth across the board. Even his low-voltage lighting installations have gone up three times as much as last year. To him, that means people are willing to invest in their homes. Over in Haddonfield, N.J., Marty DeNinno, president of Pinnacle Irrigation & Nightlighting agrees that homeowners are finally investing again. “If I had to pick any one trend for this year, I’d say it’s the fact that homeowners are taking care of their properties again,” DeNinno says. “We have customers putting in pools and adding night lighting, so of course they’re willing to invest in irrigation. Irrigation is one of the least expensive things a homeowner can do to get bang for their buck and have a nice, green property.”

Restrictions and regulations. Though there seems to be an upswing from the recession, there are still many challenges that the industry faces. Water restrictions top the list for many. “Government intervention in our industry is getting more and more invasive,” Martinez says. “You’re seeing a lot more guidelines and restrictions as the government gets involved.”

Martinez also says stricter immigration laws may impact the industry, as will changes to healthcare. “An overhaul of the healthcare system will certainly affect the bigger companies but is probably not an immediate change in 2013 – no matter what happens with the election.” Benson says licensing is a hot topic in her region. “The Florida Irrigation Society is a proponent of licensing and I am, too, but I also recognize it can carry a double edge,” she says. “My hesitancy is that I don’t see it making any real impact on a residential level and that’s significant in Florida since we have so much residential acreage.”

“State licensing is definitely a trend,” adds Kurt K. Thompson, of K. Thompson & Associates, a landscape water use consulting and training firm headquartered in Pensacola, Fla. “This seems to be a loved and hated thing. It definitely doesn’t prevent bad systems from going in or bad work from being done, but it is a more formal way of keeping track of everyone. I think it produces more responsibility.”

Also Trending. Water conservation continues to be the hot topic for 2012 and will carry into 2013 and beyond. As the cost of water rises – or threatens to rise – consumers are paying closer attention to water usage. “The public is more aware of water waste because they have to pay for that extra water in most instances,” Gallagher says. “Here in Connecticut, its state law that every system has a rain sensor but there are still some very old systems that don’t have it. If homeowners see that their irrigation system is on during the rain, they’ll call us to check the rain sensors. That’s new, as in the past they would just ignore it. In fact, some homeowners are even calling to tell on their neighbors. There’s definitely a greater recognition of waste. People are more aware that water is a limited resource and want to protect that.”

Newlin agrees. “Water conservation continues to be the big trend,” he says. “Here, what’s pushed it is the drought. We can actually gauge our phone traffic by water bills. When the water bills start hitting the street, that’s when our phone starts ringing. But that’s also making people more receptive to embracing the new technology out there.” In terms of new technology, Martinez says evolving ET technology as the hottest trend. “Getting things like the Solar Sync down to a lower cost is going to be very valuable to the consumer,” he says. “They’ll still want to keep prices competitive on installation, too. I see a lot of potential ahead. I don’t think it will be long until we see more homeowners monitoring their sprinkler systems from their smart phones. That’s the next big thing.”

Diversification is also a trend, which was first initiated by the downturn. “Businesses that played it smart and survived were those that diversified,” Dowd says.

“Over the last few years we’ve seen everything from irrigation contractors who plow snow in the northeast winters to contractors who are adding more services. If they used to only do new installs, now they also do repairs.”Thompson also sees a greater emphasis on education as a rising trend. “In the past, irrigation contractors have put more of their focus on their trade – and they’re great craftsmen and very good at what they do,” Thompson says. “But now there’s more of a need to get educated on the best business practices. That can be hard for the guy that spends his day toiling in the trenches to also know how to sit down with a company CFO and talk financials and business. But fortunately there are more opportunities than ever before to get educated.”

Looking Ahead. Even irrigation contractors who have still felt the squeeze from the recession say they have hope. “People have a lot of fears about our future,” Gallagher says. “When they look at our national debt, they start worrying about their own debt. But in the end it will come down to jobs. If our government takes the uncertainty and regulations off of small businesses, I think we can see things turn around.”