Here’s a scene that plays out every few weekends: I’m on my back deck/in a kitchen/at a bar for a birthday/housewarming/party. Whoever I’m talking to asks what I do. “Oh, I’m a magazine editor,” I say.
“Wow,” he says. “That’s pretty cool. What magazine?”
“It’s a trade magazine for landscapers.”
“Oh,” he says. And I can tell in his tone and his furtive glance toward the cooler/bathroom/bartender that he expected me to say something like Esquire or Rolling Stone or Golf Digest.
“It is pretty cool,” I say.
Explaining what I do every day is easy, but it’s not always what people expect. The same thing is true for you all. You might call yourself a certified landscape professional or a lawn care operator or, simply, a landscaper.
Before I joined L&L, I worked for PCT, our sister publication that serves the professional pest management industry. Not exterminators or bug guys or anything else. Pest management professionals. The structural pest control industry has made a big push to rebrand itself this way, to portray its members as guardians of public health and, for the most part, it’s worked.
As a writer, I like the term exterminator. It’s direct. I say it and you can picture it right away. But there’s a negative connotation to it that you can’t deny. That picture is more often than not dirty and grimy and smelly. But that’s why I like landscaper: It’s clear. It tells you what someone does. The green industry is a doing industry and the people who work in landscaping companies do landscaping – they plant flowers and install trees and cut grass.
Landscape industry certified manager sure is a technocratic way of saying landscaper. Don’t get me wrong, I think certification and licensure for any and all facets of the industry are good things. It’s not fancy: It helps consumers determine who’s reliable in a vast sea of pick-up trucks and polo shirts. But just like any name, if you say it the right way it sounds like an insult. Someone who doesn’t appreciate the industry or the work you do says, “He’s a landscaper” like there’s a silent just a at the beginning.
Whatever you call yourself and your employees when someone asks, you should say it proudly. I say this a lot, but won’t ever get tired of it: Landscapers do very cool, very important work. Not only do you get to install and maintain beautiful projects, make people happy and get instant gratification for the job, but you improve the environment and the health of everyone around you. You make the world a better place.
That’s what you do. That’s what a landscaper does.
We do the state of the industry report every year, and every year we try to make this high-level research report as useful and helpful to our many thousands of readers as possible. In an industry where so many people can be called a landscaper, it can be challenging to wade through so much data to find the most relevant information. And we ask a lot of questions. So, first, to the more than 600 contractors who made it through our entire survey, I want to say, “Thank you.” We quite literally couldn’t have done this without you.
Apart from the data collected in our survey, the L&L editors, frequent contributors and I spend the year talking with landscapers to get a handle on how things are going in the market. The main purpose of this report is to give you an idea of what’s happening across the country to landscapers of every stripe.
Here’s what we’ve been hearing:
From our initial read of the data, things are going pretty well. Key numbers like profitability, revenue and backlog look good. Nine in 10 owners say they’ll end up in the black this year, net profit margins remain an average of 10 percent nationwide, and average yearly revenue is $664,038. For the first time, we asked about average backlog for contractors, and about half reported that they’re ahead year-to-date compared to 2012. Another third of the industry is about the same as last year.
If landscapers could fix anything, they’d fix labor. A full quarter of owners say they would improve the quality of their labor pool if given the chance in 2014. A lack of quality employees is a perennial complaint of contractors, and a close second this year is customers cancelling or cutting back services.
Input costs – fuel, chemicals, labor – continue to rise and the prices contractors charge aren’t keeping pace. So owners are turning toward technology – everything from mobile devices to equipment tracking devices to custom customer management and marketing software. It’s part of a larger trend on efficiency and a focus on how to wring even more profit out of top line revenue.
Gas prices remain the No. 1 concern of landscapers. As a result, more are starting to explore the use of alternative fuels like propane in their businesses. Propane has a small foothold in the market – about 6 percent of contractors use it so far, and use it to power just 3 percent of their equipment – but it’s going to get bigger. Gas and diesel prices aren’t going to go down, and a reliable supply of any kind of cheaper fuel will help contractors budget better.
All of this – difficulty finding labor, prices and stabilizing margins – contributes to owner stress. For the second year in a row, stress appears in the top three worries for landscapers across the country. For the largest companies, it’s tied for second with health insurance costs.
Contractors by and large are legitimately scared of what’s going to happen with the Affordable Care Act. And it’s less because of the politics of the law, but of the uncertainty it causes for them trying to run their businesses. That’s not unique to landscapers, but most everyone I’ve talked to just wants to know what they’ll have to do to comply so they can start planning for it.
The main theme of this year’s report is how landscapers have fared since the Great Recession started in the fall of 2008. Five years later, contractors have learned a lot of lessons.
Many went out of business, and many more had to reinvent themselves to stay afloat. The bottom line is that many landscapers, in the last five years, have chosen or have been forced or some mix of the two, to start thinking more like business owners.
Thousands of landscapers across the country have focused, worked hard and grown in the years since the world ended. Turn the page to read how they did it, and get an in-depth analysis of our 2013 data.
– Chuck Bowen
For some, the last five years were a wrinkle in time. Finally, revenues in 2013 are on pace to meet or beat 2008, before the economy bottomed out. This year feels like shaking off after a sweaty, bad dream when you wake up wondering: What the hell happened here?
For others, the recession years were like running a business headquartered in quicksand. You had to fight so you didn’t sink. But you got really strong swimming against gravity like that.
Then there were companies that admit they were somewhat insulated from the economic catastrophe because of their market, their customer base or complete anomalies – a good snow, a lucky break with a multi-millionaire client, good timing. Of course, many companies didn’t survive this. And to be fair, the story you’re reading is a bit skewed because we talked to landscapers who are still in business. Survivors. The ones who had to cut back, invest their personal savings to keep things alive or who were positioned to eat up market share in vulnerable times.
“I feel like I just went through the ‘Biggest Loser’ where we show up, we don’t know what to do and by the time we’re done, we come out feeling great and ready to roll,” says Russ Marsan, owner of Carpenter & Costin in Rutland, Vt. “I just feel like a whole different person.”
Here are snapshots from across the country – stories that illustrate how landscape businesses were faring in 2008 before the crash, how they responded in those dark times, and why the last five years have changed these companies forever. Sure, we all have a few signs of aging thanks to this economic recession. But most of us look in the mirror and see a more distinguished, wise and mature business that’s ready to face the future.
Switching the mix after a merger
Three weeks after Marsan merged with a neighboring landscape firm in 2009 – expecting that combining forces, networks and talent would position the company for success during the downturn – the fresh new entity lost $1 million in business. Just like that.
“We lost about 50 business clients who canceled projects,” he says. “We had a major free-fall and it really shook myself and my partner to the epicenter – right to the core.”
In 2008, Marsan’s business had the best year in its history. Back then, the operation was 75 percent construction and 25 percent maintenance/snow. Today, that business model has flip-flopped. Three-quarters of revenues come from recurring services after an aggressive shift in 2009 toward commercial maintenance.
Vermont is a different market, Marsan admits. And in his region, which is rural, the switch to commercial was a survival move. “We’re very much unlike the suburbs of Boston where there are a lot of affluent single-family residents,” Marsan says, calling central Vermont a somewhat limited market. “The best way for us to afford our overhead and succeed was to focus on what was available, and there was a pretty good opportunity in the commercial end of things.”
Of course, Marsan didn’t expect the bottom to drop out when he merged with another company about 20 percent of his firm’s size. So that bounce to commercial was a survival tactic, and one that stuck. As for the partnership, it helped the business stay strong during tough times. “We knew two different networks, so that was a great opportunity for us to mesh our customer capacity,” Marsan says.
The company has grown from about 15 employees to 30 since 2008, before the merger and the economic bust. But the ship runs tighter. Profit triangle was not a phrase Marsan used in 2008. It is today.
Now he runs two-man crews – not crews with three, four or five members. The workweek is one day shorter. The business runs Monday through Thursday. “That cuts 10 hours, reduces 20 percent of road time and that means cutting back on 20 percent of my setup and breakdown on jobs, drive time, etc.,” Marsan says.
He’s lean. But what does that mean exactly?
“Benchmarking,” Marsan says. “Profit equals opportunity for growth, equals great customer service, equals team-building.”
“When I think lean, I think profit,” Marsan continues. “I think maximum efficiency. That means taking a daylong project, doing it 10 percent faster and therefore reducing expenses on that job.”
And as for now – and 2014? Last year, the company finally hit the $2.2 million mark, a goal Marsan set in 2009. “It took us this long to get back to that point, and it was a long road,” he says. This year could look like $2.5 to $2.75 million. With a branch office open in New Hampshire, there are two locations and more opportunity for growth. “It’s going to be even better,” he says of the future.
Forward again in 2013
“I put all my life savings into the business.” Zech Strauser didn’t pull back during the recession. Instead, he put his financial life on the line and pulled about $300,000 from his personal savings to invest in a new facility for Strauser Nature’s Helpers in East Stroudsburg, Pa.
The timing wasn’t all bad. “We started to have opportunities to buy land and invest in the business at a cheaper price,” he says.
Fortunately, Strauser had saved when times were good and had the reserves to make some moves. “Before, we were so busy getting work done, we didn’t have time to spend money, really,” he says. From the time he started the business in 1998 until 2008, “It was pretty much, the sky is the limit,” and the business grew 20 to 30 percent each year. Strauser played his spending smart during that time.
Even so, to sustain operations and take advantage of market opportunities, he relied on his own cash to fund growth during the recession. “At least it’s equity in property – it’s not like I lost that money,” he says, adding that building up that savings again will take time. But at least the business is healthy.
Meanwhile, the last five years has afforded Strauser an opportunity to really take a closer look at operations.
“The recession really allowed me to grow up a little,” says Strauser, 36. I started the business when I was in my 20s, and I was full bore until I was 30.” Slower times gave Strauser breathing room to stop, plan and build a strategy for what’s next at his firm. And, like most companies, he got just uncomfortable enough to learn why running lean is critical. In 2001, he launched a Working Smarter Challenge. “We started to basically look at how we do things from an operational and financial standpoint,” he says.
Finally this year, the company has a backlog. “We are starting to put a high focus on construction and installation services,” Strauser says of the primarily maintenance and snow business. Currently, recurring service work is 75 percent. Five years ago, 75 percent of the business was installation.
Meanwhile, revenues are finally reaching pre-recession levels, Strauser says. He expects to match the company’s 2007 numbers, which were its highest. The company has been growing an average of 10 to 15 percent. “We haven’t had one flat year,” Strauser says. But that growth has come from maintenance, which yields smaller profit margins and lower-dollar sales. “That was good for cash infusion and more steady growth each month, which I’m all for,” he says.
Strauser says 2013 is the year his business began moving forward again.
“If the recession would have happened during our first five years of business, we would not be here, I think,” he says. “My drive and money saving got us through everything. So, now we are trying to replicate that (work ethic) but be smarter than we were in our first decade of business.”
Insulated, but proactively diversifying
BP was a big-spender with Foret Contracting Group in Thibodaux, La., following the oil spill in 2010. Foret Group already had BP as a client. But that year, revenues swelled to $7 million. (Today, it does about $3.5 million.)
“We did anything and everything for those folks – we wanted to help our client get through that situation,” says Ryan Foret, COO and landscape division manager at the firm.
The recession really caused no tug on the business. “We feel like we were a little bit insulated from the recession because the predominant business in southern Louisiana is oil field related,” Foret says.
But Foret Group has carefully watched and learned from the last five years of economic strife throughout the country. The firm is focused on diversifying its operation and growing its capability to serve as a total facility manager. “We want to be the one-stop shop for clients,” Foret says of the group’s general contracting and facility maintenance division.
Currently, the company is working with corporate clients who contract out an array of services, from plumbing and electric to landscaping – whatever happens on the property. Foret Group sees an opportunity to serve as a reputable single point of contact. Essentially, the firm is working as a general contractor of trades, which means building relationships to fulfill large, complex facilities management contracts.
The division is doing well, Foret says. “The few clients that we are doing this work for keep us very busy, and this is definitely a service we will put some time and effort in the future to grow,” he says.
Promoting growth, winning talent
“We made the bet that things would turn around,” says Chris Clifton of his approach to business the last five years. In 2009, Southview Design in Minneapolis did $4.7 million. “We are on track to do $12 million this year.”
The landscape market in his region shrank by at least half, he says. And Southview Design did slow down, but not exponentially. During that time, the firm backed away from the homebuilder business and began to focus on consumer-direct services: residential design/build, which is 95 percent of what it does now.
Clifton made sure that homeowners recognized Southview’s name. He credits his company’s growth to assertive promotion efforts – a combination of radio, TV, newspaper, magazine and direct mail – along with creating a sought-after company culture. “We are absolutely leaner now,” he adds.
A different approach to assigning roles in the organization has drawn in talent. Rather than hiring a landscape designer who also sells, manages projects and serves as a project foreman, these roles are broken down into separate jobs. “That way, people can focus on the parts of the chain they are good at, so our average competency level for any given function in the business has gone up,” he says. “It’s the best team with the best players.”
Clifton says this concept isn’t special. But apparently, it isn’t the norm among landscapers in his area, either.
Meanwhile, business is steadily growing as consumers in the Twin Cities market loosen up spending. Clifton says 2011 and 2012 were the best years on record for Southview Designs. “I think we were a little bit on the front end of the recovery because of all the promotion we have done,” he says. “When people came back into the market (to spend), they were willing to take a look at us.
“I also think there was pent-up demand,” he continues. “For some clients, the money was always there, and I think they would have done these projects sooner.”
A brand new approach drives growth
“This might not be the story you were expecting to hear,” says Jim Campanella of Lawn Dawg, Nashua, N.H. His business doubled since 2009, from $5.6 to $12 million. “We got hit just as hard here as everywhere else in the country,” he adds. So, the market in upstate New York wasn’t especially kind.
But lawn care is a service that makes the cut in tough times. Vacations got trimmed and so did large design-build projects. “But you’ve got to keep the grass alive to protect your property investment,” he says.
At Lawn Dawg, growth was propelled by a brave new brand, a handful of acquisitions and aggressive marketing. In 2009, Campanella recruited a private equity group to recapitalize the business so he could buy out his partner. He brought in a full-time property manager, then centralized sales and processing. “We launched a new and improved Lawn Dawg and that has really paid off for us,” he says.
The look and feel of the firm got a makeover. “If we wanted to get taken seriously on a regional and maybe a national basis, which is my goal, we needed a more professional image,” Campanella says.
Meanwhile, Lawn Dawg captured opportunity to expand into new markets through organic growth and acquiring operations. Its footprint has increased from five to 10 branches in the last four years. “There were some really nice strategic opportunities out there,” Campanella says.
This assertive growth will continue. And so will the firm’s careful watch over the budget. “We negotiate everything from print material to trucks and equipment,” Campanella says of a significant change in purchasing since the economic downturn. “We make sure we are getting the best value across the board.”
Born in the recession
Joshua Cauffman launched GreenRoots Landscaping in the Philadelphia area in 2009. Tough is what he knows – business has never been all that different. But what has changed since his first year operating is the size of the design/build projects his company performs.
The $100,000-plus jobs that used to come in the door look more like $25,000 now. GreenRoots Landscaping’s volume has been steady, but billing has decreased.
Still, Cauffman is investing in his team. This year, three additional staff members bring the roster of this $2 million company up to 15 people. Cauffman is positioning the firm for growth by bringing on professionals to manage administrative functions. Now, he’s got an office staff. And that is stressful, in a way, because sales volume is not ramping up significantly. But Cauffman sees potential. “This year, it looks like we’ll be a little better than last year – not hundreds of thousands better, but a little better,” he says.
One struggle he’s facing is bidding against design/build firms that dole out free designs to win jobs. Cauffman subcontracts his design work. He is hiring freelancers that he has to pay, so freebie designs just aren’t possible if he plans to make a profit (and he does). “I have to figure out how to get a professional design to clients without it costing me an arm and a leg,” he says.
And Cauffman would also like to edge away from residential clients and take on more commercial work. For now, up to 70 percent of his clients are homeowners. “I’m telling you, they take 10 quotes on you and … it’s really tough.” Cauffman says GreenRoots is on track internally to support commercial clientele; it’s just a matter of pursuing the work.
His friends in other trades like HVAC, for example, haven’t experienced the same economic stress. If people have a limited budget, necessities come first, Cauffman says. “They’re going to fix their heaters.”
Stepping outside the multi-family niche
The rental market in Florida is booming. Buildings are full. Real Estate Investment Trusts (REIT) buy up foreclosed properties to hold and/or lease need landscaping services, too. Today, Ameriscape Services in the Tampa Bay area is servicing about 500 homes per week for REITs. Last year, the firm did no business in this sector.
Diversity has been crucial for Ameriscape because its core business – the multi-family world – was bombarded with competition since the market was so ripe. “It’s very cutthroat. I’ll tell you, that market is a blood bath now,” says Joe Chiellini, president. “No one can buy a house, so they have to rent,” he continues. “From a business standpoint, the competition for multi-family contracts has been tough.”
So Ameriscape has diversified heavily. There’s no loyalty in the multi-family market, he says, even if Chiellini gave them a price break during the recession. When a lower priced bid lands on the desk of a property owner, guess who wins?
But Ameriscape held on strong during the last five years. And in the last year, the company has staged a strategic growth spurt thanks to new REIT business. The opportunity in this market is huge in Florida and other states that were hit hard by foreclosures, including Arizona and California. The largest REIT in Chiellini’s market has 3,000 properties in the Tampa Bay area. “They are writing leases on these houses just like they are apartment complexes,” he says.
Because Chiellini has worked in the multi-family market for so long, he has relationships with property managers, some of whom moved over to work at REITs. “They reached out to us, and we saw a niche,” he says.
Now, REITs are about 30 percent of Ameriscape’s business. The company is going to do at least a half-million dollars this year from these clients. Meanwhile, Ameriscape also expanded into municipal work, capturing a significant contract with the City of Tampa.
“Before, we never diversified, and I’ve been in business for 13 years,” Chiellini says. “Halfway through last year, we realized that we better start diversifying, so we aggressively went after office park and municipal work, and now we have something in every arena, so that’s a good place for us now.” As for 2014, Chiellini says he’ll “put on the brakes” and harness the fast 30-35 percent growth the company is experiencing this year “We are getting back to what has helped us stay in business, and that’s getting rid of ‘bad business’ and continuing to find good business,” he says.
Steady but stuck
After idling at the same revenue mark for five-plus years, Dave Rykbost says he’s ready to hit a higher target. He’d like to grow Dave’s Landscape Management Co. by $1 million in the next few years. That’s about 13 percent growth each year for the Hudson, Mass.-based business. “I’m kind of sick of $2.5 million,” he says.
But playing a conservative hand has been crucial in maintaining the business since 2008. For example, Rykbost has been repairing equipment rather than making purchases. Not until recently has he added to his mower fleet. Last year, he replaced six mowers, and he ordered a couple more this season (all propane). And, he’s shopping for trucks again. This comes after a few years of steady-as-she-goes.
About a week before the market crashed in October 2008, Rykbost sealed the deal on a business purchase. He bought 200 maintenance customers from an area contractor, picked up four of its employees and spent about $250,000 on new equipment.
Then the phone stopped ringing.
That was OK in fall 2008 because of backlog, and 2009 was strong because of a few anomalies: a big snow season, that business purchase (which added recurring revenue accounts), plus a big installation job that continued from the prior year and kept Dave’s busy through fall 2009.
But in 2010 and 2011, the business felt the recessionary squeeze. The firm was about break-even and sales were down slightly. “We were afraid to raise our prices,” Rykbost says.
Meanwhile, the company did not get its H-2B labor back. Rykbost had to pull from the domestic labor pool, which was growing thanks to rising unemployment. “But it would have been nice to have the guys we had for the last several years who knew what they were doing,” he says.
Over the past few years, profit margins have eroded. This year, Rykbost made price adjustments (with no resistance from clients). “I’ve been blessed with some prudence and I didn’t spend it all when I had it,” he says of sustaining the business over the years. Now, he has money in reserves he can invest in the company. “I guess I have just been reluctant to buy a whole lot of equipment through the recession,” he says.
The economy still isn’t great, Rykbost says. Though, it has picked up from last year. He’s bidding on larger jobs and more of them. “But it’s still a competitive market and you have to keep your numbers very tight,” he says. “And, it’s definitely not 2007 or 2008.”
|Above, photos of damaged trees in Vermillion, Ohio, illustrate the damage most common from Imprelis: browning and curling of conifers. Photos courtesy of Weed Pro|
In the winter of 2011, 100 top LCOs and researchers all flew down to the Ritz-Carlton in sunny Sarasota. They were there to learn about a brand-new herbicide that promised to do amazing things for lawn care.
It was called Imprelis and it had a super-low use rate, an innovative mode of action and had been shown to control weeds like nothing else could. It was an expensive herbicide – it cost about $700 a gallon – but it was effective. DuPont, the manufacturer, was giving it a full-court press.
“It received a lot more play than I have seen a product get in a many years. They thought they had a silver bullet,” says Bob Andrews, who owns Greenskeeper in Carmel, Ind. He’s also the president of the Indiana Lawn Care Association and a past president of PLCCA. He’s been in business for three decades. “The product worked wonders. It absolutely did everything it was supposed to. I’ve had customers with wild violet for years and years. Imprelis wiped it out. It didn’t knock it down or reduce it,” he says. “It wiped it out.”
But then trees started dying. That spring, spruces and honey locusts and white pines throughout the Midwest started showing strange signs of stress and damage. The tips of their fronds curled up into club-like shapes, or the crowns turned brown. LCOs and researchers and technical reps were stumped. Many thought it was an isolated incident.
It wasn’t. Imprelis was killing the trees. The active ingredient – aptexor – and a novel mode of action made the herbicide very effective on difficult-to-control weeds like ground ivy. But Imprelis was too effective. It was readily taken up by trees – mostly conifers – and killed or damaged thousands of them across the country. Imprelis was approved everywhere except California and New York, but states in the Upper Midwest saw the heaviest damage.
Thousands of lawn care operators, golf course superintendents and municipal arborists used Imprelis before DuPont pulled it from shelves. EPA would eventually ban its sale and DuPont would sell off its professional turf and pest control products division – including any intellectual property related to Imprelis – to Syngenta for $125 million. A class action lawsuit is still working its way through the courts.
And while DuPont is still paying for damages – sometimes cutting seven-figure checks – homeowners and contractors alike complained about its lack of information during the crisis. Many trees have been replaced, but the revenue can’t. The summer-long fiasco damaged countless businesses’ reputations and tainted the image of lawn care for many customers.
So, two years later, Lawn & Landscape set out to determine what the long-term impact of Imprelis will be on the lawn care industry. Here’s what we found out.
Back home in Indiana. During the summer, Tom Creswell, director of the Plant & Pest Diagnostic Laboratory at Purdue University, typically gets a couple plant samples a week to test for suspected herbicide damage. In 2011, when the Imprelis cases started to roll in, his office was getting 30 a day. He and his team put in 80-hour weeks to handle the influx of samples. With researchers at the Indiana State Chemist’s Office, Creswell’s team led the way in identifying Imprelis as the cause of such widespread damage.
“We had more than 400 samples of suspected injury from Imprelis,” Creswell says. “It was a very busy summer. We didn’t know immediately what the problem was. We knew we’d never seen these types of symptoms before.”
The two years prior to that summer had been punishing. Record droughts throughout the Midwest had put trees under tremendous stress, which made accurate identification of the damage difficult.
And with the DuPont marketing machine at full tilt, Imprelis was in a lot of markets.
“The marketing was effective. People certainly were paying attention to what they were saying,” says Bert Clegg, associate professor of horticulture and forestry, Michigan State University in East Lansing, Mich. “There aren’t that many new chemistries coming out to begin with. The term perfect storm is overused, but in some ways it really is.”
|Copies of a damage report filed for a Weed Pro property. Settlement value was calculated by the height and cost to remove or replace damaged trees.|
Business impact. About an hour south of the MSU campus, Mark Underwood co-owns Underwood Nursery in Adrian. The business – a full service landscape company and 150-acre nursery – services 10,000 properties and has been in business for more than 60 years. The company sprayed the product for 45 days during the summer of 2011 and somewhere between 1,400 and 1,500 accounts reported damage, though a few are still trickling in.
“We bought the idea of it being a product that controlled more weeds and worked in the rain,” Underwood says. “Said it would cut down on our service calls. That didn’t prove to be a factor. It did kill weeds though.”
That summer, Underwood had to stop day-to-day business to handle the onslaught of complaints. His team couldn’t sell any new work because they were busy dealing with the fallout, and then couldn’t sell any work because customers didn’t trust the company. And it wasn’t just lawn care, but on construction, installation and maintenance.
One customer had two bushes damaged by Imprelis and cancelled a $38,000 patio installation. “That’s in a day because of the frustration over two little bushes,” Underwood says.
After the first month, he had incurred $250,000 in expenses handling the problems and from lost business due to stopping sales and production. He still has 11 people on his Imprelis response team answering phones and tagging damaged trees.
The total impact to Underwood’s business? “Millions. It’s in the millions. It’s the worst thing I’ve ever had to go through,” Underwood says. “It’s been game on, day and night, since June. It was painful, painful. I’m sure we’re the largest. I haven’t heard of anybody bigger. I’m not proud of it. We don’t know when this is going to end. I don’t see daylight.”
And Underwood not only lost longtime customers – some of whom he considered friends – but he lost employees, too. Two of his employees filed their own damage claims, collected six-figure settlements and quit. One customer got a claim check for $540,000. But that money hasn’t always found its way back into Underwood’s coffers.
“It wouldn’t be so bad if they spent the money back on their landscape,” he says. “They’re just hanging onto it.”
If the customer calls another tree company to remove or replace the damaged tree, that’s an in for Underwood’s competition. And other LCOs can easily spot Underwood’s at-risk accounts. “Our jobs are pretty easy to find. They’re marked by dead evergreens.”
Ultimately, Underwood lost about 275 customers from all the accounts sprayed with Imprelis, but those are just the ones who said they were cancelling because of the damage. It doesn’t count people who didn’t sign up because of the news, or who cancelled and didn’t say anything.
“It’s going to harm (business long-term) because we’re the company that killed all the trees,” he says. “When somebody was thinking about maybe hiring us, do you think they were excited about calling us, when we’re the one who killed their neighbor’s trees? I wouldn’t want to call. Would you?”
But beyond the customers who were turned off from lawn care or lost faith in Underwood as a company, the trees the company used to care for aren’t there anymore.
“The jobs we’ve had for years … they’re no longer available to fertilize and spray,” he says. “All this work that went into getting these customers …. There’s nothing to treat.”
Underwood made up some of the lost ground in the winter of 2011, but most of his work since that summer has been focused on saving business – and his company’s reputation.
“Try to raise prices during Imprelis. Try to raise prices on customers when you’ve killed all their shit. You can, but expect the wrath of God,” he says.
Underwood’s story – if not the scale – is a common one for lawn care operators and landscapers throughout the Midwest.
Rob Palmer, who runs WeedPro in Cleveland, used Imprelis for two weeks that spring. In late April he started getting calls about tree damage and patches of dead grass. He isolated those jobs and checked what his technicians had applied. In all, Palmer counted 1,200 trees that Imprelis killed or damaged. He hired someone full time for six months at $30,000 salary to manage the company’s 400 claims.
Back in Indiana, Bob Andrews had about 75 out of 3,400 customers with confirmed Imprelis damage. He’s not sure how many of them cancelled service, but said the damage wasn’t enough to hurt his business long-term. What was damaged was the market’s faith in the lawn care industry.
“You never know how many you lost because you don’t know how many you never got,” he says. “But how many people saw this and said, ‘That answers my questions about lawn care. I’m not going to hire those bastards.’”
Claims Process. DuPont hired a third-party company and independent arborists to evaluate damaged trees. Contractors who went through the process said it was slow and sometimes byzantine, but often paid more than a fair price. Payments were most often based strictly on the cost of a replacement, or, for taller trees, the height. No value was assigned based on aesthetics or the time it took a contractor to evaluate the problem.
“If you had a bunch of tall, scroungy-looking trees on the edge of your property, you got a pretty good deal,” Clegg says.
Andrews had a client who signed a release and got a $3,000 check for two damaged birch trees. “The settlements for customers were very generous – probably more generous than clients expected,” he says.
“DuPont gave us the choice of passing the entire responsibility to their people to coordinate the pictures and fact-finding to be submitted for a potential claim,” Palmer says. “And as inviting as that was, to wash my hands of it … I just couldn’t do it. The customers were just going to call my office number. And rightly so.”
So Weed Pro went to every site, took the appropriate pictures and compile the reports for DuPont. Palmer had to get signatures from every property owner before the investigation and after. Often, he says, he had to resubmit the reports because photos weren’t formatted or filed correctly. He figures it took about 800 hours in all.
|“How many people saw this and said, ‘I’m not going to hire those bastards.’” – Bob Andrews, Greenskeeper
“It really heightened our sense of ... trusting what the manufacturers say. In hindsight, I should have known better.” – Rob Palmer, Weed Pro
“There’s going to be more testing related to ornamental industry and turf products. Will that delay a product? I don’t think so. They could have done another five years’ worth of testing … should they have or were they required to? I didn’t see that at all.” – Roch Gaussoin, University of Nebraska-Lincoln
“If you had a bunch of scroungy-looking trees on the edge of your property, you got a pretty good deal.” – Bert Clegg, Michigan State Uniersity
“Try to raise prices on customers when you’ve killed all their shit. You can, but expect the wrath of God.” – Mark Underwood, Underwood Nursery
Ultimately, his customers received payments from $3,000 up to $200,000. But, like Underwood in Michigan, that cash for a replacement tree didn’t always get spent with Weed Pro. “At the end of the day, they removed a lot of (the trees). They didn’t necessarily replace them,” Palmer says. “The homeowner got a check and they got to decide what they did.”
Palmer’s biggest complaint during the process was that he couldn’t get any answers from DuPont, its field reps or his trade associations.
“The most frustrating thing was getting little or no information from DuPont – us having to answer the same questions to customers and looking like idiots because we had no answers,” he says.
Palmer says he lost 60 customers, mostly because he couldn’t get them any information about what was happening. “I had one customer called my office 44 times. I talked to him 44 times and I had the same conversation with him 44 times,” he says.
Andrews, though, credits DuPont for its eventual claims response, even if it was slow and at times inscrutable. At least the company paid. “We’re lucky it was a firm like DuPont. Had it been a smaller or regional manufacturer, it would have killed our industry. I don’t know how we would have stayed in business. They were writing check after check after check, sometimes for thousands of dollars.”
Buying habits. Regardless of how many or how large the checks DuPont wrote, the Imprelis incident has had a chilling effect on the relationships between contractors and their chemical suppliers.
“We’re not going to take anybody’s word for anything,” Andrews says. “The distributor who sold Imprelis to me is one of my personal best friends. And he’s so ashamed of what happened. I don’t think we’re ever going to go – DuPont, Bayer or Dow – back to the point where we buy something because it’s recommended. We’re going to take it in little doses … and make our own assessments. If DuPont would have stayed in the business, they would never have sold us another dime of product. It has changed us. We’ve got our eyes wide open.”
For his part, Palmer says his experience didn’t turn him off branded products – he still buys 90 percent from the majors – but he is more cautious and less trusting of manufacturers.
“It was enough for us to hold off on trying new products and letting other people test it for us,” says Palmer, who attended the launch and marketing blitz in Florida. “It really heightened our sense of being nervous in trusting what the manufacturers say. In hindsight, I should have known better.”
MSU’s Clegg – who did not do any research on Imprelis prior to its launch – says the fallout will slow down development of new products.
“This is going to make things that much tougher. It’s given chemical companies other things to think about. They really need to look harder at these non-target plants and organisms,” he says. “I suspect it’s certainly going to make it slower and more difficult. The companies themselves are going to want to do more testing. I think EPA is certainly going to look at things more closely.”
But any new testing won’t stop development of novel chemistries, Clegg says. Weed and pest resistance to existing chemistries – and many products coming off patent or under increasing regulatory attention – all point to a strong need for new products.
“I still think there will be products developed,” Clegg says. “There still is a need out there for some better chemistries than what we have.”
Roch Gaussoin, head of the department of agronomy and horticulture at the University of Nebraska-Lincoln, doesn’t see Imprelis having a long-term impact on the development of new lawn care products.
“In terms of new chemistries, if there were products in the mill for a company, including DuPont or Syngenta or Monsanto … I would believe there’s going to be more testing related to ornamental industry and turf products. Will that delay a product? I don’t think so,” Gaussoin says. “They could have done another five years’ worth of testing … should they have or were they required to? I didn’t see that at all.”
How did it happen? The question on the minds of many LCOs after the shock wore off and the complaints died down was: How did this happen?
“I’m just not buying the idea that nobody knew this. The damage was so intense, so pervasive at such a low rate,” Andrews says. “Where was the testing process that didn’t catch this? How do you make a mistake like that? How does a product get that heavily marketed … and you throw up your hands and say you’re surprised?”
Gaussoin was one of the researchers who tested Imprelis prior to its 2011 launch. And in traditional turf plot tests, it worked very well, he says.
“It was a spectacular chemistry within the limits of the way we test,” he says. “There’s ground ivy here that other companies won’t let us test anymore because it’s so tolerant of herbicides on the market. We got 95 percent control. It was extremely significant to us.”
But in traditional plot testing, the herbicide is applied to a patch of weedy turf in the middle of a field. There aren’t any trees around, and Gaussoin and his team weren’t asked to test the product on ornamentals.
Lessons learned. Whatever the impact on product development, Imprelis has left lasting impressions on the lawn care companies that used it, the largest of which is the best ways to communicate with customers in a crisis.
“It taught us a very important business lesson and gave us the training to own a problem and get out in front of a problem as soon as possible,” Palmer says. Weed Pro has become more proactive in communicating about weather or disease outbreaks. “That was the lesson we learned: Try to call the customer to identify issues that occurred before they call us.”
Andrews sent regular emails or letters to all of his customers with Imprelis damage every two weeks, if not sooner.
“If they had a claim, the moment we found out anything new from state chemist, Purdue or DuPont, we sent it,” he says. “They knew about it instantly. We were being very transparent and very up front. The more you hide in the bushes … that’s not going to help you. We do make mistakes, things do happen. We didn’t make this mistake, but we did make the application. You need to be very honest with these people.”
The author is editor and associate publisher of Lawn & Landscape. Email him at firstname.lastname@example.org.
Too few entrepreneurs take the time to study their company’s structure in order to understand three important concepts. They are benchmarks, critical numbers and pressure points. Benchmarks are the general norm or standard for a ratio, percentage or amount for a specific measurement within a particular industry. Critical numbers are benchmarks that must be measured and achieved in order to optimize company effectiveness and profitability. Pressure points are key areas within a company where an entrepreneur must focus his or her management attention.
Geoffrey then chimed in that, with this new structure, an additional $200,000 in sales was a “no-brainer,” almost a certainty. He then decided that he didn’t need to wait a year, and upon returning home he would immediately start looking for the designer/sales person.
The three of us discussed the move. We concluded that if Janice joined the team, George would be free to sell more design/build work – roughly an additional $100,000. The increase should bring in at least an extra $30,000 gross profit, most of which would be net profit. Janice would also head the fine gardening division and attempt to grow it, adding an additional $10,000 to the bottom line. Going into their third season working together, George and Janice are very glad that they made the move. As anticipated, design/build sales are up significantly. The fine gardening division has more than doubled in sales. The automobile expense savings total more than $20,000. While working in a small, family business is not without its stress, it sure beats spending three hours every day on highways commuting to and from a job.
JIM HUSTON runs J.R. Huston Consulting, a green industry consulting firm. See www.jrhuston.biz; mail email@example.com.