2017 State of the Industry Report: Statewide spotlight

State of the Industry Report - 2017 SOI

Hiring continues to be a main concern in the industry, but other issues are affecting contractors at a regional level.

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“I think that a smart businessman will give his employees the benefits that they need to attract and keep them already,” says Steve Christy, president, LEI Corporation.
© Jackie Ricciardi

Landscaping businesses across the country have reported that 2017 has been a good year for business, and many, such as Steve Christy’s LEI Corporation in Boylston, Massachusetts, have experienced a substantial amount of growth. However, it’s no surprise that labor has been the No. 1 issue for many in the industry.

Aside from labor, which you can read about more on page S14, contractors and LCOs across the country talked with Lawn & Landscape to share what has affected their business most in 2017.

Midwest

Huntley, Illinois

Chuck Strada, owner, My Lawn Guy Chuck
Concerns: Low-ball competition, growing pains
Services provided: maintenance

Competition is good for an industry, but poor competitors can give an industry a black eye.

“It’s nice to have competition, but today it seems like anybody can get a truck and a mower,” says Chuck Strada, owner of My Lawn Guy Chuck, which serves as a lawn maintenance business to residential and commercial clients in northwest Illinois.

The past few years, Strada has seen quite a few “bad competitors” popping up to do business in Illinois. The state experienced a drought a few years ago. Once the drought ended, business boomed and new companies emerged. While Strada doesn’t mind competition, the poor-quality service some of his competitors perform has hurt the landscaping industry in his area. It gives Strada additional business from unsatisfied customers, but he noticed that the customers tend to have a poor perception of the industry after that type of experience.

“It’s nice to have competition, but today it seems like anybody can get a truck and a mower.” Chuck Strada, owner, My Lawn Guy Chuck

“I’ve seen guys come in, undercut and don’t do the job right. Then I come in to the client to do the job right and they already have a bad taste in their mouth about landscaping,” Strada says. “I get so much new business from people who say, ‘My landscaper won’t return my call’ or ‘My guy moved back to another country.’ That gives me a bad name when they do this.”

Strada’s Illinois-based landscape maintenance company is small, having only launched business about nine years ago. Although he wants to grow, he needs a business loan to invest in new equipment. “I’m at a point where in order to grow, I need a second crew, a second truck, a second mower. To grow, I need to take a loan, but I can’t because it’s much harder to get a loan as a small business.”

My Lawn Guy Chuck is a two-man business that posted $112,000 in revenue in 2016 and Strada anticipates that figure to increase for 2017.

Topeka, Kansas

Dave Jackson, owner, Jackson’s Greenhouse and Garden Center
Concerns: New business, health care laws
Services provided: Design, installation, lawn care

An aging population of Baby Boomer customers has been a major reason for increased business this past year for Dave Jackson of Jackson’s Greenhouse and Garden Center in Topeka, Kansas.

With Baby Boomers approaching their 60s and 70s, many of them are turning to landscape contractors to perform residential landscape maintenance jobs. Jackson notes the population in Kansas is somewhat older compared with other states, as well, so he has received more calls from this population the past year.

While there’s no shortage of business opportunities, Jackson says there are limits on how much individual landscape contractors can grow due to a tax increase in Kansas and impacts from the Affordable Care Act. In July, Kansas lawmakers passed a tax increase that repealed legislation that gave a 100 percent tax break to limited liability corporations, sole proprietorships and S corporations.

“Those of us incorporated in the state as an S corporation were exempt from state income tax since 2012,” Jackson says. “The reason they did that was to stimulate business growth. What I had done before with the promise of now income tax was purchase new equipment, using our savings to defray the cost.” He adds that the income tax regulation may impact his company’s ability to grow.

Jackson also worries growth for him may be stunted temporarily because of the Affordable Care Act. “We’re not taking any new customers because with our divisions, I have to stay under 50 employees because of Obamacare. If I go over that, Obamacare will kick in, which is not good in terms of cost – the enormous cost that Obamacare would saddle on my business.”

Jackson’s Greenhouse and Garden Center’s primary focus is its nursery and greenhouse business, but the company dedicates about 10 percent of its business to design/build landscape services. The landscaping division achieved about $150,000 in revenue last year, Jackson says. To date, it has reported higher profits in 2017 compared with 2016.

west

Ripon, California

Aaron Stewart, partner and vice president of Stewart Landscape Management
Concerns: Minimum wage laws, water management
Services provided: Maintenance, installation, irrigation, lighting

Although hiring is the No. 1 concern for Aaron Stewart, partner and vice president at Stewart Landscape Management, minimum wage is a second concern. It jumped from $10.50-$12 in July and will be $15 by 2021.

Stewart says his company pays more than minimum wage to secure employees, but the escalating minimum wage standards will put more pressure on his business. “Last year, it went up about 50 cents an hour, but it will start increasing $1 an hour each time until it hits $15,” he says. “So, for us, we have to provide a service that warrants these (wage) increases to cover the labor and remain cognizant of our customer base. We always evaluate what we pay every year and increase as we need to.”

With minimum wage standards rising, Stewart also anticipates hiring will become tougher. “We’re not unique to this issue. Everyone is going through the same thing (in California), be it a landscape contractor, a carpenter or a farmer.” Stewart adds that he makes sure his pay remains competitive in order to attract and retain employees.

This past year also marked the end to a lingering drought that plagued most of California the past few years, thanks to a rainy winter season from January to April. While some pockets of California still have restrictions on water use, Stewart says most areas have lifted restrictions.

Reflecting on California’s drought, he says it taught many in the industry ways to improve water management. “We saw a lot of conversions from overhead sprays to drip. We have seen more water-efficient sprinklers and lawn sprinklers installed. Smart controllers have been installed. One of the main things it did was it created a sense of urgency to aid broken sprinklers, and there was very little tolerance for runoff or water waste. You had to be service oriented, which isn’t a bad thing.”

Stewart Landscape Management, which employs 25 to 30 people, focuses on landscape maintenance, installation and irrigation jobs.

Fort Collins, Colorado

Cara Doyle, owner, Summit Hardscaping
Concerns: Local legislations, new business
Services provided: Design/Build, hardscaping

Western landscape contractors also express concern over other laws and regulations. Cara Doyle, owner of Summit Hardscaping in Fort Collins, Colorado, said a few legislations seem to be in the forefront of mind for her, including dust laws, silica rules and permeable paver percentages.

“Our city is trying to cut down on dust at construction sites, and we also get some neighbors upset when there’s a lot of dust. Our crews are doing what they can to reduce this – wearing masks, running wet saws,” Doyle says.

Like other regions, business also boomed this past year compared with 2016. More residential customers are looking for landscaping services. For Doyle, this means she can be more selective with the jobs and customers she takes.

“We’re getting to do the jobs we want to do versus when we were in the recession, we were in survival mode.” Cara Doyle, owner, Summit Hardscaping

“The quality of jobs is better,” she notes. “We’re getting to do the jobs we want to do versus when we were in the Recession, we were in survival mode.” Instead of clients shopping for the best contractor, contractors are shopping for the best clients, Doyle says.

South

Jacksonville, Florida

Jim Hawkinson, president, TLC Total Lawncare
Concerns: Quick growth, bad weather
Services provided: Lawn care, maintenance, installation

In northern Florida, TLC Total Lawncare grew this year, but the growth wasn’t easy.

“Things have been harder this year (compared to 2016),” says owner Jim Hawkinson. “We grew a lot so we are dealing with those growing pains.”

TLC has been able to take on more clients so the company has seen an increased workload. Hawkinson says the workers have been putting in a lot of hours and the company has had to spend more during the growth process, as well.

“We’re balancing the work we’re getting with the workers we have right now,” he says. The low unemployment rate in the area has also slowed their ability to get good workers.

Weather in Florida hasn’t helped businesses, either. Hawkinson says the weather has been terrible for business. A drought plagued the region in winter, and it dealt with an early heat wave until rain events occurred almost daily by summer. With rainy conditions most mornings, maintenance jobs quickly backed up.

“Everything grows fast and we run out of time to deal with it,” he says.

TLC employs about 80 people, and its workers have had to stay later and work additional hours to play catch up. And with the company’s primary clients being commercial, Hawkinson says it was harder to keep a flexible schedule when the weather didn’t cooperate.

Still, with the growth they’ve experienced, he says the company plans to make $6 million in revenue this year.

Dahlonega, Georgia

Suzanne Brosche, owner, Art of Stone Gardening
Concerns: Uncomfortable weather, labor markets
Services provided: hardscape installation, design

In Georgia, Art of Stone Gardening has grown, but the region experienced extreme heat, making its work harder. The company does landscape installations with heavy stone work and masonry.

“We’ve doubled in size this year,” owner Suzanne Brosche says. “Right now, we are about three or four months out on any new work.” With business booming, Brosche says the only issue the company has had is finding and keeping employees.

Brosche wanted to focus efforts on hiring more women into the industry, but Art of Stone still experienced labor shortages.

“We’re located about an hour out of Atlanta,” she says. “So the market just isn’t the same in the mountains.”

Northeast

Boylston, Massachusetts

Steve Christy, president, LEI Corporation
Concerns: Late snow, state regulations
Services provided: Landscape management, snow management, design/build

The landscaping industry is booming – it’s possibly the busiest that Steve Christy, president of LEI Corporation in Massachusetts, has seen it in 30 years.

“There are so many new office buildings, apartment communities, shopping centers, colleges, universities and distribution centers,” he says. “All of these need to have their landscaping installed when they are built and they have to have their landscaping maintained and their snow plowed. It’s a great thing.”

LEI Corporation provides landscape maintenance and site construction like stonework and masonry to a mostly commercial client-base.

Late-season snow in the northeast made it hard for landscapers to get out and start their spring cleanups. And, after the snow, the area was deluged with six weeks of rain. Christy says the rain caused workers to miss quite a few days stretching into early June.

“With the late snow, it was hard to find people to work. Our guys had to be putting in more overtime,” he says. “And, we’ve had to make sure to properly communicate with our customers with all the rain.”

On those rainy days, Christy says his employees take the time to work on their equipment and the company sometimes holds meetings or training sessions.

Christy says the industry in Massachusetts specifically has had to deal with regulations such as mandatory sick leave.

“It’s been kind of a nuisance to us,” he says. “I think a smart businessman will give his employees the benefits that they need to attract and keep them already.”

Massachusetts’ Earned Sick Time law mandates that employees must accrue at least one hour of sick time for every 30 hours worked. Employers with fewer than 11 workers are not required to offered paid sick leave, but those who employ more than 11 have to provide compensation. LEI employs over 100 workers and expects to do $16 million in revenue this year, so this law would apply to the company.

West View, Pennsylvania

Sarah Rizzitano, president, A&N Lawn Service
Concerns: Schedule setbacks
Services provided: Design/build, maintenance, lawn care, snow removal

Wet weather caused additional stress for A&N Lawn Service in Pennsylvania. Sarah Rizzitano, president, says the company fell behind in its mulching services because of the rain.

“It took us a long time to finish our mulching services. Our customers don’t want us mulching in the rain,” she says. “And, most of them get the brown-dyed mulch, and the dye runs off in the rain.”

Rain hit the Pittsburgh region in May, with nearly three rain events each week, Rizzitano says.

“We were still trying to get work done in the rain, but our capabilities were very limited,” she says.

With the mulching services pushed back, work crews were still busy mowing in July, when Rizzitano says mowing typically slows down.

As a result, more crews had to be added to the mowing jobs so that lawns were being cared for efficiently. A&N plans to achieve around $3.8 million this year, with higher profits than what was reported in 2016.