Iowa’s green industry has enjoyed 74 percent growth since 2004, a recent Iowa State University Extension survey reveals, making it the fastest growing segment of the state’s agriculture industry.
Since 2004, Iowa’s green industry went from $311.5 million in estimated value of sales and services to a $538.2-million economic impact, details the study, which was authored by extension specialists and ISU faculty Cynthia Haynes, Ann Marie VanDerZanden and Jeffery Iles. The researchers surveyed landscape contractors and designers, as well as arborists and garden center owners.
Most survey respondents expect their businesses to grow in employment, annual gross payroll and sales, and total annual expenses by 2010. Though the size and type of businesses varied, most had only one location, were family-owned and have been in business less than six years, Haynes says. “Respondents participating in our study were generally optimistic,” she points out.
“Those people and businesses that can afford to pay for [landscape] services have not scaled back their commitment to their properties,” agrees Bryan McGinness, president of Des Moines-based Write Outdoor Services. The company, which employs 116 employees, including 40 seasonal workers, forecasted more than 18 percent growth this year alone and plans to double in size by the year 2012. Growth will come organically and through continued mergers and acquisitions. The company purchased Des Moines-based Heard Gardens earlier this year.
Another landscape company who is reaping the benefits of Iowa’s growing green industry is Des Moines’ Perficut Lawn & Landscape. The company, which earned $3 million in 2002, is expecting $11 million this year, according to President Kory Ballard. Since that time, the company has also gone from 24 full-time and 45 seasonal employees to 40 full-time and 125 seasonal employees, as well as doubling its vehicles from approximately 34 in 2002 to 70 of its signature blue trucks today.
Though Perficut has enjoyed strong growth, it has felt some of the negative effects of rising business costs, including soaring gas prices – mainly, some unpaid bills for work performed, resulting in the cash flow restrictions non-collected debt can create. Also, Ballard has seen some large developers make cutbacks or close their doors since 2007 and, on the residential side, he has seen some customers spend less and be more selective in the services they choose to purchase. On the commercial maintenance side, the excessive snow this winter resulted in property owners spending more than they budgeted, so they are making service cutbacks on their lawn care as a way to recoup costs, Ballard shares.
In fact, due to the residential construction slowdown, many Iowa landscape professionals have not raised prices “because they are scared of losing work,” Ballard says. “We are paying more for all of the products we use and have been unable to adjust the prices accordingly.”
Despite these challenges, Ballard says the company will still continue growth in the next few years “but at a much slower rate than in the past,” citing growth plans in the 5- to 10-percent range.
Though most Iowa landscape contractors see a reduction in new residential home building, they are seeing customers invest money in their existing residences instead, McGinness says. Both Perficut and Wright Outdoor Services report the phone is still ringing with clients requesting quotes. Even with Perficut’s initial $50 consulting fee to meet with design/build customers, only four potential clients declined because they didn’t want to pay the fee so far this year.
McGinness and Ballard plan to see the most growth come from their tree service divisions. In addition to that sector, McGinness says his enhancement profit center is enjoying strong growth, and Ballard plans to see a boost in recurring revenue from obtaining new maintenance clients after completing their installations.
Iowa’s green industry provides more than 11,000 jobs. Haynes and her colleagues plan to use this preliminary research to create further educational programming and professional development opportunities to address industry needs. Building the skills of the workforce will help position Iowa’s green industry for further expansion, she says.
Moreover, when it came to identifying factors that could limit business success, survey respondents pointed only to the availability of skilled labor and capital, which are also limitations in states with larger green industries than Iowa, Haynes points out