PULSE of the industry

Welcome to our very first issue focusing on the state of the green industry. As we put this issue together, we gave serious thought to information you could use as you look forward to 2005, and set out to compile what we believe is a comprehensive look at all aspects of the industry that will help you plan for the coming year. First, we will profile the current state of the industry, based on data collected in 2004. In the next section, you'll find projections for 2005, as well as predictions and advice from industry leaders. We hope this serves as a strong tool to guide your planning.

Size and Scope of the Grounds Care Market

Commodity markets such as agriculture and manufacturing have long been tracking the size of their industries. By knowing what is produced and tracking cash receipts, dollar/quantity information of commodities can be tracked. However the grounds care industry is more difficult to document because there are no commodities that are produced, just services provided.

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Information on the size and scope of the grounds care industry is extremely valuable in terms of political capital. Priority for federal and state support of research, teaching and education is related to the government body's recognition of the economic impact of the particular industry on the country or state. Without this information it is difficult to make a case for supporting one industry over another.

There are tidbits of public information on the size of the grounds care industry out there but not all in one place. Several states have conducted research on the size of turf industry, golf course industry and landscape industry in their state, but no comprehensive national study exists. Industry estimates state that there are approximately 50 million acres of managed turf in the U.S. This places turfgrass third in total acreage among other agricultural crop acreages nationwide. In many states such as Maryland, Pennsylvania, Florida, New Jersey, and North Carolina; turf is the number one or two agricultural commodity.

The joint effort between the United States Department of Agriculture Agricultural Research Service and the National Turfgrass Federation new turf initiative is intended among many other broad objectives to determine the economic impact of turf management practices on the national and regional economy, but that will be some time before it is completed. In the meantime, here is an overview on what we currently know about the size and scope of the grounds care industry.

LANDSCAPE AND IRRIGATION CONTRACTORS AND LANDSCAPE ARCHITECTS

Grounds Maintenance Work Force (U.S. Department of Labor, Bureau of Labor Statistics, 2002). Grounds maintenance workers held about 1.3 million jobs in 2002, distributed as follows:

  • Landscaping and groundskeeping workers: 1,074,000
  • Supervisors/managers: 150,000
  • Tree trimmers and pruners: 59,000
  • Pesticide handlers, sprayers, and applicators, vegetation: 27,000

This is an increase of about 200,000 grounds maintenance workers since 2000. In a time when unemployment increased in the general population, the grounds care industry held its own.

Landscape and Garden Services:

  • 87,658 U.S. businesses with total annual sales of $20,405.8 million in 2003

  • Customers plan to purchase most common services in 2004: Mowing (13%), Fertilization and weeding lawns (10%), Landscape maintenance (8%), Tree care (7%), Pest Management of lawn (7%), Landscape installation (5%)

Market Forecast: Based upon U.S. Department of Labor data, landscaping, grounds keeping, nursery, greenhouse and lawn service occupations are expected to have a 1.969% compounded annual growth rate (CAGR) from 2002 to 2012. A revenue forecast cannot be provided due to the horizontal nature of this industry.

Landscaping services: Growth market. The number of landscaping service establishments is growing, and as private residential building continues to stay healthy, so does the demand for these services. As of October 2004, The U.S. Department of Commerce stated that the residential housing starts rose 6.4% to a seasonally adjusted rate of 2.03 million units. This sets the stage for a record in housing starts if the trend continues through November and December 2004. Non-residential construction Industry analysts forecast a 2 to 4 percent decline in residential housing starts in 2005.

Non-residential construction market is trending just the opposite of residential housing. Non-residential construction peaked about 2000, and experienced a downturn shortly after. The market has been depressed since then, but analysts expect a rebound in 2005. Just as with residential construction boom, increased non-residential construction will be favorable for landscape installation and maintenance.

GOLF COURSES

Golf Courses

Golf courses include regulation-length courses, par-3 courses and executive-length courses and are categorized as daily fee, municipal or private. The National Golf Foundation defines golf courses in terms of 18-hole equivalents (number of holes divided by 18).

  • 14,827 U.S. golf courses (18-hole equivalents) in 2003

  • 72% are open to public

Golf Courses: Mature market. Although growth rate of new golf course introductions began slowing in 2001 and has remained at historically low, positive growth continues in the total number of golf courses. During the 1990's the annual increase in the number of new golf courses averaged about 340 per year. Between 2000 and 2003 the annual number of new golf courses fell from 266 to 102 in 2003.

INSTITUTIONAL GROUNDS CARE

This industry grouping includes all fixed-site grounds facilities with the exception of golf courses. For example, parks, schools, universities, resorts and hotels, apartment complexes, municipal/government facilities, office and industrial parks, cemeteries, roadsides, military bases and airports are facilities included in this industry group.

  • 84.4 million acres of national parks in 2003

  • 5,655 state parks comprising 13 million acres in 2002

  • 5,000 park and recreation departments estimated in 2002

  • 93,273 K-12 public schools (14,559 independent school districts), 27,223 K-12 private schools, 4,182 colleges/junior colleges/universities in 2004

  • 3,981,670 miles of highways in U.S. in 2002

  • 19,431 municipal governments and 16,506 township governments

  • 87,900 government units in U.S., including the federal government, 50 state governments and 87,849 units of local government. 38,971 general purpose local governments (3,034 county governments, 35,937 subcounty governments (including 19,431 municipal governments and 16,506 township governments). The remainder are special purpose governments (including 13,522 school district governments and 35,356 special district governments) in 2002.

  • 19,581 public and private airports in 2003

  • 519 military installations in 1995

  • 28,714 sports facilities (professional, college/university, other schools, park & rec.), 775,124 fields comprising 6,826,758 acres in 2003

Institutional Grounds Care: Mature market. This sector, like landscape services, is tied to construction, but its tie is to public and private non-residential construction, whereas landscape services is tied to residential and private non-residential construction.

SUPPLIERS

Commercial Pesticide Sales in the United States: Annual sales of $825 million in 2003.

The commercial pesticide sales data is a fraction of the total pesticide use including agriculture. Regulatory pressures from the U.S. Environmental Protection Agency are eliminating uses of many products and encouraging manufacturers to introduce new products that are lower risk. Several key older products are reaching the end of their patent protected lives and becoming generic products.

Over the last 20 years, chemical manufacturers have experienced considerable consolidation. For instance, with herbicide manufacturers, there now are only 10 basic manufacturers when there were over 30 basic manufacturers in the early 1980s.

Fertilizer Use in the United States (all uses including agriculture and turf & ornamental).

  • 53 million short tons (N, P, K total)
  • Nitrate: 12 million short tons
  • Phosphate: 4.6 million short tons
  • Potash: 5.0 million short tons

Nitrogen fertilizer is closely tied to the price and availability of natural gas, which is the source of ammonia, the building block for the production of all nitrogen fertilizers. Natural gas prices have been extremely volatile over the last three years. Although gas prices have moderated, they remain approximately 150 percent above the 1990s historic average of $2.40 per-million Btu. In turn, this has forced fertilizer production costs to reach unprecedented levels and caused the curtailment of U.S. fertilizer production.

Part of the problem is competition for natural gas for other uses. With the requirements of the Clean Air Act, it is increasingly difficult to permit, construct and enlarge the nation's coal-fired plants. In the past, power plants primarily relied on coal for energy needs. Now most new power plants rely on natural gas. This increases demand for natural gas and raises the price for other uses such as fertilizer production.

Nursery Plants (includes broadleaf evergreens, coniferous evergreens, deciduous shade trees, flowering shade trees, deciduous shrubs, fruit and nut plants, palms, ornamental grasses, other woody ornamentals and vines, Christmas trees, transplants for commercial vegetable and strawberry production, propagation material and lining — out stock): Annual sales of $3.97 billion in 2003.

The USDA estimated 2003 gross value of sales for twelve categories of nursery products total $3.97 billion on operations exceeding $100,000 in sales in the 17 states surveyed for this report. This is an increase of 19 percent from comparable states since the survey was last conducted for the 2000 crop year. Broadleaf evergreens account for 21 percent of the total sales dollars, followed by deciduous shrubs at 15 percent, and deciduous shade trees at 13 percent. The top three contributing states to value of production are California with 25 percent of the total followed by Florida and Oregon, tied at 16 percent each.

Commercial/Consumer Turf and Grounds Care Equipment in the United States:

  • 99 businesses with annual sales of $535.2 million (2004)

  • Consumer grounds-care equipment shipments $6.48 billion in 2000

  • Commercial grounds-care equipment shipments $1.865 billion in 2000

The DB Company estimated the industry at a relatively low $535.2 million based on 99 manufacturers. However, the Outdoor Power Equipment Institute estimated manufacturers' shipments of consumer equipment of walk-behind rotary mowers, rear engine riding mowers, front engine garden tractors, riding garden tractors, walk-behind and hand-held tillers, snow throwers and other outdoor power equipment such as shredders and log splitters for consumer markets and lawn and garden tractor attachments totaled $6.48 billion in 2000. Outdoor Power Equipment Institute data is based on U.S. Bureau of Census Current Industrial Report. Outdoor Power Equipment Institute estimated manufacturers' shipments of commercial equipment (for commercial lawn care, golf course and institutional markets), such as walk-behind mowers, riding equipment and lawn care and maintenance products for golf courses totaled $1.865 billion.

Industry Forecast for 2005

Now that you know a little more about the current state of the industry, you can use that information to guide you as you make plans for 2005. To provide even more help, we've consulted industry leaders to offer their advice and insights. Overall, there are a few trends that several of the leaders we interviewed named as ones that will impact you in the coming year. Most are cautiously optimistic about the economy while pointing to overall industry concerns, such as fuel prices, steel prices and labor reliability. In a survey by the Professional Grounds Management Society (PGMS), money and manpower issues were cited as the two biggest challenges facing its members, according to Thomas Shaner, PGMS executive director.

Comments received by the organization of specific recurring problems for grounds managers included “Low wages for permanent staff, leading to high turnover,” “Motivating employees to care about more than a paycheck,” “Achieving desired results with time constraints due to other duties,” “Finding conscientious, qualified manpower.” Reflecting a current trend in the green industry as a whole, several respondents also recognized the need to be able to better communicate with Hispanic workers.

Golf-specific indicators are also positive for 2005. As 2004 comes to a close, rounds of golf played are still up for the year, according to the National Golf Foundation (NGF) and the National Golf Course Owners Association (NGCOA). Rounds have been up 2.5 percent through the first two quarters of 2004, but a third quarter decrease of 0.9 percent lowered year-to-date results to +1.3 percent. Coinciding with the national increase in rounds played, golf facility revenues have increased 2.7 percent year-to-date, while revenue per round at public golf courses has increased just under one percent.

The Mid-Atlantic region has posted the strongest gains in rounds so far this year, up nearly 12 percent in 2004 as compared to rain-soaked 2003. Central/South Florida have managed to hang on to a 2 percent gain for the year, even with rounds down 20 percent in August and 30 percent in September due to a fearsome hurricane season. “Four hurricanes and about 30 inches of rain here in Palm Beach County alone have certainly created trying times for golf courses in Florida this year,” says Joe Beditz, president and CEO of NGF. “The only saving grace is that the hurricane season comes during our off-season for golf here in South Florida.”

“As the economy strengthens, so has spending in golf,” adds Mike Hughes, executive director of NGCOA. “This is especially encouraging in light of the extraordinary weather events affecting the Southeast and the Atlantic coast.”

The president of the American Society of Golf Course Architects (ASGCA) predicts that golf facilities will increase their interest in course remodeling due to the impact of new equipment technology, competition for rounds, advances in turfgrass management practices and years of use. Owners are embarking on everything from minor “touch-ups” to complete overhauls of their layouts.

ASGCA President Bill Love says that new course construction is still strong in the real estate sector, where new courses are being built in conjunction with housing developments. Yet ASGCA members report continued interest in remodeling. “Older courses are reacting to the challenges of newer ones down the street and are remodeling to respond to, and take advantage of, technological advances,” he observes.

Nearly every course 20 years old or more should be evaluated to determine what improvements should be made for it to remain competitive, the College Park, Md., architect notes. And much like residential remodeling, “it's usually wise to develop a master plan, not only to head off problems, but also to budget for the long term. Such a plan also insures a project's vision remains intact through administrative and committee changes,” he says.

There are many more segments of the green industry. Below, we have included interviews with experts in each to help offer insight into what is in store next year. We asked each to report on trends in the marketplace for 2005, pinpointing specific strengths and weaknesses. We also asked them to provide their thoughts on the economy, and what advice they would offer you as you plan for the coming year. Here is what they said.

SPORTS TURF

Patrick Maguire, president Geller Sport

Boston, Mass.

Trends: In 2005, we see more of the same. When the economy dipped a few years ago, we didn't really notice a big lag because when the economy is bad, it's a good time for institutions to get things done. A wise financial director is one who realizes that when the economy is slow, that's when you want to get bids — when prices are down. So we saw a trend of building things ahead of schedule; things that were planned for 2005 and 2007, they could get done at 2002 prices.

We noticed that people are doing a tremendous amount of building synthetic turf fields. They are improving natural grass fields, as well, for all sports. They want at least one to play around with, to do their own research of new synthetic turfs. Many of these schools have multiple fields and lots of practice areas. They can often use their synthetic fields for alternate game sites when there is inclement weather.

Better directors have noticed that they need to look at all of their facilities. Find out what their programs are. See what their goals are. Are there enough seats? Do they need to expand or upgrade or even start from scratch? We've noticed in the past few years that for facilities directors to have successful programs, they needed to improve the facilities they have. To do so, they're breaking out projects into different, individual projects. Discreet projects. Not necessarily small, just not attached to another type of project. They are building new tennis and soccer stadiums with their own separate budgets. And they're using lots of specialty people to get those projects done. We've also noticed that directors have been very interested in taking a step back and looking at their entire bank of facilities, making sure that if they're going to dedicate funds, they are dedicating them in the right place. There is a lot of master planning going on.

Economy: We have not noticed in seven years that the economy has a big impact on this market. At some point, there will inevitably be a downward trend but, at least for the next several years, we don't anticipate it. Things have been good in 2004 and will be in 2005. If you want to recruit good athletes, you have to keep up with other (competing) facilities. You have to stay ahead of the game.

Advice: Don't do any planning before speaking to a professional in athletic facilities design. While many facilities and athletic directors know a lot about construction, athletic field construction is very different and a little bit of knowledge can be very dangerous. Talking to a professional will save them time, effort and aggravation, if not money.

SEED

Wayne Horman, director of sales and marketing The Scotts Co.
Marysville, Ohio

Trends: I think the industry is in search of something new. New developments. Every year there's a new bluegrass or new ryegrass, but the market is looking for something new that is unique. Something that gives them a competitive advantage. So I think seed companies will be spending more money on research and development in search of it. We're optimistic because of our new products. Our future is about developing grasses that can do more with less. And the industry is going this way, too. It matches what the demand is and desire is of turf managers. So we need to offer the industry something that doesn't cost more to use: varieties that can do more.

We are still very committed to the development of Roundup Ready bentgrass. And we're excited about it because it is the ultimate do-more-with-less product. It's hard to predict when it will be ready to market because it's in APHIS's hands now (for approval). We hope it'll be ready to go in 12 to 18 months. But we're continuing to move forward. We remain optimistic.

Economy: As far as projections, it's difficult. Our industry is dependent on fuel. Oil is $45 a barrel and it affects lots of products in this market, as well as delivery of those products. Interest rates are still down but are inching up, and we've seed some holdback from sod producers because of this. Times have changed because of the speed in delivery of information. This impacts everyone. Interest rates and fuel are the two biggest factors for 2005. We're dependent on these factors to see what happens.

We're somewhat optimistic for green industry growth in 2005. When interest rates go up and oil goes up and it rains all the time and rounds of golf go down, it's horrible for our industry. We can't have that again. But Scotts had a good year 2004 despite the bad (rainy) weather in the East and Midwest. And we're still looking at a good 2005. From a seed standpoint, 2004 started out really well and we had a great 9 months, but then it slowed down. Sales weren't there in the fall, not just for our seed company, but for others as well. What will come into play in 2005 is how turf makes it through the winter and new housing starts. We see 2005 very similar to 2004.

Planning: I think when it comes to grasses, anticipate a price increase for the good, more elite, grasses. However, prices on ryegrasses are going to be flat. If urea prices stay up and fuel stays up, the price of shipping will go up, too. Remember to look at fuel prices for equipment, too, when planning your budgets.

Rick Elyea, director of golf marketing Tee-2-Green Corp. and Turf Seed, Inc.
Hubbard, Oregon

Trends: More and more varieties are becoming available that are more efficient and make better use of water and fertilizer. Seed developers realize that the water issue is only going to get worse and the quality and amount of water available for golf courses will see even more constraints in the coming years. It's going to become just as important to have turf that can tolerate water that is poor quality such as effluent water and water with a high salt content. So it's important to get that research done now.

There is also a trend to develop varieties that have better disease resistance and are less susceptive to diseases such as gray leaf spot and brown patch.

Economy: I see some growth in 2005. The new construction market is climbing up again in the golf market. Renovations of old courses will increase to keep up with new facilities as equipment (golf balls and golf clubs) continues to change.

Planning: As you plan for next year, take a look at all varieties offered to you. Look at the benefits of each, and consider what kind of performance you'll need as well as special characteristics like disease resistance. Some varieties were developed for specific situations. Do your research. When comparing varieties, make sure you are comparing apples to apples. Sometimes paying 5 to 10 cents more per pound actually saves you money on a cost per acre.

IRRIGATION

Michael Rivers, director of commercial division
Rain Bird
Azusa, Calif.

Trends: When I think about trends, I think of water management and the need to use water efficiently. Water is a finite resource, and there are increasing demands on that supply. I think irrigation often gets targeted (as at fault for water waste) because we are some of the most obvious uses of water. Water-efficient products are a huge trend and focus in this market. All of the professionals involved in irrigation and even who use it need to be aware of intelligent water use and be part of the solution. We need to work to change the perception that we are part of the problem because we're part of the solution. I think we're doing that through research and development and with all of the water-efficient products on the market. And it's no longer just something available for high-end or large users. The Green Industry as a whole must pay more attention to this topic to ensure our viability. I'd rather have us lead in this area rather than have policy forced on it. We have to be proactive.

Another trend that lends itself to smart irrigating is use of a central control. There is a focus on this and self-adjusting control, evapotranspiration (ET)-based irrigation. Our technology has advanced to the point that this type of control is accessible to a greater number of people than ever, and that's pretty exciting and a major trend in regards to product.

Market: We feel pretty positive about the market. 2004 has been a good year, and we have a very positive outlook for 2005 as the economy continues to strengthen. We are planning for industry growth. Professionals have a real opportunity to enhance their designs and projects by using (water efficient) products. They can and should be taking advantage of enhancing the whole picture. Sometimes they get too caught up in looking at the cost instead of the overall benefits. I would encourage them to take another look at products that are available. We need to educate them on the benefit of efficiency. I wish we could flip a switch and turn everything over to water efficient products over night. It's going to be years before it fully changes. But I think there will be major shifts soon, especially on the control side because that's where technology has improved the quickest.

Economy: Indicators for the economy are positive. It seems to be strengthening. We are cautiously optimistic.

HAND-HELD POWER EQUIPMENT

Dave Zerfoss, president Husqvarna
Charlotte, N.C.

Economy: Being intimately involved with OPEI (Outdoor Power Equipment Institute) and as chairman, I have seen the statistics and we predict a very healthy growth level in 2005 for commercial units. We anticipate double-digit growth. The growth in 2004 was 18 percent total for equipment. And I believe we can expect double-digit growth for at least 5 years. This is driven by a couple of factors: Babyboomers are maturing and want someone else to take care of their lawns; a general trend of time compression; and a global desire for nice lawns. We also predict more entrance into this business market because when you have so much growth, it brings new business people into marketplace.

Trends: The trend will continue for improved technology in the equipment market. Cleaner, quieter and more efficient equipment is on the way. There will be more focus on ergonomics and vibration. It's a transfer from Europe where there are vibration ratings of products. There will be more user standards, lower emissions. Everyone is working toward that to meet standards. With up to 70 percent less emissions, all of these improvements take tremendous investments.

Challenges: There is a key issue right now and that's hiring and training employees. A focus on human assets. It's a challenge today to get productive employees. To help with this, we feel we want to provide more training online, and that's what we've done. Our training is available 24 hours a day, 7 days a week to assist customers. We also offer maintenance information online. We're going to be expanding these programs, because we feel it's important to have the right support.

Planning: I believe that as you plan, you need to plan for growth in a very positive way. There is a real technology in thinking. To move forward, companies need to make a bold declaration. Think about the future and where you want to go. You may even need to reinvent yourself. If you can't differentiate yourself from your competitors, you won't be able to compete. You'll become the same as the others. Develop what differentiates you. Look at what if instead of what was.

Advice: Take stress out of your business. Focus on what makes you money: It's services you perform. So you need to look at how your time is being used. Narrow your focus instead of being all things to all people. Decide where you want to be. Don't look at how you want to decide, but how you want to prosper.

Joe Fahey, vice president of marketing Echo, Inc.
Lake Zurich, Ill.

Trends/concerns: Landscape contractors in this market need to be aware of what's going on with handheld equipment right now. We are in the middle of one of the biggest issues that has hit this industry in recent memory, and that's emissions regulation. Although we've been talking about them for a long time, on Jan. 1, 2005, they hit their lowest limit. The impact is enormous because manufacturers have had to change technology to achieve these regulations. The end-users need to understand the new technology involved. Now more than ever, your clientele needs to know the facts. There is a lot of misunderstanding in the marketplace regarding technology, the future and its impact. So I advise everyone involved in handheld equipment to know your facts. Our biggest concern is that the rumor mill has it that 2-stroke technology is dead. But landscape contractors need to know that this isn't true and that they need to do their research before buying equipment so that they don't end up with something that doesn't meet requirements or that they won't want down the line. You can make wiser choices by knowing the facts.

Economy: Things are a little on the worrisome side right now from the manufacturing standpoint. Raw material prices are going up with gas and steel. We are worried about the weakening dollar as well as the trade deficit. These are issues that have so far had minimal impact, but could be serious depending on how they are handled.

Planning: I think that the growth of the commercial landscaper will continue. The trend toward homeowners having professionals do their lawns will also continue. Weather is always the X factor, but I think you should prepare for a solid year in 2005.

CHEMICALS

Steve Stansell, marketing manager, lawn care
Syngenta Professional Products
Greensboro, N.C.

Trends: I think in general people are taking a more outside view of their homes. We're seeing a lot of interest in having a nice premium lawn and landscape. There is a growth in hiring a professional to give you that look. Right now, we're working toward helping lawn care operators (LCOs) to reduce turn and keep customers. They can do so by offering more services. Professionally-applied fungicide is a great growth opportunity for LCOs. It gives you a way to offer the improved lawns that homeowners are looking for. Also, there is a trend to seek out more information. Using the latest technology like our Greencast Web site (www.greencastonline.com) lets them stay ahead of any diseases in their area. It provides the information they need to treat both preventatively and curatively, thus reducing their turn rate, giving the homeowner more satisfaction.

Economy: We're optimistic about the market. It's been growing. Home building is up. Size of lawns and homes are up. I think there will be overall growth. We're forecasting 3 to 5 percent. While some expenses are up, most people are realizing as much net income as they did before, encouraging specialized services. However, I think the do-not-call list is changing the way LCOs are going to market to develop business. LCOs are trying to figure out new ways to attract customers. If they can reduce turn rate by 5 to 10 percent, that's the same as growth.

Planning: I don't see input costs from equipment and labor getting any easier. Fuel costs are up. Maintaining good labor will always be an issue. Not having consistent, quality employees works against you when you're trying to provide a premium experience and reduce your turn rate.

EQUIPMENT

Dennis Schwieger, vice president Jacobsen, A Textron Company
Charlotte, N.C.

Trends: The No. 1 trend is that zero-turn mowers are going to continue to be the fastest growing machine in the entire industry. I don't see anything that even comes close to that. It's got a growth rate above 20 percent on a compounded growth basis. Industry market research indicates that consumers are a much bigger proportion of the buyers on this than many had expected. Lot of landscapers are buying zero-turns, too, but consumers are as well. The biggest factor in this growth is productivity. None of us have as much time as we used to have. So we are compelled to save time, and zero-turn mowers cover ground quickly.

We're also going to see a consolidation on the supply side, even as the industry is growing. And based on the research we've seen, equipment customers will be very, very demanding of reliability and support, whether they are homeowners or commercial cutters.

There will also be a trend to make these machines more versatile. The hydraulic system and 20- to 30-hp engine is there, and it's enough to power something versatile. You'll begin to see attachments that can dig postholes, cut small trenches, provide a power source for hedge trimmers, etc. They have the potential to morph and displace lawn and garden tractors a little bit.

Market: Golf course superintendents seem to be under economic pressure from greens committees or public managers. Some people still care a great deal about the quality of the job. But some say that “all mowers cut, what's the price?” And we're hearing that more and more. They are under pressure and it's going to drive consolidation. I don't see that changing. Quality of cut is still the most important issue, but reliability is right behind that. Then cost.

Professional landscape contractors are concerned with getting higher prices from the market, and equipment better be productive and reliable. If he could cut three more lawns in a day, it's enough to pay for the equipment. Those are the major concerns.

Economy: While economy is coming back, it's not roaring back. It's going to be moderate through 2005, solid but moderate recovery.

John Cloutier, marketing communications manager
Exmark
Beatrice, Neb.

Trends: Homeowners are stepping up and purchasing commercial products. Still a new category for them as far as awareness and value, but this will continue to grow in long term. What does that mean to landscape contractors? Well, mowing used to be an outside service and is now something they are doing themselves. Even those with properties at an acre and a half are doing it themselves. They are buying mid-mount zero-turns. You might lose some of those accounts.

The theme for 2005 is really about efficiency. You need equipment that covers a lot of area. We don't think landscape contractors are seeing a pot of gold out there to better revenues and profits, but there is potential for growth with increasing efficiencies. But you have to look at everything you do. Does is take double cutting of grass to meet your customers' standards? All businesses will be looking internally to eliminate waste. This is what happens when things slow down a little bit.

I'm not sure manufacturers lowered any prices for 2005 because of steel costs. Probably the single biggest driver of day-to-day costs is that of equipment going up. So look at what machine is going to be most efficient to generate revenue. It's tempting to go to a lower-costing machine, but often the logical choice would be paying a little more to eliminate downtime and increase efficiency.

Economy: All the indicators are that it's going to be a positive year, but nothing says it's going to be extraordinary. Economic indicators are better; not great, but better. There won't really be anything different this year from last year. A lot is weather-driven, and no one has a crystal ball that says whether it's going to rain or not. So we are cautiously optimistic.

Randy Harris, senior marketing manager, Toro Landscape Contractor Equipment The Toro Co.
Bloomington, Minn.

Trends: There is a growing importance of lawn maintenance to landscape contracting firms. Survey results indicate that 44 percent of landscapers who responded say that lawn maintenance is their primary revenue source. In 1998, the same survey indicated that only 24 percent said that lawn maintenance was their primary revenue source.

Another trend is that contracting firms are looking to boost efficiency as other costs go up. Health care costs are rising, combined with increasing insurance prices and fuel hikes, there is no end to watching operating expenses go up and only so much you can pass on to the end-user. One way to offset that is to purchase do-more-faster equipment plus make sure that equipment isn't breaking down. A cheap piece of equipment that is always in the shop is going to cost you more in the long run.

Market: Long term we see continued growth. In our survey, 84 percent of respondents said their revenues also would increase in 2004.

Economy: We are positive. We believe the economic recovery will continue with strong housing starts. We don't see it slowing down. We're pretty bullish on the future.

Planning: Plan for fuel and energy prices to stay high. Hopefully, they've peaked and will come down, but not soon. Steel is at record highs. In the short term, equipment prices will increase over the next couple of years at a higher rate than in the past. Building is considerably higher than it was 18 months ago. In general, plan for higher overall operating expenses. Plan for high health care cost and pay scale increases. Look for different ways to drive down costs, eliminate waste and increase productivity.

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