GREEN INDUSTRY OUTLOOK 2019 - Irrigation & Green Industry
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
JANUARY 2019
2019
GREEN
INDUSTRY
OUTLOOK
Find out what direction
the industry is headed
in and if your business
is following the right
course.
INSIDE:
Overview, p. 2 | Demographics, p. 4 | Business Performance, p. 6 | Labor Statistics, p. 7 | Future Trends, p. 82019 GREEN INDUSTRY OUTLOOK
© fox17 | adobestock.com
S2 Irrigation & Green Industry January 2019 www.igin.com2019 GREEN INDUSTRY OUTLOOK
BY KRISTIN SMITH - ELY
2019
GREEN
INDUSTRY
OUTLOOK
Find out what
W
direction the
industry is elcome to Irrigation & Green Industry’s
headed in and if 2019 Green Industry Outlook. This
your business market analysis looks different from
the status reports you have seen from
is following the
us before. We wanted to make abso-
right course. lutely sure that the information we are
sharing with you is an accurate and true
representation of the current state of affairs for landscape compa-
nies, so we went directly to the source for the answers: you.
During November 2018, we surveyed the segment of our read-
ers who are landscape contractors. We wanted to hear from you
about your business size, mix of services, revenues, challenges and
growth opportunities. And we were pleased with the number of
you who took the time to take our Green Industry Outlook survey.
Thank you to all 437 of you who took our survey. It’s because
of you that we are able to publish the results with confidence and
portray a true reflection of the industry. We are planning to con-
duct this survey on an annual basis, so if you did not respond to
this one, you will get another opportunity to complete one later
in the year.
Beyond being interesting for the reader to see how the industry
responded, I hope you will take the time to compare the results to
your own business. There is useful information contained in this
report that you can use to gauge the market and compare your
company.
Have you ever wondered how your company compares with
your peers? Do you face similar problems and opportunities?
Where are they investing and seeing growth in 2019? Are you
keeping up with the competition? Answers to these questions and
more are revealed.
www.igin.com January 2019 Irrigation & Green Industry S32019 GREEN INDUSTRY OUTLOOK
AN EQUAL REPRESENTATION
20%
31% 17%
n Northeast
n Southeast
14% n Upper Midwest
n Lower Midwest
18% n West
Is your Diving into the demographics
O
business ur survey respondents hailed from all and Driven”) that young entrepreneurs, some as
seasonal or over the United States. An almost equal young as 13, are out there already realizing the earn-
number of respondents come from the ing potential there is. We would welcome a few more.
year-round? East, West and Central parts of the Most of the people responding to the survey say
18% country. The vast majority of those “landscape contractor – installation” is their primary
who responded consider themselves executives at the business (32 percent), with lawn maintenance com-
SEASONAL
company they work for, with another 14 percent that pany coming in close second (30 percent).
are managers or supervisors. These contractors offer a host of other services in
They also have a lot of experience in the landscape addition to their primary business, which you can see
82% industry, with a whopping 73 percent reporting they in blue on the next page.
YEAR ROUND have worked in the landscaping industry for more These businesses primarily operate year-round
than 20 years. Yes, that ages some of our respondents. (82 percent), and more than half have been in busi-
Sixty-six percent responded they are 50 or older. It’s ness for over 20 years (58 percent). They come from
a sign that attracting more and younger people into businesses that are family-owned (63 percent) or
careers in the landscaping industry will be critical in privately held (32 percent). A few (4 percent) say
the coming years. they work with government, while less than 1 per-
We know from previous reports in Irrigation & cent are publicly traded. They service a variety of
Green Industry (see the August 2018 article “Young property types.
What types of properties do you service?
303 283 148 56
Residential Commercial Municipal/Parks/Sports field Other
S4 Irrigation & Green Industry January 2019 www.igin.comWHICH OF THE
FOLLOWING
SERVICES DOES
YOUR COMPANY
What is your company/organization’s primary business? PROVIDE?
Landscape contractor - installation 32% 60%
Lawn maintenance company 30% Landscape design
and installation
Irrigation contractor/Consultant 21%
Landscape architect/Designer/Consultant 7% 60%
Irrigation maintenance
In-house lawn and grounds maintenance 6%
Chemical application company 2% 58%
Tree care 2% Lawn maintenance
57%
Turf and landscape
How long has your company How many locations does renovation
been in business? your company have?
7%
56%
4% 3% Irrigation design
6%
and installation
10% 13%
35% 51%
Drainage
23%
21%
78% 50%
Landscape lighting
47%
n 2 years or less n 11–20 years n1 n 5–10 Hardscaping
n 3–5 years n 21–30 years n 2–5 n 10 or more
n 6–10 years n 31 years or more 42%
Tree and ornamental care
40%
AN EXPERIENCED GROUP OF RESPONDENTS Disease, insect
and weed control
Which of the following How long have you
49%
best describes your title? been working in the 38%
landscape industry? Chemical application
Executive
Owner, Partner, CEO, President, 75% n 5 years or less
General manager n 6–10 years 37%
24%
n 11–20 years Water features
8%
Manager/Supervisor
15%
n 21–30 years
4%
Architect, Director, Superintendent,
Foreman, Landscape grounds 14% n 31 years or more
30%
manager, Consultant Snow/ice management
Specialist How old are you?
38%
Arborist, Agronomist, Forester,
4% n Under 20 28%
Horticulturist, Instructor, Water n 20–29 Environmentally friendly
28%
Manager, Researcher, Engineer n 30–39 services
2%
22%
Sales/Marketing/PR/Advertising n 40–49
Service crew member 1%
n
n
50–59
60+
20%
Hydroseeding/
3%
8%
Other 4%
1%
erosion control
16%
www.igin.com Holiday lighting2019 GREEN INDUSTRY OUTLOOK
Compared to 2017, how much What is your company’s What is the expected
do you expect your business projected gross growth in demand for your
has grown in 2018? revenue for 2018? company’s services in 2019?
30%
30%
63%
25%
22%
21%
18%
14%
12%
18%
8%
17%
8%
7%
2%
5%
n 16% or more n 1%–5% n Less than $100,000 n $1,000,001–$5 million n High growth n Flat
n 11%–15% n Flat n $100,001–$500,000 n $5,000,001–$10 million n Moderate growth n Declining
n 6%–10% n Decrease n $500,001–$1 million n Over $10 million
WHAT ARE YOUR COMPANY’S LARGEST EXPENSES?
69% 37% 32% 25% 14% 7%
Employee Insurance Fuel and Equipment Equipment Other
compensation energy acquisition maintenance
and benefits
What barriers most impact your business growth?
Too much competition 38%
Negative perceptions of industry 18%
Economic conditions 10%
Regulations 7%
Labor shortage 7%
Which regulation has the most
Low profit margins 7%
negative impact on your business?
Aging client base 5%
31% – Number of respondents
Equipment costs 5% who answered water.
Insurance/ labor costs 4%
26% – Number of respondents
Weather conditions 4% who answered fuel.
S6 Irrigation & Green Industry January 2019 www.igin.com2019 GREEN INDUSTRY OUTLOOK
Let the good times roll
W
hen we surveyed contractors at the the survey is negative perceptions of the industry
end of 2018, their official year- (18 percent). It beat out economic conditions, reg-
end revenues had not yet been ulations, labor shortage and low profit margins as a
calculated. But based on their barrier to business growth. This sends a strong mes-
estimates, three quarters of those sage to the industry of the importance of employee
who responded anticipated growth in 2018 over the training and providing exceptional customer service. Every
previous year. Most were in the 1 to 5 percent range Don’t be a company whose lack of attention to detail indication
(30 percent) or the 6 to 10 percent range (25 percent) or poor response time ends up reflecting poorly on
of growth. The majority of the rest of the respondents the whole industry. is that the
estimated flat growth. Perhaps a good sign for the While only 7 percent of respondents say regula-
industry is that the smallest response rate (7 percent) tions impact growth the most, we asked them to be
industry is
reported they thought business had actually con- more specific about what regulations were causing optimistic
tracted from 2017. them the most trouble. Thirty-one percent said water
More than half (65 percent) of contractors re- regulations, while 26 percent said regulations around about
sponding to the survey have revenues under $1 mil-
lion. Those whose revenues are between $100,001
fuel were the most detrimental. We took a closer look
at where these respondents were located, and those
business
and $500,000 make up the largest category of re- who said water were primarily irrigation-focused and the
spondents (30 percent). Still about one third of companies located in the West, South Central and
those responding have projected 2018 revenues over West Central regions of the U.S. These drought- majority are
$1 million in 2018. Five percent anticipate revenues
of over $10 million.
prone areas have been no stranger to regulations re-
stricting water use as a way to conserve water. Fuel
experiencing
And the good news is, based on the responses, ranked higher among lawn maintenance companies growth.
these contractors expect to see business continue to with the Southeast, Mid-Atlantic and East Central
improve in 2019. Sixty-three percent said they ex- standing out as the most troubled areas.
pected moderate growth in demand for their com- It came as no surprise that when these respon-
pany’s services in 2019, while another 17 percent ex- dents were asked to pick their two highest expenses
pect high growth in the coming year. Still another 18 that employee compensation and benefits was the
percent say growth will be flat for business in 2019, top response with 69 percent of respondents select-
while only 2 percent see it declining. Every indica- ing it in their top two. Insurance (37 percent) and
tion is that the industry is optimistic about business fuel and energy (32 percent), were the second and
and the majority are experiencing growth. third most popular choices. Equipment acquisi-
But with every opportunity comes its challenges. tion was fourth on the list (25 percent), followed by
These survey takers were asked to rank what barriers equipment maintenance. When cross-referenced by
most impact their business. The number one answer area of the country, insurance/labor costs were dis-
was too much competition. A little more surprising proportionately higher in the Southeast, West, East
was that the second largest barrier that came out of Central and Mid-Atlantic.
© fox17 | adobestock.com
www.igin.com January 2019 Irrigation & Green Industry S72019 GREEN INDUSTRY OUTLOOK
Labor shortages continue
A
recurring theme in Irrigation & Green more than 50 people, with just 5 percent having 101
Industry throughout 2018 was the labor employees or greater. Perhaps these smaller compa-
shortage in the industry. This has been nies wouldn’t be so small if they could find workers.
compounded by tighter restrictions on One respondent commented that his biggest
H-2B worker hiring practices being challenge was “having people with the knowledge
implemented by the Department of Labor and De- or desire to obtain knowledge so I do not have to
When partment of Homeland Security. be everywhere.” Those types of comments were an
two-thirds of It’s no wonder that 66 percent of respondents ongoing theme for survey takers when asked that
answered “no” when asked, “Does your region offer open-ended question. “No labor.” “Not enough la-
an industry enough qualified workers to meet your company’s bor.” “Difficulty getting our H-2B workers here due
needs?” to the cap.” “Labor. There is a big shortage of people
responds When two-thirds of an industry responds that willing to do manual labor in western New York.”
that finding finding qualified workers is a problem, it signifies This was just a sample of what was said.
a major issue. Industry associations, including the While H-2B has received a lot of attention lately,
qualified National Association of Landscape Professionals it turns out a small percentage of respondents have
workers is a and the Irrigation Association have recognized this
and have implemented programs aimed at attracting
ever participated in the program. According to the
survey, only 12 percent have ever used it, with only 5
problem, it young people into the irrigation and green industry. percent using it in 2018. With the difficulties those
The good news is the survey provided some who have used it experienced this year, it’s no won-
signifies a statistics on pay that are very marketable to young der the percentage is so low and as the program be-
major issue. workers. In fact, 87 percent of those who responded
say they pay their crew workers at least 6 percent
comes more strict, the participation rate will likely
drop off even further.
above the minimum wage. What’s better is that Spanish speaking workers are quite common for
more than half responded they pay 11 percent or the companies who responded to the survey. More
more than the minimum wage (64 percent). Many than half (54 percent) are employing at least some
of the higher paying landscape companies are small- employees who consider Spanish their primary lan-
er in size and are located primarily in the Southeast, guage. Nearly 20 percent of the companies that re-
West and Mid-Atlantic regions. sponded say more than half of their labor force is
The landscape companies who are represented in Spanish-speaking. The regions with the highest per-
the survey tend to be on the smaller side of the spec- centage of Spanish-speaking workers are located in
trum. Most of the firms who responded to the sur- the West and South Central U.S.
vey employed 10 or less workers during their peak It just might be time to brush up on those Span-
seasons (60 percent). Only 12 percent employed ish language skills.
© fox17 | adobestock.com
S8 Irrigation & Green Industry January 2019 www.igin.com“
On average, do you pay your crew
”
WHAT YOU HAD
members minimum wage or a TO SAY ABOUT
higher amount?
YOUR BIGGEST
CHALLENGES
IN 2019 ...
“Two things stand
out. One is finding
reliable, consistent
4% 9% 23% 64% labor, and two is
Minimum wage 1%–5% more 6%–10% more 11% or more
reducing fuel costs
with more efficient
trucks and equipment.”
How many full-time Does your company participate
employees does your company in the H-2B nonimmigrant
“Lowball pricing.
employ at peak season? visa program?
Other companies not
5% 5% knowing their true
7%
7% cost/profit margin.”
12%
48% “Definitely a labor
shortage. I am also
16% concerned about
88%
increasing material and
12% equipment costs due to
tariffs and lack of labor
causing the market to
n 1–5 n 26–50 n We used H-2B labor in 2018 swing downward.”
n 6–10 n 51–100 n We have previously used H-2B labor but
n 11–25 n 101+ did not use it in 2018 “Labor, labor, labor,
n We have never participated in H-2B labor. I could be a
millionaire if I could just
get guys to show up to
What percentage of your employees speak Does your
work on time every day
Spanish as their first language? region offer
enough qualified and stay sober until the
workers to meet work day is over.”
None 46%
your company’s
1% – 25% 20% “Labor shortages.
needs?
26% – 50% 15% Our current employees
are getting older, and
51% – 75% 8%
there are not enough
76% or more 11% young people to
fill their roles.”
No – 66%
Hello 54% “Low unemployment
rates driving up
Total percentage of respondents who compensation
Hola employ workers who speak Spanish necessary to be
as their first language. Yes – 34% competitive. Increasing
number of startups in
www.igin.com the industry.”52% In 2019, which equipment and/or services
q
Trucks
are you considering investing in?
49%
Hand-held power equipment Which of the following services are you Which of the following services are you
considering expanding or adding in considering reducing or eliminating
38% 2019? in 2019?
Mowers Landscape lighting 27% Snow/ice management 16%
34% Landscape design and installation 25% Lawn maintenance 15%
Construction equipment Irrigation maintenance 23% Chemical application 14%
Environmentally friendly services 20% Water features 14%
33%
Tires Hardscaping 20% Holiday lighting 12%
Lawn maintenance 19% Hydroseeding/erosion control 11%
31%
Business hardware
Irrigation design and installation 19% Disease, insect and weed control 10%
Drainage 17% Hardscaping 9%
26% Turf and landscape renovation 15% Tree and ornamental care 7%
Battery-powered equipment
Water features 14% Drainage 6%
23% Holiday lighting 14% Landscape design and installation 6%
Uniforms
Tree and ornamental care 13% Irrigation maintenance 5%
21% Disease, insect and weed control 13% Irrigation design and installation 4%
Design software
Chemical application 13% Landscape lighting 4%
20% Snow/ice management 10% Turf and landscape renovation 4%
Business management Hydroseeding/erosion control 7% Environmentally friendly services 3%
software
12% What trends do you expect to gain the most traction with
Drones your clients in 2019?
10% Smart irrigation controllers 46%
GPS Native landscapes 37%
Outdoor entertainment spaces 29%
8%
Hiring a business consultant Landscape lighting 20%
Organic fertilizer 19%
7% Battery power 17%
Tree equipment
Water features 7%
7% Artificial turf installation 7%
37% 46%
Financial services Percentage Percentage
of respondents of respondents
6% who expect who expect the
the native smart irrigation
Engines 61% landscapes trend controllers trend
NO to grow in 2019. to grow in 2019.
6% Do you use GPS/
Chippers/shredders navigation software 39%
on your trucks? YES
5%
Remote-operated equipment www.igin.com2019 GREEN INDUSTRY OUTLOOK
Opportunity is knocking
T
here is a lot of good news going on in Contractors are seeing some trends in the types of
the industry as evidenced by the growth projects clients are requesting as evidenced by some When asked what
contractors are anticipating in 2019. We pretty clear front-runners. When asked to select is the biggest
drilled things down even further to find what trends are expected to gain the most traction
out where contractors plan to invest, with their clients in 2019, nearly half of them (46 challenge your
what services they plan to add or remove and what percent) answered smart irrigation controllers. This business faces
equipment and services they plan on spending their was followed by native landscapes (37 percent) and in 2019, 54% of
dollars on in 2019. Is your business in line with what outdoor entertainment spaces (29 percent). At the respondents
the rest of the industry is seeing? bottom of the list was water features and artificial listed labor.
For starters, respondents appear to see an oppor- turf installation.
tunity in the market to enter or expand into landscape With all these services landscape businesses are
lighting more than any other service. Twenty-seven considering, equipment and supplies will surely be
percent say they are considering it. Landscape design needed. More than half said they plan to invest in
and installation comes in close second at 25 percent trucks in 2019. Other popular areas of equipment
and irrigation maintenance finished third. acquisition include hand-held power equipment The area of
Environmentally friendly services, hardscaping, (49 percent); mowers (38 percent); and construc- service
lawn maintenance and irrigation design and installa- tion equipment (34 percent). As business grows in a expecting the
tion are all within close reach of each other in terms tight labor market, it is clear equipment investment highest growth
of where companies see opportunities for growth. will be critical to help these businesses achieve their in 2019 is
But contractors are also considering reducing or growth goals.
landscape
eliminating services. Topping that list is snow/ice They also will be purchasing supplies for their
management with 16 percent of contractors saying clients. The most popular item they say they will be lighting.
they would consider that move. Other areas where buying in 2019 is irrigation equipment/controllers.
a reduction or elimination are being contemplated The majority of contractors also will be buying nurs-
most heavily are lawn maintenance (15 percent); ery/flower items, soils and mulches, sod, grass seed,
chemical application (14 percent); and water features chemicals, hardscape supplies and landscape lighting.
(14 percent). What a great time it is to be in this industry!
Which products will you purchase for your clients over the next 12 months?
Irrigation equipment/controllers 70%
Nursery/flowers 69%
70% Soil/organics/mulch 67%
Percentage of Sod 59%
respondents
Grass seed 59%
who plan to
purchase Chemicals 53%
irrigation
equipment or Hardscape products 52%
controllers. Landscape lighting 51%
Water feature accessories 34%
A SPECIAL THANKS
Asking people to take time out of their busy schedules to take an online survey is no easy feat. We want to thank Stihl for giving people
an added incentive to respond. The Germany-based outdoor power equipment company with U.S. headquarters in Virginia Beach,
Virginia, gave away one of its FSA 130R lightweight cordless brush cutters with AP 300 battery, charger and accessory bag to one
lucky respondent who entered to win. Congratulations to the winner, Eldon Hoover, landscape manager at Weaver’s Landscape Co., in
Shippensburg, Pennsylvania.
www.igin.com January 2019 Irrigation & Green Industry S11You can also read
