Experienced landscape business owners say that the landscape industry is usually the last to feel the brunt of an economic
slowdown. It's also the last to recover from one, they say.
If that's the case, is the industry's optimism, as gauged by our recent "Outlook" survey, based on the industry's perception
that the surge in consumer demand for its services this past decade will continue? Is the industry's confidence based more
on its recent, positive historical performance than on a more critical (and perhaps realistic) read of conditions that will
affect its revenues and profitability in 2008?
The approaching season looks unlike any the industry has faced since the very early 1990s, a rough period for the U.S. economy.
With 2008 just days away, there's certainly more than the usual share negative economic news being generated to go around.
Daily media reports are clearly rattling consumers' confidence. Who can ignore the barrage of news focused on the subprime
mortgage crisis, tightening credit, falling home values, rising energy costs, stalled immigration reform and the continuing
erosion of manufacturing?
In spite of this, however, the U.S. economy keeps chugging along with relatively low unemployment, inflation under control
(for the time being) and robust consumer spending, as this holiday shopping season demonstrates once again.
Fueling concern
What are the top industry concerns as we close out 2007?
"Right now it appears that fuel prices could make the top of the list," says Bret Achtenhagen of Bret Achtenhagen's Seasonal
Services LTD, Eagle, WI. "Immigration reform, the election, the housing market are other challenges that we're watching."
In other words, as conditions change, he will adapt.
"We do not spend a lot of time dwelling on circumstances we can't control," he adds. "We set financial and business goals
and monitor them closely. If an outside force exerts pressure on us we are able to pinpoint the problem and adjust accordingly."
Higher energy/fuel costs are top of mind for most of you, it turns out. In our mid-autumn survey 77% of you said that you're
"very concerned" with these costs. They affect everything from gas and diesel for trucks and power equipment to the cost of
fertilizer.
"Fuel costs continue to climb along with products produced through fuel such as fertilizer and PVC products. These costs will
eventually be passed on to the end user or recipient of the service," says Ernie Pyle of Heaviland Enterprises, Vista, CA.
To offset these higher fuel costs and also to add in its conservation efforts, Heaviland managers now drive Ford Rangers rather
than F150s.
"Managing our costs has been the most challenging aspect of managing our business and one of our greatest challenges," says
Bob Grover, CLP, CLT, president of Pacific Landscape Maintenance, Hillsboro, OR. "In addition to fuel, many of our costs including
fertilizers, job waste disposal and labor continue to rise significantly faster than the rate of inflation.
"We are able to absorb these costs. Having to pass these cost increases on to our customers in a competitive environment is
always dicey."
