Landscape Management, October 2012
ThE iNDuSTry PuLSE Going up L andscape contractors and lawn care operators are affected by rising costs in seemingly every area of the business from labor to equipment Aside from labor which always is a major expense no two things are hitting contractors wallets quite as hard as fuel prices and insurance rates I dont think weve had a single expense that didnt go up says Rob Reindl president of Oasis Turf Tree in Loveland Ohio Fuel has gone up insurance goes up 15 percent a year Fertilizer prices are going up every year Herbicides You name it I think theyre all well above 5 percent Dan Sohovecky is vice president of finance at New Way Landscape Tree Services in San Diego The company has a small tree service division but 93 percent of the companys work is maintenance The challenge for a landscape maintenance company in this environment is rising costs Sohovecky says and work is being bid cheaper now Its affecting our margins The bid price in general has gone down in the last couple years Its a sign of the times For more on commercial contract prices see page 14 With lower margins and rising costs companies need to be creative and focus on their stable long term clients if theyre to remain profitable Retention is No 1 in our book says Sohovecky Liquid gold In 2012 New Way Landscape Tree Services LANDSCAPEMANAGEMENT NET october 2012 S18 has felt the weight of rising fuel prices as much as anything Over the last two years Californias fuel prices have skyrocketed by 40 percent The price of gasoline stands at 410 a gallon up from 290 two years ago Out here in California we get hit by refinery charges Sohovecky says Thats definitely been a large impact costwise Steven Fine can relate At the mere mention of fuel prices the first words out of his mouth are Ugh Awful The marketing manager and business developer for Reno Nev based Signature Landscapes says Renos gas prices also just topped 4 per gallon Add to that the fact that in 2012 Signature committed to traveling farther to secure more work and fuel costs are definitely hitting Signatures margins As we speak were working on solutions to rerouting and consolidating routes to see how we can stave off this fuel issue Fine says Fuel is always a big item for The Greenery in Hilton Head S C The company anticipated the worst in 2012 budgeting more for fuel than it did in 2011 We budgeted just under 1 million for fuel this year says The Greenery President and CEO Lee Edwards We sent out a letter last winter saying if the prices go up to such and such levels then we will have to raise your price by X amount Fortunately we never had to do that The prices never went up as we expected so it ended up being very tricky by Beth Geraci Senior editor In economic times still uncertain there is one thing you can count on rising costs
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