Landscape Installation Business Continues Recovery

Most landscape installation contractors have spent the past three years trudging along in a historically weak market. The main drivers of growth are improving, though, and most contractors are feeling pretty good about their prospects going forward.

A fall 2011 survey of Green Industry PRO readers suggested that roughly one-third of contractors grew installation sales last year. Roughly half expect sales to grow this year. Only 7% anticipate a reduction in installation business.

So far this year, most contractors are holding firm to their predictions. Scott Parker, whose New Jersey-based company is profiled in this issue, is one example. "We are seeing a drastic increase in consumer demand," Parker says. He attributes this to the following:

• Economy seems to be improving (as of early spring) and many consumers have a better idea as to what their personal job stability and financial situation are
• In New Jersey, fall storms have revealed faulty or inadequate drainage systems and have devastated trees and plantings

"We are simply seeing many homeowners who are looking to repair their landscapes due to the hurricane and ice storm we experienced," Parker adds.

A look at the two big drivers: housing and construction

As you can see, Mother Nature's havoc can sometimes work in favor of landscape professionals. However, the best indicators of both present and future prosperity are directly tied to two things: residential housing and commercial construction.

On the housing front, March data was still throwing mixed signals. According to the National Association of Home Builders (NAHB), newly built, single-family home sales were down 7% from February. But February had proved to be much stronger than expected. Thus, sales for the entire first quarter were up 3.7% from the fourth quarter of 2011. More importantly, March sales were 9% higher than one year ago.

March construction spending data from the U.S. Census Bureau of the Department of Commerce also paints a favorable picture. Residential construction spending—which also includes multi-family units such as apartment buildings and condominiums—was up 6.5% from a year ago.

It's a somewhat similar story for non-residential construction. Spending was up 5.7% in March as compared to one year ago. The best-performing segments include manufacturing (+39.6%), power (+19.2%), commercial (+8.9%) and public safety (+7%).

These are all positive signs that show continual improvement in the housing and construction markets. Still, research firm IBISWorld indicates that growth will remain measured over the next several years. In fact, the market will not return to pre-recession levels until 2016. That means landscaping industry growth will likely remain in line with overall economic growth until that time.

Contractors that specialize in bid/build understand this better than anyone. Maryland-based Ruppert Landscape is one example. "Thankfully, we are starting to see the bid/build market pick up now," says Amy Snyder, director of public relations. "Our customers are all getting busier. Typically, architects get busy, then the general contractors, and then a year later the landscape contractors feel it. So this year is a lot better, but we're really expecting to see some solid improvement in 2013."

How to outpace overall industry growth

Broader market coverage. Snyder says that Ruppert's broad market coverage has been a real blessing. The company operates several branches and offices in Maryland, Georgia, Pennsylvania, North Carolina and Virginia. However, its ability to travel as far away as Oklahoma has helped offset the effects of a slow economy.

"We did a huge project called Myriad Botanical Gardens in Oklahoma City last year," Snyder tells. The project spanned from August 2010 through October 2011 and employed roughly 150 people at times. "We've now established a national branch where we are pursuing more national contracts like this. We're getting some of that work through established contacts. But it's really about being willing to go out and get the business and do the travel. You also have to be capable of doing it."