Landscape Contractor Business Outlook

You’ve heard this story umpteen times over the past four years, but here we go again: The maintenance business has been fairly strong while the installation business has remained spotty. But here’s something new: Next year could be strong all across the board.

Results of a recent Green Industry PRO magazine survey show that twice as many lawn maintenance contractors said business was up this year as those who said it was down, and most think business will get even better in 2013. The same can be said for lawn care (fertilizing, weed control, etc.)

Landscape design and installation contractors are also optimistic about 2013. While the number that saw a decrease in business this year was about equal to the number that saw an increase, most expect to grow sales next year. As for irrigation, roughly half think business will grow next year.

Roughly 9% of installation contractors think business will be down next year. That’s compared to 5% for maintenance, 6% for lawn care, and 7% for irrigation.

(See charts 1a, 1b, 1c, 1d.)

Specialty services a struggle for many

Over the past few years, tight consumer spending and weak new construction have put the pinch on some specialty services. As a result, just a small segment of contractors have been able to grow their sales in most cases. (See chart 2.)

Water features and hydroseeding seem to have been hit the hardest. Just 12% of contractors that install water features say business is growing, compared to 42% that say business is in a decline. Likewise, 43% of hydroseeding contractors say business is down, compared to 15% that say it’s growing.

Lawn renovation, tree care, pest control and green roofs represent growth areas for many contractors. The number that says business is growing far exceeds the number saying business is down.

Prices finally on the climb?

A natural byproduct of the recent recession has been a pricing collapse in this industry, most notably in the maintenance sector. Many contractors have said that prices are back to where they were 20 years ago. But according to the results of this survey, many contractors are expecting some relief in 2013.

Roughly 55% of residential maintenance contractors think they’ll be able to raise prices with at least a few of their clients next year. Another 20% say they’ll be able to bump the majority of their clients. In commercial maintenance, 41% say they’ll be able to raise prices with at least some clients. Another 18% plan to raise prices on most clients.

There appears to be hope for installation contractors, too. Roughly 42% think they’ll be able to raise prices on at least some residential installation jobs, with another 22% thinking they’ll be able to raise prices on most jobs. In commercial installation, 35% of contractors think they’ll be able to charge more in some instances, while another 17% plan to charge more on the majority of their jobs.

However, prices still seem to be stuck for many contractors. (See chart 3.)

Hiring and firing

Most landscape contractors maintained staffing levels this year, and most plan to do the same in 2013.

Maintenance workers were the most likely to find jobs this year, as 33% of contractors added maintenance crew. Additionally, 19% of contractors added foreman-level maintenance personnel. Ironically, though, maintenance workers were also the most likely to get laid off, as 20% of contractors cut back on maintenance personnel.

On the installation side, 21% of contractors added laborers while 10% added foremen. Conversely, 18% cut back on laborers while 9% cut back on foremen.

With respect to lawn care technicians, 17% of contractors increased staff while 11% cut back.

Looking ahead to next year:

  • 50% of contractors plan to hire additional maintenance workers
  • 34% plan to hire additional installation workers
  • 28% plan to hire additional lawn care techs
  • 26% plan to hire additional maintenance foremen
  • 16% plan to hire additional installation foremen
  • 13% plan to hire additional managers
  • 11% plan to hire additional office workers

Where growing landscape companies will find reliable employees remains to be seen. One contractor responding to the survey put it this way: “Legal and reliable labor (is a big issue). Finding American labor that has a driver's license, is not drunk or committed felonies, etc., is very hard. When you do find them, they lie about not drinking or doing drugs, then they steal from you. Just trying to find people that will perform a labor function at a reasonable rate is tough.”­

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