In an article posted earlier this fall, landscape contractors talked about what they feel are their biggest opportunities in 2012. The top three are: improve sales and marketing, expand, and improve the workforce. These three biggest opportunities mirror the three biggest challenges which contractors also cited: intense competitive climate, ultra-tight customer budgets, and labor uncertainty.
In other words: There is opportunity out there—it's just going to take a lot of careful planning and hard work to turn those challenges into opportunities.
Below are comments surrounding the No. 1 issue—intense competition—directly from the mouths of Green Industry PRO readers. Take a look and see if you feel the same way, and feel free to post your comments at the end of the article or on our forum.
Where are these low-ballers coming from?!!
There is a lot of fluctuation in the market. There are also amazingly low bidders—more so than years past.
The low bidders are emerging in different ways:
- Some contractors pay illegal immigrants under the table, creating an artificial price floor that is hard to compete with.
- Some of those illegal immigrants have started their own lawn mowing businesses. "We need to be licensed like plumbers and electricians," an irritated contractor said. "And we need to send this illegal alien worker pool back to their own countries—now!"
- Many of the small one- and two-man operations that don't have insurance, etc. are willing to work extremely cheap. They might even make money doing it because their overhead is so low.
- National companies, in some instances, are willing to work for less because they can make it up in volume. They're also starting to stick their noses into the residential market.
- Some contractors are really struggling and getting desperate. They're just so happy to get a job on the books that they don't even think about the fact that they won't make a dime.
- Some contractors are simply inept and bid projects extremely cheap because they don't understand their costs or how to recover overhead.
- Some homeowners are now going out and buying low-end equipment to try and compete with actual contractors in the mowing and maintenance arena. Many of them have been out of work for a while.
- Landscape construction contractors have tried to forge their way into the maintenance business. Some have done so by under-cutting established maintenance contractors' prices. In most instances, though, their mere presence in an already saturated market has applied additional pressure to pricing.
- The "handyman" market is also growing, fueled by unemployed construction workers, for example. Yard work is one of the core services on their menu.
The end result is ugly. But can it be stopped … and turned around?
What happens is that all of this low bidding sets unreasonable expectations for homeowners. One contractor said he's run into competitors who are actually bidding install jobs below their cost. "I don't get it," he quipped. The scary thing, a few contractors agreed, is that some of the low bidding is being done by reputable companies that have never done it in the past.
Another contractor said he's concerned that all of this low bidding has resulted in sub-par work being performed. What's more concerning is that many consumers seem to be willing to tolerate it, placing cost over quality. "Personally, I refuse to perform sub-par work," the contractor said. "I am licensed in structural pest control and am trying to incorporate that facet into my business as a potential bonus."
"If this doesn't turn around soon, the Green Industry is going to be just a bunch of DIYers because prices are going to be driven so low that nobody is going to make any money—not even the big companies," another frustrated contractor shared.
Watch for other installments of this series right here at greenindustrypros.com.