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2002: The Year Ahead

Association Presidents Speak Out

2001 has been a year full of suprises and challenges for us all. The events of Sept. 11 cast a shadow across our nation and our industry. With the economy on a downtrend even before the attacks, many people are wondering what the future holds for our country, and more specifically for the landscape industry. During times of uncertainty, it's always good to take stock, re-evaluate and re-strategize. It's a time when the industry as a whole needs to come together to take a look at where it's been and where it's going.

With this in mind, LCM gathered 10 presidents of national and regional industry associations, and asked each of them to provide our readers with their views on what 2002 will be like for the green industry. A theme of cautious optimism seems to permeate our presidents' thoughts, letting us know that things might not be as bad as they seem.

But read for yourself, as we let the presidents speak...

Associated Landscape Contractors of America (ALCA)

Rick Doesburg

President

As a very excited incoming president of ALCA, I would like to explain and express my enthusiasm for our association. I have had the pleasure of working with many trade associations and I can honestly say ALCA is the best. The volunteerism, the staff and the Executive Vice President, Debra Holder, continue to perform at extraordinary levels.

I have recently returned from the Green Industry Conference and Expo in Tampa, Fla., and personally observed the strength and power of ALCA. We call it “ALCA Magic.” The attendance was up from last year’s record-breaking numbers, a very remarkable feat since the events of Sept. 11. All across the country, attendance has been considerably down at other trade shows since that date, while ALCA’s attendance increased.

We go into 2002 with a record membership that has continued to increase monthly. We are financially very sound, and leadership and volunteerism is at an all-time high. Best of all, the committees have met and given the staff a plethora of action items they want to accomplish. Their goal this year is to make ALCA and our green industry better and stronger.

We have made a major commitment to the educational venues around the country; we know our future is dependent on the young students of America. We are building an alliance with the FFA (Future Farmers of America), Student Career Days in March and the 25-plus scholarships we will give to students from the ALCA Educational Foundation. We have a strong bond with educators around the country and ALCA’s accreditation program has become very important to the universities across the nation.

But a primary focus of ALCA is the education of our members. This upcoming year we anticipate a very successful Maintenance Symposium in August, following the giant success of our Design/Build Symposium in 2001. We have many other educational seminars planned, and have already begun the planning for the 2002 Green Industry Conference at Opryland in Nashville, Tenn., in November.

Under the leadership of our 2002 President Elect Michael Byrne we will be moving forward with a new look at marketing the ALCA name through “branding.” This will be an exciting step for ALCA and the opportunities could be a giant leap forward.

As Drew St. John concludes his very successful year as President of ALCA, his focus is on “Emerging Companies,” their education and making sure they know they play a major role in ALCA’s success. His leadership and insight has continued to propel our association to the top of the chart in providing extraordinary services to our membership, the heart of ALCA.

In February, when I become President for 2002, I want to continue this focus along with making sure that members understand the value available to them in ALCA. I have been involved with ALCA for 30 years, and through the years the value to my company and myself has gone far beyond what any ALCA brochure could ever put in writing. This truly is the greatest association available to the green industry.

Outdoor Power Equipment Institute (OPEI)

William G. Harley

President and CEO

Because of the tragic events of Sept. 11 the economic landscape has undergone a major change that has ushered in a period of uncertainty. Prior to the terrorist attacks, OPEI was already forecasting a decline in industry shipments due to negative economic indicators such as: poor stock market performance; energy shortages; higher gasoline prices; dismal corporate profit reports; and countless layoffs. These were all vastly intensified by the terrorist attacks.

Prior to Sept. 11, OPEI forecast that there would be a nine percent shipment decrease for walk-behind mowers in model year 2001, and a 12.4 percent decrease in all riding units. On the positive side, OPEI forecast that the anticipated tax cut and expansionary Federal policy would help begin economic healing and most outdoor power equipment products would slowly rebound. Now, although faced with unprecedented risk and uncertainty in business decisions, companies are cautiously optimistic for next year.

In 2002, the industry will face challenges with noise issues both domestically and in Europe. Domestically, the primary focus is on leaf blower bans in a growing number of municipalities. In Europe, a new stringent noise directive will take effect on Jan. 3. This will have an impact on all manufacturers who ship lawn mowers and lawn trimmers/lawn edger trimmers to Europe because of required reductions in noise levels.

The outdoor power equipment industry will continue to face more stringent emissions regulations. The OPEI's Technical Committees, Clean Air Act Committee, Noise Committee and the Hand Held Products Committee will work proactively with the EPA, California Air Resource Board (CARB), and other state and federal agencies to ensure that proposed new regulations are communicated to all stakeholders in a timely manner and that they do not impose unrealistic burdens. The industry and the marketplace will be affected by new regulations and will meet those challenges through new and improved technologies. For example, today's newest engines are cleaner, more durable, and more fuel-efficient.

The trend toward e-commerce has reached the outdoor power equipment industry and the opportunities are growing among manufacturers, dealers, and distributors. More and more companies are promoting their products on their web sites, and the use of electronic data interchange (EDI) is growing. More manufacturers are selling products through mass merchandisers which will create an opportunity for outdoor power equipment dealers. As their customer base for service continues to grow, dealers can take advantage of the skills and experience they have accumulated over the years and provide personalized knowledge and service.

The OPEI-sponsored industry trade show, the International Lawn, Garden and Power Equipment Exposition (EXPO) will grow and change along with the industry. It will remain the top industry marketing event by adding new features to meet the demands created by industry shifts. For example, in 2002, to encourage more dealers to come to Louisville and stay through EXPO, OPEI is sponsoring the first-ever National Power Equipment Dealers' Convention.

In 2002, while growth will remain a priority, we may well see some emphasis on preserving resources as companies gear up for inevitable shifts in the economy and business strategies. To achieve profitability, CEOs will be creative and innovative in their marketing plans; industry buyouts and consolidations will continue; and new products will continue to be developed. With all of this said, the outdoor power equipment industry will remain strong, dynamic, and forward-thinking, and will continue striving to meet all challenges.

Turfgrass Producers International (TPI)

Tom Keeven

President

Successful turfgrass sod growers are long-term planners and simultaneously just-in-time producers. It takes the average farm about a year to go from bare ground to harvestable sod, so we have to project our plantings and sales (expansion, stable or contraction) way ahead of any stock market news or interest rate adjustments. However, at the same time we have to be ready to fill actual orders for sod on extremely short notice. Reflecting its members, TPI also plans well in advance but is equally adept at adjusting to last-minute changes. That's what has gotten us through the past, and it will help us make it to the future.

In looking ahead to 2002, I think most producers in the U.S. and certainly TPI itself will be cautious because we don't know what the outcome of the terrorist activities will be on so many aspects of our lives and businesses, but we're also a positive group, so I'd have to say that we are positively cautious.

Prior to Sept. 11, the economy had begun to slip after record-breaking growth for 10 to 12 years, but new housing starts were still strong for most regions. That's unprecedented in sod production because we're so closely tied to interest rates, new housing starts and other construction. When soil is being moved around, we know sod will be sold, so we look to construction as a major indicator for our business, and it's looking pretty good--at least for now.

We've also been successful as an industry in demonstrating the cost-return benefits of sodding on sports fields and golf courses, as well as the many positive environmental benefits for residential and commercial properties, so the overall market for sod has been increasing annually. We've been getting a larger piece of a larger pie.

As with every business, success draws imitators, and with general agriculture prices being at historic lows, we're seeing more farm ground converted to sod and the competition is intense. As president of TPI, I welcome these new growers as members because I think we can help them become quality-driven and not base their marketing activities on price alone. However, as a producer myself, I never like to see a new sod farm started in my market area because I know that it will mean long-time customers trying to beat me down on price, even if they don't know what the sod quality or service standards will be for an unproven new producer. It's a real test.

From an organization point of view, TPI continues to look to the future. With the support of our International Turf Producers Foundation, we were the first out of the box to seriously address critical landscape water issues and those efforts will continue to expand. We're also looking at how we can better serve all of the members, regardless of their size or location. Our publications and meetings are top-rate, but we always think improvements are possible.

I've grown up in the sod business and in TPI, starting out with my parents and brothers. We've seen good times and bad, but there have always been more good times. I think we can look forward to many, many more years of positives for our families, our farms, our employees and our association.

Professional Lawn Care Association of America (PLCAA)

Bill Hoopes

President

Stepping back from the events of the day for a moment, in recognition of the fact that by the time these comments are published the business environment could again be impacted by world events, we are still required to establish plans for the 2002 business year. Unable to afford the luxury of a wait-and-see attitude, those of us in lawn service cannot simply wait to see "how things develop." For us, spring sales begin with the new year. Our plans should be in place now.

Looking at 02 from a lawn service perspective, three words come to mind: challenge, caution and optimism.

I see all three impacting the upcoming season. I also clearly see a consumer buying environment that will definitely not provide many of us with the windfall, almost automatic, growth we came to enjoy, and in some cases to expect, in the latter part of the last decade.

How will lawn service operators respond to the new challenges we face? How will customer acquisition plans vary from past years as we face a market in which consumer confidence has been shaken and Americans have had to accept the fact that our lifestyles are under attack? We have two choices. First, to "hunker down" and cancel plans to grow our businesses, waiting for things to "return to normal" or second, to assume that at least for the near future today's business is normal and make prudent plans to deal with the new, challenging environment.

Those of us in leadership positions in the Professional Lawn Care Association are advising our members to be positive but measured as we face the spring sales season. I can tell you that, at Scotts LawnService, we plan to execute the fifth consecutive year of aggressive growth. We'll be selling franchises to qualified investors, opening new corporate locations and making sensible acquisitions. So, we plan to grow in three distinct ways. Having said that, I should add that we are being prudent and cautious in developing our plans.

We will measure results daily and remain as flexible as possible, knowing we may encounter situations we cannot foresee or control.

Since the inception of Scotts LawnService we have operated on a foundation of careful resource management. That practice will simply continue. In my view, those in our industry who have become used to setting up more general operational parameters and executing their plans blindly, without frequent re-forecasting and performance measurements, will need to institute a tighter, more "hands-on" management style. Companies that can react quickly to events in individual locations will necessarily be better able to minimize the downside and risk of any unexpected changes in the marketplace.

On the upside, I am confident that most of us will, as a result of the growing need to be better managers of our businesses, build our skills. And that is a real positive.

And lest these comments are perceived as mostly negative, let me conclude with what I believe is the most positive force at work in the present business environment. Though it's no more than an opinion, I believe that in times of stress and perceived threat we turn naturally to those things that matter most: our homes and our families. For me, that represents a great business opportunity for the "green industry." I believe that while a family may well think twice about taking a trip to Europe, the funds may well be invested in home improvements and the care of their properties.

So the year ahead will surely challenge us all. But buried within the challenge we should find positive opportunities to grow our businesses. Cautious optimism seems to make the most sense for 2002.

Ohio Landscapers Association (OLA)

Joe Drake

President

I have been asked to give my two cents on what the year ahead holds for our industry and members. Go figure! The two words that I would use to sum up the overall outlook for 2002, based on my conversations with fellow contractors and suppliers, are uncertainty and optimism.

Uncertainty because we are in uncharted waters regarding our economy, which was drastically changed by the tragic events of Sept. 11. Never before in our country’s history has a single event caused so much concern and havoc on our economy. Overnight the airline and travel industries were virtually shut down. And we thought we had it bad as landscape contractors. Its seems as though prior to Sept. 11 a lot of landscape contractors were either busy or slow according to several suppliers that I spoke with. September was definitely an "off" month for most companies as far as booking new sales went but most contractors that I have spoken with since said that sales were on the upswing going into the last few months of the season here in Ohio.

Obviously for a lot of Landscape Contractors a considerable amount of our business is based on mowing grass, raking leaves, and of course plowing snow. Mother Nature has the control of this part of our businesses and for the most part these services are recession proof. Except for the fact that it seems as though every factory worker who has been laid off from their regular job and owns a pickup truck decides to supplement their unemployment checks with performing the above mentioned services. Usually at considerably less than those of us who have established businesses with overhead, etc. So a lot of contractors are uncertain as to how many of their present clients that they provide these type of services for will indeed renew with them for next season.

Optimism abounds because I know that many contractors that I spoke with are experiencing one of their best years ever as far as sales and profitability. Also, interest rates are at the lowest levels in the last 30 years, allowing many contractors to refinance their current debt loads thus reducing their overhead and operating expenses. Many are looking forward to the lower interest rates which should spearhead consumers into investing more on their homes and thus for landscaping. Also many contractors I spoke with are going to try to increase their maintenance clients because this type of work is usually recession proof.

Many veteran contractors are optimistic because they feel the clientele that they deal with are more upscale and generally they have not had their businesses affected in past economic downturns. Also they stress that a lot of indicators point to the fact that 2002 will be a good year with our overall economy improving just in time for the Spring busy time. As of writing this article the stock market had already recovered all of the loses it suffered when the market reopened after the Sept. 11.

Overall, 2002 should be a good year for Landscape Contractors here in northeast Ohio.

Associated Landscape Contractors of Massachusetts (ALCM)

Genie Holland

President

As we begin to look ahead to our expectations for 2002 it is necessary to reflect a bit on the many things that affected the landscape industry in 2001. First of all, here in the Northeast we had the harshest winter in many years. This caused a very slow start to the season and both landscapers and nurseries felt a huge economic impact in the month of April. It was difficult to catch up, and affected the entire year. Secondly, the economy appeared to be slowing down and sales were not as great as expected. Lastly, the huge tragedy of Sept. 11 spread doubts about the future and affected customer spending.

As we head into 2002 it is a good time to ponder our expectations for the landscape industry. Here in the Northeast, we have time to do this during January and February. It is a good time to review the past year in a leisurely manner, and to implement changes for the upcoming season. It always seems like there is so much time in the winter to get many things done, but it is over much too quickly, and still not everything is accomplished. But we greet spring with renewed enthusiasm, energy and ideas. How fortunate we are! The landscape industry is very healthy!

The growth in sales of landscape installation and lawn-and-tree services has been very strong. One of the biggest concerns in the industry is attracting and retaining the necessary labor force to produce the work that is available. Energy and environmental issues are definitely affecting the landscape industry. Water, waste management, pesticide and noise regulations are all concerns that will affect the cost of doing business in the green industry.

The biggest concern for 2002 is the economy. The stock market has been rallying, which is a good sign. Landscape installation and services will still be in demand as businesses try harder to attract tenants, schools and colleges beautify their campuses to attract students, and homeowners improve their personal property. We still feel the industry is strong and will continue to be, even if there possibly might be some downsizing for a time.

The value of professional landscaping is being recognized like never before, especially in light of the value of real estate and the demand for open space. Both will continue to be a driving force in the future. The Associated Landscape Contractors of Massachusetts (ALCM) is very proud of its certification program, which now has over 300 Massachusetts Certified Landscape Professionals (MCLP’s). This certificate recognizes the highest achievement in landscape contracting in the state.

ALCM works constantly to make the public aware of the importance of hiring a certified landscaper, and acts as a resource for customers who are seeking these professionals. An educated public is truly the best resource for continued success.

California Landscape Contractors Association (CLCA)

Jeff Sheehan

President

The world as we know it has been forever changed by the events of 9/11/01. That date will be forever ingrained in our minds and we will reflect on it from time to time as we try to focus on the present and move ahead. Certainly, we have our families and those close to us to consider and nurture, and most certainly there is a wider, more global picture for which we must do the same. We must do all we can to secure the future of our great industry.

As the new year dawns here on the West Coast we will find a recovering but tentative economy. There will likely be more employment layoffs in all lines of work as the population reduces its consumption of goods. What can our industry do to help the situation and what can we do to help our industry? We can become the most professional profession that our buying public has ever experienced. How will that help? Our public’s confidence is in dire need of restoration. What better way to help than to allow the public to feel confident about the landscape projects they wish to entertain.

What invokes that high level of confidence? Being taken care of in a professional manner during all phases of the project, from the first contact to the final clean-up. How would that be a benefit for the industry? Our industry is in dire need of a better image. What better way to help change our image than to become more professional.

One of the chief problems we will face this year, and likely into the future if we turn a blind eye toward it, is the paucity of future employees and business owners. What are we as an industry doing to attract our future? We have job fairs, we participate in career days at the local schools, we have job shadowing and perhaps a few other source point events that do help but are limited in their focus and their success. This lack of future employees is in direct relation to the poor image of our industry. The population does not see our industry as being ‘professional’ and as a result they are directing their children into other fields where they will be considered as such.

Continuing Education programs, voluntary and mandatory, as requisites for licenses or some form of accreditation, will help us to become more professional. The vast majority of our industry has a less than average education level and many have learned merely from the "school of hard knocks." Not a bad education, but one that is deficient in business and management curriculum.

We must establish educational criteria by which our industry can be measured. Criteria that is high enough to gain recognition from the public. Criteria that will illustrate and demonstrate the professional level to which we have risen.

If we are to focus and move ahead, and if we wish to consider and nurture our industry, then we must work together to secure its future. When we professionalize our industry, we will have our answer as to where our future will come from.

New Jersey Landscape Contractors Assocation (NJLCA)

Chris James

President

Although the green industry in New Jersey had decelerated prior to the World Trade Center disaster, Sept. 11 has had a big impact on almost every town and city in the Garden State from a human and economic toll. Every community has lost loved ones; some of our members are as close as five miles from ground zero. NJLCA has set up a World Trade Center Fund and 100 percent of the donations go to the fund. The association is paying all expenses and has donated $10,000 of seed money. Please help by sending a donation to: WTC Fund, P.O. Box 604, HoHokus, NJ 07423-0604.

The following business forecast results were taken from an informal poll at our Oct. 2001 meeting with input from about 60 members:

1)The phones stopped ringing at most companies for one

to two weeks after 9/11 and a number of companies

reported that projects were put on hold or cancelled.

2)The fall of 2001 workload will stay about the same with

some companies believing there will be a drop-off in

design-build and irrigation projects with maintenance

staying the same.

3)For next year there is a real wait-and-see approach with

some optimism.

4)Associate insurance-broker members told us that due to

the 9/11 losses, insurance increases could climb by 25

percent for 2002.

5)Large equipment sales were still strong during the fall

but our associate members felt that three factors were

needed to keep this trend going into the spring 2002

a) a good snow winter

b) improving economic conditions

c) a continued strong housing market.

6)As far as hiring for 2002, the members were split – 50

percent said they would add people, 50 percent said they

would not. Many companies said it was necessary to

increase their marketing budget for 2002, to insure their

share of profitable projects.

7)For pricing - 25 percent said yes, they planned on

increasing prices, 25 percent said they would not, and

50 percent gave no opinion.

As president of NJLCA and a member of ACLA, I sat in on a breakfast roundtable discussion on how to deal with lean times. The companies at this GIE discussion were from New Jersey, Tennessee, Florida and Texas with dollar values from one million to 20 million. The outlook of these companies was much less optimistic, with all of the participants feeling that 2002 would be off compared to the last three years. Every company was looking to cut costs across the board. All had hiring freezes, and no overtime. They were both cutting capital expenditures and expanding existing lines of credit. Everyone said fall and spring workloads were down from previous years.

Being in this industry since the late 1970s, and seeing how bad the recession was in the early 90s, my professional opinion is that all companies should be tightening their spending habits and reducing their debit now. Retain quality employees, cut the dead wood and stay in contact with your clients. There are lots of young companies out there that have known nothing but good times, and what took five or 10 years to build, can crash in 12-24 months. I hope I am wrong.

Washington Association of Landscape Professionals (WALP)

Michael Murphy

President

I am the 2002 WALP president and have been actively involved in the organization for the past 10 years. One of the most successful efforts WALP has promoted is the Certified Landscape Technicians Program, a national hands-on test that recognizes proficiency in the landscape workforce. Testing is administered by state associations and is currently endorsed by ALCA. Washington State started testing in 1992 when WALP partnered with Tacoma Technical College to create a permanent test site.

This collaboration has resulted in hundreds of new CLTs in our state. With the new vision of our Spokane chapter in eastern Washington, a second site was built partnering with the Spokane Community College. We now can offer the CLT test in the spring on the west side and again in the fall on the east side. This gives our membership greater opportunity for success with our CLT program.

Thanks to WALP Executive Director Peter Dervin, the CLT program has a new advanced endorsement called Horticulture Management. This category was created with the partnership of the Seattle and Tacoma Public Utilities. It was designed to qualify best practices and to recognize skills within specialty environmental areas that affect our state, such as water quality, salmon recovery and conservation.

Washington State, like other states, is now experiencing slower economic times. We began the year 2001 with the driest winter I have seen in 20 years. This, of course, led to the ugly word "Drought." Power became the fallout with threats of rolling blackouts. Fuel prices rose. Now we pay more for all our energy resources. However, we once again are in our winter season and the rains have returned.

I believe our members are approaching 2002 with optimism and are diligently planning for a conservative increase in sales during the year to come. Companies are reviewing their operation and becoming leaner. This means some lay-offs but also selecting the very best people to continue with our companies. Opportunity to refinance loans at incredibly low interest rates has caused the residential building trade to remain healthy. I predict a strong rebound for the landscape industry come spring.

The Attack on America has forced us all to take a new look at our country and our purpose in life. The companies that emerge from 2002 will be stronger and better prepared for the new challenges that await us.

Associated Landscape Contractors of Colorado (ALCC)

Fred Wheeler

President

Challenging economic times lie ahead for us all in the landscape industry. Numerous new construction projects are being placed on hold; the bid list is growing and the bidding is becoming more competitive. The commercial office market is overbuilt right now. Buildings are being subleased and in some cases sold before they are even completed. Consumer confidence is at the lowest level we have seen in four-and-a-half years. Foreclosures are becoming a reality again, and bankruptcy proceedings are returning. Thousands of lay-offs across the country have people wondering what lies in our future. Sounds like plenty of dismal times ahead and our future is indeed bleak--or is it?

Generally speaking, I think contractors should maintain a positive but cautious approach to the future. I think this is a time of opportunity for contractors who remain focused on the positives. With interest rates at a 30-year low, the housing market should remain strong. A local homebuilder in Colorado (MDC-Richmond Homes) is planning a banner year in 2002. As fledgling companies fail during these challenging economic times, the labor market for skilled labor should ease, although it may take up to a year or more to realize the full impact.

Growth is essential for continued survival. If you are not moving forward today, you are falling behind. Growth does not necessarily need to be viewed as increased sales/revenue. The kind of growth I am referring to is self-improvement (professionalism). Now is the time to increase the professionalism within our companies so we will become prepared not only to survive but to grow/flourish in the future.

Education is also essential. We must educate the general public on the "value" of our services and we must educate our employees on professionalism. We must refine our estimating, cost management and accounting systems, and field efficiencies, etc. We must enhance our leadership and management capabilities. We must get creative and develop new profit centers, i.e. Holiday Decor, Snow Removal, Annual Color, Hardscapes, Water Features, Spraying, Brush Clipping, etc.

I believe a greater challenge (than the economy) to continued long-term growth is the lack of a qualified labor force. The Bureau of Labor Statistics predicts that by 2006 American business will have a shortage of 10 million employees. This shortage will hit the service sector particularly hard. This leads me to believe that we must build a "company culture" that will allow us to attract new employees and retain the ones we currently have. This is critical for survival and growth.

Rising wages and increasing cost of benefits like medical insurance will continue to plague the landscape industry. However, for the past five years approximately half of the landscape contractor firms in the U.S. have grown in size. Many of these companies have experienced double-digit growth in the past two years, according to a recent survey.

In summary, I think opportunity remains for all, but we will need to work hard to realize it. It will not fall into our laps. Many of us have become "Fat, Dumb and Happy" during the recent economic boom time. Tomorrow begins the real test of time. If you really want to do something (survive, succeed, grow, etc.) you'll find a way; if you don't, you'll find an excuse.


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