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Responding and Reacting

Responding and Reacting

Responding and Reacting

Working closely with all levels of the landscape construction sector gives us as Landscape cost estimating specialists a unique insight of how the sector is reacting and responding to the upswing in activity.

Official figures show that 5,625 houses and apartments have been completed so far this year - up 16pc, or by 801 units, on the same period in 2014. In tandem with this activity within the commercial landscape contracting market has risen significantly. With the reigniting of the construction sector and improvement of private landscaping market, landscape contractors, and indeed the landscape industry as a whole, should take the time to devise a strategy in order to ensure problems that arose around the bubble of the ‘Celtic Tiger’ don’t occur again.

Skilled labour shortage

For landscape contractors there are a number of key issues which must be overcome in order to sustain a profitable business. After several years of vicious price competition, a large number of landscape contractors I deal with are saying their biggest challenge is recruiting trained, experienced staff when they are required.  The downturn had an enormous impact on the numbers employed in the industry. Many sector workers emigrated or diverted away from the industry entirely, seeking employment in more stable sectors of the economy. Added to the fact that the pool of workers was reduced, young people who may have been once interested in a career in horticulture could have change their minds when they saw the state of the industry and were unable to find full time employment a number of years ago.

In order to improve the situation and get the next generation into the industry, we need to encourage them and prove that it can be a rewarding career.  Instead of throwing them in the deep end, an apprenticeship type of scheme like that being trialled by Teagasc, would see them learn new skills gradually over time and gain supervised experience.

With the landscape sector still the most unregulated industry within the wider construction family, industry professionalism is another problem which needs to be addressed. Uninsured, fly by night businesses are causing harm to the entire industry and damaging legitimate contractors. They often face competition from with illegal contractors who win the job on an unrealistic low price and even give take cash payments. The standard of the completed job is often very poor but the homeowner or client may not realise that until the money has changed hands. This type of practice affects the view of average consumer has of the landscaping trade. Again making a comparison to an   electrician, if you need a fuse board changed at home you ill make sure the electrician you get if fully registered and insured. Unfortunately, customers shopping for landscape contractors don’t do the same due diligence as they think anybody can ‘do landscaping’, and they treat you that way. Education of the general public is key to eliminate such contractors and bad practices.  The challenge for reputable contractors is to educate customers so they know what they are getting for their money and the cost of poor workmanship has in the long run.

For the landscape industry a system of registration of contractors is required to weed out poor standards and increase industry professionalism. The Association Of Landscape Contractors (ALCI) is the professional trade association but through no fault of anyone involved, is struggling to get members and recognition from other sectors of the industry. With membership hovering around the 100-member mark, I would estimate that this equates to less than 5% of the number of contractors operating in Ireland. If this membership was to increase, it would be a lot easier to promote it among the wider public. Again making a comparison to the electricians, they have a very strong trade industry in RECI. This is the type of ‘brand recognition’ that is required to drive on the industry. How this is achieved won’t be done in the short term but recruitment of members into the ALCI is the first step on a long road.

Often some non ALCI contractors I know would comment that they don’t see the benefit to joining such organisations as the ALCI. However, I am of the opinion that there is strength in numbers and having one strong voice lobbying for improved standards across the industry can benefit all. Apart from adding more contacts to your network, more information would be shared within the industry. Other contractors maybe be able to help you out in times of need such as sharing labour resources or specialist machinery. Indeed, there would be opportunities for contractors to collaborate with each other. Small contractors joining up together as a joint venture to take on projects that they would normally not be in a position to undertake would be of benefit to all parties and help spread the workload to more businesses. This is a common practice in the construction industry so why not in the landscaping sector?

Now that the adverts are back on the radio about 0% finance on new vans and jeeps we all need to prevent ourselves from getting carried away investing in vehicles and machinery that we don’t require. The lessons and experiences from the past number of years should stick to you if you have navigated the last number of years successfully. Again collaborating with other contractors may reduce your requirements to buy specialist machinery that you may only use a few number of times on a small amount of jobs. Taking an accountants approach by hiring in all your machinery is an another solution that could work for smaller contractors in particular. Hire companies are plentiful and have built up a good stock of specialist landscape equipment. Even if this is used as a short term strategy, you could use it to gauge or estimate if you really require to purchase new machinery. It doesn’t really make sense to purchase a machine if you don’t have at least a quarter of its value lined up for the year. The days when contractors bought €3,000 machinery on a three-year loan at high interest are thankfully over and hopefully never to return again.

Recognition by potential clients of this professionalism along with the skills and experience required to carry out a landscape contract to the highest of standards can only have a positive impact when contractors seek to increase profit margins by raising rates. Pricing pressure, which was the result of a slowdown in the economy and also illegitimate contractors should slowly start to ease with the rise in the economy. Smarter business practices such as selecting the project that suits your operation is also something contractors should consider. During the last number of years, we had a situation where contractors were afraid to turn down projects, even if they didn’t suit them. Smarter decision making a choosing the project that suits your machinery and the skills of you and your staff are key.  Don’t be afraid to let projects pass you by if they don’t suit. Concentrate on winning jobs that suit your business.

Many contractors are not seeing rates rise at all and often tell me that they haven’t moved since 2010. Hearing this makes me nervous of the chances of a long term future for such business. Are they chasing the wrong types for projects for their business? My own opinion is that they are rising marginally each year since 2014 but so too are costs however prices haven't been able to increase fast enough to keep up with rising material costs so in order to combat this and stay in business efficiencies need to be found. Cost control within the business is key to building a sustainable business. The challenge is to determine how we can be all more efficient with our resources, such as labour, machinery costs and general overheads, to still deliver services profitably.

Other problems faced by landscape contractors are caused by our colleagues within the sector. Again recognition of the professionalism of contactors by designers and other consultants such as Architects and Engineers is needed in order to improve standards across the industry.  Communication and respect between all parties would lead to better working relationships and a clearer understanding of everyone’s requirements. It would be a huge step to get not just the contractors involved in the design phase at an early stage but also the nursery producers. The expertise they could bring to the table would be huge and be of benefit to all parties. Designers would benefit by having added input in terms of how designs would be constructed. Plant availability would improve as designers would have up to date information and the nurseries would have the opportunity to promote Irish stock and contract grow stock if required. This would cut down on the volumes of imported stock sourced throughout Europe, provide employment and the opportunity for the next generation of nursery growers to pursue a career at home. 

What often happens on larger landscape schemes is the designers spend a massive amount of time developing high class designs which satisfies the requirements of their clients.  Unfortunately such designs are not included in the original cost plan and so value engineering is required to bring the designs within a notional budget, often set by professions who have no comprehension of the importance of high quality landscape schemes to accompany their high quality buildings. Granite worktops and expensive tiling to bathroom floors are specified in lieu of tasty paving and feature trees and specimen plants. Setting budgets at an early stage even from initial sketch designs could be done in a logical manner if contractors are allowed to participate. The design of the scheme can be often being enhance from input by contractors as they know the mechanics of how designs are implemented on site.

In the words of one contractor who has been around long enough to have survived numerous recessions…How did we survive? Simple, we do good work, we do it consistently and we charge appropriately. If we don’t get the job for the money we need for it, we let it go and chase the next one that suits our business. While the challenge within the industry are significant, I think that they can be overcome them with correct decision making as individuals and working together to promote the industry to our colleagues within the industry and the wider public.