BUSINESS FORECAST: Emissions: Impossible?

Just what you need – another price hike.

But look deeper into the new Environmental Protection Agency antipollution rules for lawn mower and handheld equipment engines and you might be anxious to pull out your budget. Phase 3 exhaust emission regulations for small spark-ignition engines (less than or equal to 19 kW) will take effect beginning in 2011, but first-time evaporative emission controls roll out in ‘09. Now’s the time to start thinking about what this important legislation means for your riding mowers, zero-turn mowers, string trimmers, edgers and other handheld equipment – and your overall business.

Signed Sept. 4 and published Oct. 8, the final EPA “surf and turf” rule – so called because of its applicability to lawn equipment as well as pleasure boats – is expected to achieve a 95 percent reduction in emissions since 1997. Generally, these standards mirror the California Air Resources Board (CARB) regulations put in place for the ‘07-‘08 fiscal year. While it’s true that air pollution is a more urgent concern in California than in other areas of the country, CARB representative Parke Terry says emissions reductions should be a lawn and landscape business concern throughout the country because of customer demand. Landscape businesses are tapping into this demand already – 11 percent of landscape contractors say their businesses are adding green services in 2009, according to Lawn & Landscape research – but whether your customers are asking for it or not, our industry will soon be expected to comply with the EPA’s standards for the cleanest, greenest engines in lawn care history. How will the rule affect your equipment’s power and efficiency? And what about cost? Is it the right time for your business to approach jobs with alternative types of equipment?

Quantity vs. (Air) Quality

Zak George describes Fort Collins, Colo., as a young, middle-income town. With a population of around 120,000, Fort Collins is just small enough for George to be familiar with some of the other lawn care services in town – more than 70 in all, including zero-emissions franchise Clean Air Lawn Care. George is eager to make a distinction between his business, Zak George’s Landscaping, and Clean Air Lawn Care.

“They’re not a direct competitor,” he says. “They’re in it to make the world better.”

This might be so – according to Clean Air’s Web site, their mission statement is to “change the way America cares for lawns by empowering … local owners and managers to deliver an exceptional lawn care service that improves the quality of life in their communities” – but Zak George’s Landscaping is no slouch when it comes to environmental stewardship. He switched from a truck to a Toyota Echo economy car and went from 10 miles per gallon to 42 mpg. George’s irrigation services are reducing clients’ water consumption (including the local Target store) by up to 67 percent.

Interestingly, George argues that the volume of lawn care he provides makes his business not only more profitable, but also more environmentally conscious. “If a 60-inch mower uses as much gas as a 32-inch mower, that’s green,” he says. “You’re doing twice as much work with half as much fuel.”

It helps that equipment’s getting better and better, George says. “Fuel injection helps,” he adds. “But it’s all personal preference for business owners.”

But new regulations could affect the performance and the fuel-efficiency of engines, says one major manufacturer. According to the EPA, fuel injection and catalysts, in addition to general improvements, are expected to be part of the change in new Class II equipment, which includes riding mowers and zero-turn mowers and accounts for $4 million in sales per year. Gasoline-powered walk-behind mowers (both commercial and homeowner-grade) represent around 15 percent of the small SI nonroad engine category.

George hopes new equipment won’t affect his efficiency. Clean Air LCOs can take half a day to service a single residential property, George says, while his gas-powered mowers speed through a day’s work at 13 mph. There’s a fine line, he says, between doing what you can for the environment and going too far.

“Right now, I think Clean Air’s a little early in the industry,” George says. “Down the road, they probably have a better chance. It’s a cool concept, but it’s tough. Those types of business never last long.”

By using higher-octane fuels, keeping filters clean and minimizing idle time, George feels his business does its part. But, he says, he’s primarily a profit man. “We’re into mowing as much as we can,” he says. “The more we produce, the better off we are.”

Pay to play

It’s unclear if performance will be affected by new emissions standards, but cost will almost certainly be impacted, says Kris Kiser of OPEI.

“There’s going to be a cost component,” he says. “It’s going to cost more to build cleaner engines. The cost of compliance is real. But we don’t see it effecting sales appreciably. The cost change will come over time – but you’ll save money on fuel.”

Manufacturers will meet emission targets by creating engines that burn less, Kiser says. For some, it’s less a hardware issue than a software issue. All manufacturers will be required to build test facilities for their equipment, a large expense that doesn’t even include the testing procedures or certification/warranty fees. Cost will vary by manufacturer, and a few might be able to absorb costs without passing them on to customers.

Larry Rohlfes, CAE, assistant executive director of the California Landscape Contractors Association, testified on Tier 2 emissions standards in the state of California. For hearings, manufacturers put together a coalition of groups such as CARB, Rohlfes says. Within that group, suppliers were divided over the impact of emissions standards on equipment, buyers and the industry as a whole. “There was a group of manufacturers who said, ‘This is bad,’” Rohlfes says. “There was another group who said, ‘This is good.’ But there were manufacturers who were prepared for the change and manufacturers who weren’t.”

The California ARB estimates commercial mower costs will go up about 3 percent following the implementation of the new standards for riding mowers in 2011. “I don’t think you’ll see any one manufacturer’s prices much higher than another’s,” Kiser says. Across the board, the machines themselves are dramatically different than they were before emissions regulations started in 1997, Kiser adds – and it’s a big transition for the outdoor power equipment industry.

“It’s not your grandfather’s lawnmower anymore,” he says.

Still, regulations aren’t making things any easier for equipment manufacturers. “Our official position is it’s challenging,” Kiser says.

The Kindest Approach

Few business owners strive for “zero,” but Steve Kilbride wakes up every morning figuring out how to get there. Two years ago, Steve Kilbride founded Kindest Cut Lawn Care in Atlanta to have his cake and eat it too. He marketed a zero-emissions lawn care service, but also provided standard lawn care to reach maximum market share. The small business has grown 75 percent since inception. Kindest Cut promotes its zero-emissions lawn care services in the community, and as a result, has a reputation for eco-friendly turf practices. But he stresses that it’s important to let practicality dictate his marketing.

“I’m not anti-gas mower any more than I’m anti-automobile,” Kilbride says. “Both are useful and necessary tools. But just as you shouldn’t hop in your car to drive a mile for an errand, there’s no reason to use a gas mower on a modest and reasonably level lawn. We offer zero-emissions lawn care as an option to those who want it and want to make the commitment. Some grasses like zoysia need to be cut weekly with a manual mower. There are instances – overgrown lawns, steep slopes, clients that only want a monthly cut – where a gas mower is a necessity. As long as a manual mower is not an option, why not get a piece of the business?”

And Kilbride says competitors are asking the same question.

“I regularly get calls from competitors who are curious about our approach – mostly because their clients have complained about the noise they make,” he says. “I also get calls from across the U.S and Canada from folks wanting to start a similar business.”

Again, though, practicality still drives his business. “In a global economy, we need to keep American manufacturers competitive while at the same time protecting the environment for future generations,” he says.

Peter Estournes, vice president of Gardenworks, Inc. in Healdsburg, Calif., saw similar benefits for his business in a battery-powered mower.

“Some of our jobs are very small lawns in densely populated neighborhoods,” he says. “I started thinking about the 21” mowers we use and the noise we have when we fire our mowers up and use them for five or ten minutes and shut them down.”

Estournes read about the Neutron battery-powered mower in a pamphlet and, after learning from the company’s Web site that a 19” mower could cover up to 2,000 square feet on a single battery charge, he decided to give the machine a try. He purchased the mower plus a spare battery in Sept. for about $800.

While the mower is plastic and hasn’t quite held up to the frequent activity, Estournes says the company sent him replacement handlebars when the machine was cracked on the job, and the lightweight plastic frame makes operations more efficient.

“One man can carry the machine when the battery’s taken out,” Estournes says. “The mower only weighs about 19 pounds.”

He plans to monitor the machine over the next 10 months to measure its year-long performance. Overall, however, he believes it’s a smart business experiment – one that others should try for themselves.

Terry believes battery-powered sales will pick up in earnest during the next 10 years, beginning in California and extending to the rest of the country.

“I think you’re going to see increasing interest in both customers and landscapers in California in battery-operated lawn and garden equipment, assuming manufacturers can produce what’s needed,” Terry says. “I see California leading the nation in that area. Los Angeles played around with a battery-powered backpack blower, which turned out to be far too heavy, but considering all the battery technology, it seems almost inevitable that it’ll migrate to lawn equipment. I see increasing use of battery technology for lawn equipment 10 years ahead.”

Kiser believes there’ll always be a zero-emissions debate. “But even with a battery mower, you have to charge the battery,” he points out. “That energy comes from a coal-fired power plant.”

Overall, the best opportunity for your business is to promote your environmental stewardship. “The amount of carbon emitted by the mower is greatly outpaced by the amount of carbon the lawn will absorb and sequester,” Kiser says. “Lawns are starting to be viewed a little more positively.”