Conversation Series: Burt Sperber, Environmental Industries

As part of Lawn & Landscape’s exclusive conversation series, Bob West, editor of the Lawn & Landscape Media Group, spent some time with Burt Sperber, president and chief executive officer of Environmental Industries. These interviews are not designed to provide the history or background of a company, rather to examine how the people at the helm of uniquely successful companies have steered their firms into leadership roles in the professional lawn and landscape industry.

What is the largest company in the green industry? This has always been an easy question to answer, with the obvious response being “Environmental Industries” for as long as most people can remember.

The acquisition environment of the past year is likely to change the answer to that question, however. And Burt Sperber, president and chief executive officer of Environmental Industries, finds the company he founded 50 years ago in somewhat of a new position with new challenges.

While being a dominant force in the landscape installation and maintenance market in Southern California and across much of the southern United States over the past few decades, Sperber’s organization has also been a leader in terms of supporting contractor education and professionalism, developing innovative concepts and business strategies and giving the industry a national presence.

Q. How did the company start?

A. Before the company started, I worked in my family’s nursery and at a local landscape nursery. I had a few dollars and the timing was right for me. I loved plants, moving trees and doing irrigation work.

After World War II, the housing industry was booming across the country. No where was that boom greater than in the part of greater Los Angeles known as the San Fernando Valley where areas formerly zoned for ranching and agriculture were turning into housing tracts. Our family nursery expanded its landscape services to meet the needs of this market. I obtained my landscape architects and engineering and landscape contractor’s licenses and began concentrating on landscape design and construction on apartment projects, industrial and commercial developments and homes.

Q. What have been the keys to EII’s success?

A. Keeping a clear focus on what we do best: gardening, nursery plant growing, moving trees, site and landscape work. I believe EII “wrote the book” on building the kind of business and the kind of company that is the successful model today.

We’ve also been progressive in some of our business practices before they were mandated. For example, we committed from the beginning to being “equal opportunity employers by choice” years before legislation required diversity in hiring. Our commitment to environmental resource management began before recycling and landfill issues were politically motivated.

We don’t advertise these things, but they are part of our basic culture, who we are - this is what we believe is right and what we believe makes sense.

Q. Is the EII business so strong that anyone could succeed when placed in it?

A. I would hope so, although you have to be able to attract the right people. We have identified key leaders, put people in important positions and they seem to be moving forward well and successfully.

We have the strongest and best known brand names in the business: Valley Crest, Environmental Care, Valley Crest Tree Company, Environmental Golf and U.S. Lawns.

We already have tested and established systems, systems combined with a strong administrative infrastructure that we believe goes a long way to reinforce and support our success. We do all of the business tasks ourselves at our corporate headquarters in Calabasas, Calif., - banking and financing, purchasing, legal, insurance, accounting and so on - functions that require a lot of specialized knowledge and that are often the hardest part of running a business.

Q. How would you compare the industry today to the industry at the time of Environmental Industries’ beginnings?

A. There was no “industry” as we know it today back then - just a loosely knit group of landscape gardeners who worked out of and with local nurseries. To be a big company meant you had six to 10 employees. We worked out of trucks and depended upon the local nurseries for all of our supplies, sales leads and technical advice on horticultural problems.

There isn’t much difference in the basic products and services, but the industry’s face has certainly changed. Bigger companies are now the norm rather than the exception.

Landscape companies today have a more aggressive national agenda and, as a result of the recent pairing with Wall Street and venture capital, are more predatory.

Also, customers today are much more sophisticated and knowledgeable about what we do and regard service companies in general as “resource partners” rather than as “vendors.” This is important - we must never lose sight of the fact that we are a service industry, not a products industry.

Q. How has the manufacturer-contractor relationship evolved over time?

A. Our relationships with the irrigation manufacturer have gotten worse. It’s too bad because there is great potential for us to have win/win working relationships. The method used by the manufacturers of irrigation products is basically non-competitive, especially when those products are spec’d into a job. In an “open market,” or where the products are spec’d or “equal,” there is greater room for competitive pricing and more fairness for our customer.

Basically, the landscape company is the test ground for irrigation products. We are the first to know what works and what doesn’t. Because we are working with and using the products on a daily basis, our feedback is critical to the evolution and refinement of product - heads, valves and clocks, for example. Ultimately, it is the contractor who pays for faulty products or mistakes made in manufacturing. Unfortunately, it’s happening all too often. I believe the responsibility for the testing of irrigation products is better off in the hands of the manufacturer, not the contractor.

Equipment manufacturers in mowing, on the other hand, are much more responsive to the contractor. The irrigation companies still have a long way to go. But however many challenges we may have with the irrigation industry, we also have unlimited opportunities to communicate our needs and work together, which is something I would like to see happen.

Q. When did you first recognize that the green industry offered the type of growth potential that EII has capitalized on?

A. First of all, let me talk for a minute on “Green Industry” because this usage of this term is one I consistently take issue with.

I’m not sure the term “green industry” refers to what our industry does. We are in the landscape industry.

For many years, the term “green” has been used by the media and government when referring to environmental politics or ecology-friendy agendas. While Environmental Industries has a long-standing commitment to environmental resource management as an integral part of what we do, it in no way makes us a “green” company. The final result of all our labors may be more in line with calling us the “beautification industry.”

As we look to the millennium, one of the things we might consider is to look to our roots. We are landscape gardeners - an honorable profession and one that has been historically celebrated with prestige and status. Let’s not use the word “green.” What’s wrong with being a “gardener?”

To your question about capitalizing on business growth opportunities, as businessmen, we look each year to surpass ourselves, not our competitors, and, for the most part, we are able to do so.

This year, without acquisition, EII is enjoying over 20 percent growth, which translates to about $75 million.

Q. What key trends do you see shaping the industry today?

A. No question that technology in general will have the longest-term impact on our business, but consolidation is having the most immediate impact. When the mergers and acquisitions were announced last year, there is no question that at that time we all realized our industry will never be the same.

This is the second time consolidation has hit our industry. When it was tried in the late 1960s and 1970s, it wasn’t a success, but the companies then didn’t have the benefits of today’s experience, market leadership or business climate and funding that exists today.

I’m going to be interested to see if there will be long term success for the new companies if they have no passion for the landscape side of the business. This is a service business, a landscape service business. A commitment to a personal relationship with the customer is of utmost importance, and, ultimately, the most essential sustaining element for ensuring long term success.

Q. Is this trend of consolidation good or bad for the average contractor?

A. I think the small contractor will have more problems than the larger ones. This is why we bought U.S. Lawns, our franchise landscape maintenance company. U.S. Lawns provides the owner-operator of a small landscape business an opportunity to be part of and share competitive advantages with a larger national company, yet retain ownership. U.S. Lawns is a strategic partner in our strategy for market saturation, which I think might be a threat to consolidators.

Q. Does it bother you, someone who built the industry’s largest company steadily for 50 years, to see companies today build an entity so rapidly simply via acquisition?

A. No. The stockholders spent hundreds of millions of dollars to do what they did. Some of the companies purchased through the mergers will be great long-term assets for them; but some will not. Whenever you buy as many companies as they did, and in such a short time, it is tough to digest all of the cultural and organizational differences. I’m sure it will take some time before they’re fully integrated. They will still have a long haul in developing a corporate team spirit, camaraderie, culture, ethics, buying and selling techniques and, most importantly, getting an information system in place.

On the plus side, these new, big companies should be formidable competitors who will help keep us all sharp. I wish them luck. Eventually, we’ll all be measured against their success as well as their failures.

Q. How do you view EII’s role in the industry because of its size and success?

A. Our success has evolved through a half-century of solid teamwork, an ambitious work ethic, a clear vision and agenda about doing quality work, selling quality products, giving great customer service and raising the bar for performance.

I believe we do some of the finest work in the industry nationwide and hope that we will always be regarded as a leadership company and industry role model. We will continue to “leapfrog” in areas such as university scholarships, community service and corporate citizenship. I hope that through initiative and good planning, EII will continue to lead the industry by being ahead in our thinking.

Q. How important to you is it that EII has always been a family-driven company?

A. Environmental Industries is a family of companies. Our divisions are called “sister companies” and we often refer to EII and its divisions as “… a member of the Environmental Industries Family of Companies.” I do have two family members in EII. My brother, Stuart, runs the nursery division (Valley Crest Tree Co.) and my son, Richard, runs the landscape division (Valley Crest). Everyone who works for EII, as well as the hundreds of people I’ve worked with over the years who have all helped build our company, is considered a member of EII’s extended family.

Many of our field people have been with us for more than 20 years; some have brought their family into our company and we are proud of our extensive tenure list and the multiple generations who work for us.

Q. What are the keys to the industry’s future?

A. Same as the past: Good people. Shared vision. Passion. Knowledge and technology. As long as there are quality long-term people focused on doing quality work there will always be a market for good quality landscapes.

Q. What are the keys to Environmental Industries’ future?

A. Service. Work ethic. A continued commitment to sound economic principles and fiscal responsibility. An ability to stay focused on what we know so well and do it with meticulous attention to detail. A continued commitment to expand strategically, deliberately and with purpose. I hope that if EII’s presence were to be illustrated by a graphic, a map for example, the company would show its future growth by density - market saturation in areas we are already in - rather than as dots spread all over a map.

No one yet comes close to having the type of company we have, or building the types of projects we do.

Q. What will the industry be like 50 years from today?

A. I can’t see that far, but there are a remarkable array of issues on the table -everything from the long-term influence of consolidation and the public marketplace to operational issues, competition, pricing and workforce resources. How these issues come together over the next several years could say a lot about how our industry makes its way into the 21st century.

Q. If you could go back and avoid or not do any one thing that you’ve done in this industry, what would it be?

A. Tough question. Sure, there were plenty of mistakes made in our learning years - we were a growing company. Today we are still learning, still growing.

What we learned from our mistakes was not to repeat them. We always recovered and found we were better at how we approached a decision the next time because of our experience. For example, we took EII public in 1969. The public market is good for many companies, but for us it was a mistake. The thinking behind the offering was great, but the timing was terrible. We bought the company back 10 years later.

Q. What is the future of EII without Burt Sperber?

A. EII is not Burt Sperber. You know, I really believe we have built a fine company. We take great pride in our reputation and enjoy the respect and credibility of our customers and our peers. I believe that EII’s growth blueprint will provide my son, Richard, and his management team with a strategic action plan that will take the company to new heights in both quality and size. With the ever-expanding resources that knowledge and technology provide, Richard - and the entire company - have a better set of tools today than I had when I started.

Q. What will Burt Sperber’s legacy be?

A. I don’t know. I hope I will be looked upon as a person who not only grew EII but, in the process, helped shape the horticultural service industry’s future. I hope that one of my personal initiatives will succeed - that is the return to prominence in this industry of the term “gardener.”

I hope that Burt Sperber will be viewed as a visionary, as a person who took a small mom-and-pop company and grew it to a position of leadership; a person who created a company that is responsible for some of the most outstanding landscape work ever done. What more could I ask for as a legacy?

I believe EII is a quality managed and profitable landscape company that stands alone as a successful business model for a national operation. EII is a company that cares about its people and provides a fine place to work. EII has become a career home for more than 5,000 people who display a passion for their work, passion for productivity and passion for quality and service.

I hope that the quality of our people and their contributions to our industry is my greatest legacy.

The author is Editor of Lawn & Landscape magazine.