As the economy continues to oscillate between “things are getting better” to “batten down the hatches,” contractors are left wondering what they should do about their fleets. Some are buying at zero-percent interest to keep up with growing businesses; others are mothballing their trucks since they aren’t getting much use anyway.
Lawn & Landscape talked to contractors, dealers and manufacturers to get the latest information on the state of truck and trailer purchasing.
Business is growing
Andy LaVelle, vice president and general manager of Hayward, Calif.-based tree care company Aborwell, says business is good. The firm covers the San Francisco Bay area, as well as San Diego. Founded eight years ago, they have 80 employees and pull in about $12 million a year.
Arborwell has 40 vehicles in its fleet – Internationals, Ford pick-ups and chippers by Birch Bandit and Vermeer. LaVelle says he just bought a new bucket truck, a new chipper and a used crane to handle the increased business he’s seeing. And in the next three months, he’ll likely buy another truck and chipper. “We’re definitely still expanding. We’re still in growth mode,” he says.
The economy has even helped LaVelle get deals on purchases. “You’ve got to take advantage of that, just like our clients take advantage of the economic climate right now. It’s really much less expensive.”
Holding off
Andy Gagnon, owner of Woodland, Calif.-based Andy Gagnon Landscapes and Cricket Pools, says the current economy has him mothballing a few of his 14 trucks, and not even thinking about buying any more.
“With the slowdown, we’re not using all of them. We’re just going to sit on them until the economy turns around,” he says. “We’ve got more than enough in our fleet for what we do.”
That fleet consists mostly of pickups, with six dumps and about half a dozen trailers. Gagnon says he stays local on his construction jobs – rarely do the trucks travel more than 10,000 miles in a year – so his equipment lasts long anyway. Add to that a downturn in business, and the trucks and trailers aren’t getting much wear and tear.
His $2 million company does residential landscaping and swimming pool construction with about 20 employees. But landscaping sales have dropped a bit this year, and pools are down 70 percent.
“I don’t foresee any replacement in the near future,” he says.
Robert Stewart is president of Yards of Pleasure, a retail nursery and landscaping company in Holbrook, Mass. He and a dozen employees do maintenance and installations, pulling in between $1.5 and $2 million a year.
Stewart’s fleet comprises two pickups and five work trucks – six-wheelers and one-ton dumps. He tries to get about 10 to 12 years of service out of his trucks, and replaces them on a rotating basis.
He has seen sales in both his retail and landscaping divisions drop 10 to 15 percent, making his question whether he needs to replace some of his trucks now or if he can stretch them a bit further.
“This year, we may put it off for one whole year,” he says.
But when he does buy a new truck or trailer, he buys them outright. “We don’t typically borrow a lot of money. We own everything lock, stock and barrel,” he says. But lately, with the dealers in his area offering zero-percent loans, he’s been taking them up on their offers. “Any accountant’s going to tell you: ‘Use their money, it’s free.’”
General motorsNew vs. Used
Stewart always goes for new trucks. “I don’t want to get someone else’s problems,” he says, adding that fewer maintenance headaches and lower cost also come with buying new vs. used. “If I buy a three-year-old truck, I don’t know where it’s been.”
LaVelle uses primarily new service trucks. The company does mostly commercial work, and property managers expect a certain image when his crews roll up, he says. “We consider ourselves a very professional tree care company. They expect to see a new truck with a new paint job and guys in uniform,” he says. “It needs to look sharp.”
And while he’s been able to buy new trucks this year thanks to increased business, the purchases were more scrutinized than they would have been in the past.
“The economy has impacted us. We’re more conservative,” he says. “It used to be we’d get the feeling we might need another crew, then do a cursory glance, and say, ‘Let’s do it.’”
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Mark Bonek, division sales manager, Elkhart, Ind., from Wells Cargo offers his tips on how contractors can buy the best trailer for their money, and keep it running longer. “It’s the structure of the trailer – things you can’t see, chassis – that’s what’s going to make the trailer last a long time,” he says.
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Andy Gagnon says he buys a lot of used trucks to save money. He scours Craigslist, the newspaper, dealer specials and auction listings for good deals, especially when he doesn’t have an immediate need – he recently bought a Ford 650 for $15,000 off the sticker price. “If we can keep an eye out on used equipment, and we don’t need it today, we can find some pretty good deals and save some money,” he says.
Gagnon realizes used equipment might come with higher maintenance costs, but he has an ace up his sleeve: An in-house maintenance department, complete with lift. “We’ve replaced engines and we’ve done clutches,” he says.
“We’re versatile in the people we hire; they’re not just landscapers.”
Dave Coberth, new truck manager at Adobe Truck and Equipment in Tucker, Ga., says contractors should take maintenance into account when they’re looking to buy a truck – whether it’s brand new or just new to them. A brand new vehicle can cost twice as much as a similar used model, but fixing up a three-year-old truck could eat up that cost difference quick.
Adobe offers a tiered fixed-cost maintenance program with its new trucks. Contractors purchase a certain level of coverage, and the cost – between $3,000 and $12,000 – is rolled into the finance contract. In return, scheduled services like inspections and filter changes are pre-paid.And trailers, while maybe not as sexy as something with a Cummins engine, can still be a costly line item. A trailer set up for irrigation services can run $3,000, and a custom job with lots of bells and whistles can run up to $70,000.
Pulling up the rear
Mike Bermes, chief development officer, Novae Corp., says contractors have delayed purchasing trailers this year. “We’re seeing a significant reduction in major purchases by contractors,” Bermes says. Significant in this case means sales are off 40 to 50 percent from the same time last year.
“The spring rush that’s normally there was not there. There was some, but those were the extremely well-heeled companies,” Bermes adds. “Everybody’s been holding on to their cash in a very substantial way. It’s taking a very long time for contractors to feel comfortable enough to make that new purchase.”
He predicts this fall will be better than last year, which was “one of the worst.”
“In October, it was as if someone turned off the spigot – there were no orders,” he says.
But sales are starting to show signs of life; Bermes says he’s “cautiously optimistic” about this fall.
What is increasing, he says, are replacement parts purchases. Axels, brakes, lights and tires are moving, as contractors work to repair the equipment they already have on hand. But everyone’s looking for a deal.
Bermes adds: “When they do come in and they are going to buy something, they are shopping very, very hard.”
The author is associate editor of Lawn & Landscape magazine. Send him your truck purchasing tips at cbowen@gie.net.
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