Snow Days

SnowExAs the economy sputters along, companies providing snow services say they need a good winter to buoy them through the season. Lawn & Landscape magazine talked to contractors about how they’re working to make sure this winter is a profitable one.

Winter Margins
Jason Benson, shop manager at Kimball Property Maintenance in Draper, Utah, says his company’s 45 plow trucks pay the bills for summertime mowing, and the coming winter is vital.

“That’s where we make all our money to survive and live on all summer,” Benson says. “We lose money all summer long, and then in the wintertime is where we make our money.”

Kimball does mostly large commercial accounts – big shopping plazas and property for larger businesses – and then works on landscape maintenance in the summer. The profit margins on the winter work are much better, Benson says.

Expected Margins Companies offering snow services expected an average profit margin of 9.3% this year. Nearly half of contractors say they expect profit between 6% and 15% this year. 27% say they expect profit margins of between 10% and 15%.

The company brought in $11 million last year on a mild Utah winter. They were able to bring in the same revenue as 2007, he says, but had to get more accounts. “It was fair. It wasn’t as good as the winter before. The winter before was record-breaking for us,” he says.

Benson says he equips his fleet with Boss plows and SnowEx spreaders.

The company uses about 100 subcontractors for snow removal in season and rents a lot of equipment – back hoes, skid steers and wheel loaders. In all, Kimball has up to 250 in the winter. To keep tabs on that many employees, the company has managers for specific areas.

“They’re in charge of a certain area for sidewalk guys,” Benson says. At large commercial sites, one also manages the crews. “He’s the guy who babysits and makes sure they sign in and sign out and makes sure they get paid.”

Working for the Railroad
Paul Cove is depending on a good winter, too. Snow removal makes up 90 percent of his business – he clears a terminal for CSX railroad that houses 5,500 automobiles as they wait to be shipped across the country by truck.

He uses mostly Avalanche plows – he likes the steel edges, he says – and has been plowing snow since 1972. He and his crew, between four and 12 employees in the winter, gather the snow up in the aisles and then use huge blowers to send it over the fence.

Cove’s business, East Brookfield, Mass.-based Paul Cove Enterprises, is almost entirely for the railroad and reliant on the struggling auto industry. This winter is paramount. “It’s very important. It wasn’t as important before the economy was so bad,” he says. “Snow is becoming a bigger part of my business than it used to be. Our client list keeps declining.”

He pulls in between $150,000 and $350,000 a year.

And as business stays slow, he’s not buying new equipment, and is relying on his 16-year relationship with the railroad to get him through.

“When the economy is a little bit better, people are less apt to go looking,” he says. “The bean counters aren’t on them as much.” 

 

Snow Stats 38% of landscape companies say they offer snow removal services. On average, 5% of a company’s revenue comes from snow and ice removal. Understandably, firms in the East and Midwest do more – 8%. On average, companies saw gross revenues from snow services jump 20% from 2007 to 2008. The net change was 12%. Companies spend, on average, more than $21,000 a year on plows, snow throwers, salt and spreaders. 2.6% of firms said snow removal would be their fastest-growing service in 2009.

The author is associate editor of Lawn & Landscape. Reach him at cbowen@gie.net.