Market Trends: Oct. 2000

ALBANY, N.Y. – Lawn and tree care companies in New York may soon face increased operating costs, changes in business practices and loss of customers due to the state’s new Neighbor Notification Law for pesticide use.

The new law, effective March 1, 2001, features two separate provisions that could negatively affect the state’s lawn and tree care businesses. The first provision will require companies that commercially apply pesticides to give at least a 48-hour written notification to neighboring properties within 150 feet of any spray site. The second provision of the law requires schools and day care facilities to provide parents and staff with a written notice before pesticides are applied on school grounds.

The success of New York’s lawn and tree care companies lobbying to protect their industry will determine the extent of the law. The New York battle could set a precedent for other states considering similar legislation.

New York State placed adoption of the residential and commercial application portion of the notification bill into the hands of its 67 local county governments. This means lawn and tree care companies and associations must fight 67 individual battles to preserve their current business practices.

According to Bob Ottley, president of N. Chili, N.Y.-based One Step Tree & Lawncare, the burden of the new law will fall on lawn care companies that will be required to supply written notification to homeowners, including door-to-door distribution of fliers or mailers. This requirement will increase business costs by 35 percent, Ottley estimated.

Because the new law targets only spray applications, granular applications will not require notification and Ottley predicts that many companies will switch from spray to granular products. "We’re considering a granular weed control product," he said. "I hate to do this because the results are very poor. Also, you can’t practice Integrated Pest Management (IPM) because granular products require blanket applications, which goes against IPM, and pests, weeds and diseases can’t be treated immediately after they are found due to the 48-hour notification."

The law allows contractors to list two alternate dates for spraying in the event of weather-related cancellations. However, Ottley said the law does not address other factors that can alter scheduled application dates, such as equipment breakdowns or technician work absences.

Limited applications also are exempt from notification. According to the law, notification would not be required for spot treatments when the machine being used contains less than 32 ounces of product and the area treated is no more than 9 square feet.

The consensus among New York lawn care companies is that their practices have been targeted to serve as an example. "We feel this is discriminatory," said Don Potenza, president, Lushlawn, Buffalo, N.Y. "The only people who are singled out are the lawn and tree care applicators, not homeowners. This law also infringes on property owners’ rights – they can’t have done what they want on their property when they want it."

The New York State Lawn Care Association is taking a proactive approach to the legislation with the following plans:

• Forming a registry of New York residents who prefer advance notice of applications.
• Hiring an attorney to explore its legal options.
• Hiring staff to develop a packet of scientific data and other information to be distributed to state county legislatures detailing the industry’s side of the story.
• Soliciting monetary support from lawn and tree care companies and associations.

For ages, people have been improving the aesthetics of their home or business environments, but how long have lawn and landscape contractors been in the business of providing this service to residential and commercial clients?

The average landscape contractor has been in business for 17.7 years – 20.7 percent of contractors between 10 to 14 years and 20 percent of contractors between 20 to 29 years, according to a Lawn & Landscape Reader Survey.

Approximately 16.9 percent of contractors said they have been in business for five to nine years, and 14.6 percent of contractors said they’ve been running their companies for 15 to 19 years.

Less than 5 percent of contractors have been in business for 50 or more years and even less – 4.3 percent – are new to the industry and have been in business for less than two years.

DOWNERS GROVE, Ill. – TruGreen turned over its interior plantscaping services to Rentokil for $44 million in a definitive sale agreement pending antitrust clearance.

According to a release from TruGreen’s parent company, ServiceMaster, the sale represents its continued focus on growth and investment in its core businesses, including lawn care and landscaping (TruGreen ChemLawn and TruGreen LandCare brand names).

Commenting on Rentokil’s acquisition, Jeff Mariola, president, Rentokil Tropical Services, said, "Besides strengthening our position in the bolt-on markets, the acquisition provides the strategic benefits of taking us into 15 new cities, which offer additional future opportunities for our people, organic growth and other bolt-on acquisitions."

TruGreen will retain some interior plantcare manaagers to support its lawn care and landscape operations. According to the company, all other TruGreen employees will be offered employment by Rentokil, which had 1999 revenue of $42 million and operates branches in 24 U.S. cities.

The sale is not expected to alter ServiceMaster’s operating results for the year.

LANGHORNE, Pa. – The Brickman Group, one of the largest companies in the landscape industry, acquired two companies serving the greater San Diego, Calif., market. The companies, Brookwood Landscape and Wrisley Landscape, have been merged into one $30-million branch known as Brookwood Landscape, a Brickman Group Co. This acquisition provides The Brickman Group with its first presence on the West Coast

The Brickman Group pursued the California acquisitions because of Brookwood’s and Wrisley’s strong past performance, established management teams and reputation for quality and high client renewal rates, according to a company press release.

Three of the five former owners will manage the operation from San Diego. They will work with Brickman Group Executive Vice President John King who will monitor operations and coordinate the transitions.

These acquisitions give The Brickman Group its first presence in California and are expected to lead to additional company growth in the state.

Brookwood Landscape started in 1972 as a small, family-owned landscape construction and maintenance business in San Diego. Today the firm has become a significant force in the Southern California landscape industry. Its business encompasses residential and commercial projects in both public and private sectors.

Founded in 1977 by Ralph Wrisley, Wrisley Landscape was a landscape contracting company operating primarily in San Diego. In 1990, two of the company’s senior managers acquired the company from Ralph Wrisley. Originally a landscape construction business, the company added maintenance operations a few years following this transaction. Seeking to accelerate landscape maintenance growth, Wrisley Landscape acquired Camino Real Landscape in February of 1998.

CLEVELAND — As more lawn and landscape industry suppliers explore the potential of serving contractors’ via the Internet, many eyes are carefully watching LESCO, who holds a powerful position in the industry because of the significant national coverage its 234 service center locations provide.

To date, the company’s Internet efforts haven’t produced any tangible results. However, LESCO’s corporate restructuring earlier this year created an E-Business Division, headed by Wayne Murawski, a six-year veteran of the company. Murawski still has not announced his specific plans, although he has revealed the company’s intention to leverage the value of its service centers. "Companies that have bricks and mortar – that have assets and people in place when they enter the dot-com world – are better equipped," he pointed out.

Murawski also pointed to a three-fold mission for a LESCO e-business Web site: Partner with established sales divisions to improve customer service; provide new web-based information and service products to prospective and existing customers; and allow LESCO to reach remote locations the company currently doesn’t serve. In addition to direct sales, order status, e-mail and material safety data sheets, Murawski predicts that the site will offer chat rooms, online workshops and access to insurance and temporary labor help.

Although a specific timeline for these web offerings wasn’t available, the company would like to start updating its Web site within six months.

WASHINGTON – The U.S. House of Representatives Agriculture Committee postponed a scheduled bill mark-up that would slow the Environmental Protection Agency’s (EPA) pesticide review under the 1996 Food Quality Protection Act (FQPA).

A spokesman for the House agriculture panel said the mark-up, which was backed by pesticide manufacturers, was postponed due to scheduling conflicts and would be rescheduled. But lobbyists said chances of setting a new date are slim, with Congress facing a heavy workload until it adjourns in early October before the November election.

The bill, sponsored by Richard Pombo, R-Calif., and co-sponsored by more than 200 supporters, would allow pesticide manufacturers more time to produce information about the safety of their products.

Under FQPA, EPA must review approximately 9,000 pesticides to determine whether they pose a health risk for children. Critics say the agency has moved too quickly to phase out some of the most popular and widely-used pesticides, and based its claims on computer models that don’t include real-world data. The FQPA already banned many uses of chlorpyrifos (Dursban) this year.

Environmental groups have pushed to block the bill, contending that the legislation was an industry tactic to delay EPA from banning pesticides that could affect children’s developing nervous systems.

Industry support for the bill has waned in recent weeks, favoring a reintroduction of the bill at the beginning of Congress in January. With House elections a few weeks away, one lobbyist said some members didn’t want to wade into the political issue of children’s health vs. pesticide manufacturers.

The bill is also before the U.S. House Commerce Committee, which is considering holding a hearing on the EPA’s implementation of the FQPA. That panel is not expected to mark-up the bill.

In related news, the Professional Lawn Care Association of America (PLCAA), Atlanta, Ga., addressed the impact of product loss in light of EPA’s recent decision to limit the use of Dursban in its latest ProPoll.

According to the survey, 55 percent of respondent said the eventual loss of Dursban will negatively affect their businesses, citing reasons such as the lack of other, as-effective insecticides and the low cost of Dursban vs. other products. Seventy-six percent of lawn care technicians said they have not experienced customer questions or complaints as a result of the negative publicity surrounding the Dursban story.