Market Trends: Sept. 2001

By observing weather patterns and trends, the National Weather Service forecasts above or below normal temperatures and precipitation for various U.S. regions.

For instance, in Georgia, the average December temperature last year was 11 degrees below 1999’s temperature, 13 degrees below 1998’s and 7 degrees below 1994’s, pointed out Gil Landry, professor of crop and soil sciences, The University of Georgia, Athens, Ga. Since The Farmer’s Almanac predicts a harsh winter for many states based on statistics like Georgia’s, this doesn’t bode well for warm-season grasses’ chances of surviving winterkill in 2001.

Low-temperature (below 25 degrees Fahrenheit) stress and fungi, winter desiccation and traffic most commonly cause winter injury or kill for these turfgrass varieties, Landry pointed out.

In addition to paying attention to the relative killing temperatures of warm-season species (above), contractors can follow a few preventative practices to minimize injury, including maintaining good soil moisture, preventing desiccation with irrigation, and minimizing traffic and cultural injury.

IN STYLE
Faux Grass Is Unnaturally Green

This summer, more suburbanites are installing what National Gardening Association Research Director Bruce Butterfield calls "a toupee for your lawn" – artificial turf.

While it’s hardly a mass movement, phony grass spending is expected to rise 25 percent this year, the Wall Street Journal reported, amounting to $250 million worth of turf that takes just a blow-dry to maintain.

Though the fad has the ability to put landscape companies out of business if it continues growing, contractors should remain hopeful. The fake stuff costs nearly 10 times as much as the real deal – about $10 per square foot. Consequently, a 2,000-square-foot plastic yard costs $20,000 vs. its natural counterpart, which costs $2,000 for installation, plus the price of a sprinkler system and ongoing maintenance.

Additional downsides to artificial turf include the fact that green grass stands out like a sore thumb when neighbors’ yards affected by winter or drought turn brown. Environmentalists are quick to point out that the product also is bad for biodiversity.

And based on the negatives alone, some neighborhood groups have adopted unofficial policies against faux grass or banned it entirely, such as Sun City Hilton Head in South Carolina. "It’s like painting your house purple," exclaimed Steve O’Donnell, Sun City vice president. "It’s just not the presentation you want."

MERGERS & ACQUISITIONS
Brickman Acquires Duke-Weeks Landscape

LANGHORNE, PA – Scott Brickman has steadfastly maintained that The Brickman Group (No. 5 on Lawn & Landscape’s 2000 Top 100 List) should not be considered a consolidator, but that hasn’t stopped him from aggressively pursuing strategic deals. The company’s latest deal is its biggest to date – it acquired $35 million in landscape work from Duke Realty.

Duke Realty, formerly known as Duke-Weeks, manages and develops more than $800 million in commercial and multi-residential properties across the country and traditionally managed the landscapes on its properties through a combination of in-house staff and outside contractors. The Brickman Group assumed responsibility for this work immediately upon closing the deal, and Mark Flowers, the former president of Duke-Weeks Landscaping (No. 22 on Lawn & Landscape’s 2000 Top 100 List), joined The Brickman Group as manager of its Atlanta regional office.

"This acquisition is ideal for both companies," explained Brickman, president and chief executive officer. "It allows Duke-Weeks to focus on its core real estate business while partnering with the Brickman Group to provide their tenants high quality landscape and snow removal services."

"We chose to negotiate exclusively with The Brickman Group because we were looking for a long-term partner who could provide us with the highest level of quality and service, and they are clearly the industry leader," related Gary Burk, executive vice president of Duke Realty’s Construction and Property Management Operations.

The deal expands The Brickman Group’s presence in Indianapolis, Atlanta, Raleigh, Chicago, St. Louis, Dallas and Cleveland, while providing its first work in Nashville, Minneapolis, Cincinnati, Columbus and Greenville, S.C. "There’s a beauty to buying a company to go into a new market because then you’ve got everything right there in terms of the jobs, the people and the equipment," Brickman related. "Now we’ve got a lot of business with one customer in these markets, which gives us the foothold to grow our presence there."

This acquisition takes the Brickman Group’s estimated 2001 revenue to more than $300 million with 88 branches in 25 states. Most of the work it acquired is maintenance work, although there is a fair amount of installation work as well.

INDUSTRY NEWS
ServiceMaster Income Down, Revenue Up

DOWNERS GROVE, Ill. – ServiceMaster reported a 23 percent decrease in second quarter earnings to $51 million, partly due to TruGreen ChemLawn’s and TruGreen Land-Care’s higher labor and overhead costs.

These escalated costs, which were put in place to support expected increased revenue, hurt lawn care profits, ServiceMaster reported. And the decreased effectiveness of telemarketing, combined with the softening economy, compounded the issue.

But even though earnings were down, ServiceMaster revenues were up 4 percent to $1.65 billion in the second quarter compared to the same quarter last year. Lawn care revenue also was up from last year, reflecting the realization of price increases, growth in ancillary services and the delay of first quarter production into the second quarter.

"We are disappointed with the results of the second quarter and how they affect our view of the full year results," said Jon Ward, ServiceMaster president and chief executive officer. "In the quarter, we also began to see indications that a slowing economy is affecting certain business offerings. In TruGreen, slower growth in the residential lawn care business and unprofitable contracts in the landscape construction business continue to put pressure on results. Our leadership team is looking into controlling costs, reducing overhead and improving labor productivity."

The TruGreen segment reported combined revenue of $475 million for the second quarter, up 1 percent from 2000. On the down side, the segment’s operating income fell $11 million, or 18.6 percent, in the second quarter from $59 million to $48 million. For the first half of 2001, TruGreen reported revenue of $733 million, consistent with the $732 million reported in 2000, while profit was down 28.6 percent from $91 million to $65 million.

IN THE NEWS
N.Y. County Reinstates Notification Law

LONG ISLAND, N.Y. - The Appellate Division of the State Supreme Court interrupted lawn care operators (LCOs) in the middle of the summer spraying season to reinstate the pesticide notification law in Nassau County.

Legal challenges by lawn care firms blocked implementation of the controversial law, which requires commercial pesticide applicators to give 48 hours notice to anyone living within 150 feet before spraying and took effect in March in Suffolk, Westchester and Albany counties.

Even though the law was passed statewide, it only applies in counties that choose to adopt it "as is," barring them from modifications. Only Suffolk, Nassau, Westchester and Albany counties adopted the law thus far, and legal challenges are pending in three of the four counties.

The appellate court’s three-judge panel did not explain its one-paragraph order. The final court decision is expected in mid-2002.

Nassau officials immediately started enforcing the rules, including seeking fines against violators. A lawyer for several lawn care companies challenging the law said the ruling "throws the industry into chaos" during its busiest time of year. "This is going to create real problems for Nassau County landscapers," said attorney Fred Eisenbud, adding that the firms will continue to pursue the legal case in hopes of invalidating the law before next summer.

State Supreme Court Justice Stephen Bucaria ruled in April that Nassau County should have conducted an environmental impact statement before approving the local law and implementing the state’s rules. However, the appellate court decision overturned Bucaria’s ruling, reinstating the law until the judges decide the case. Additionally, Suffolk and Westchester judges rejected Bucaria’s argument in similar lawsuits filed by lawn and tree care companies.

RESEARCH UPDATE
New Bluegrass Takes the Heat

DALLAS – What’s hardy enough to stand the South’s heat and sun, but soft enough to walk barefoot on? A new experiment in turf that is turning Southern U.S. homeowners’ heads.

Reveille, which crosses Kentucky bluegrass with Texas native bluegrass, was developed by James Read, Texas A&M turf breeder, and during tests showed heat and drought tolerance, insect and disease resistance and stayed green year-round, Read said.

"It may never replace Bermudagrass and St. Augustinegrass as the basic turf in this area, but it certainly has a much-needed use we haven’t had before," explained James Mafee, Texas Agricultural Extension Service turfgrass specialist.

Read’s 20-year search for a cool-season grass suitable for Texas conditions intensified once he turned to native grasses in the late 1980s.

The new turf, which requires good drainage, doesn’t mind the sun, and is a slow grower, will be available as sod late this year in very limited quantities. "We need another year to produce enough sod to supply consumers," he said.

Renew Job Passion & Warm Up A Cool Economy

NEW YORK – When the economy runs cold, business owners can tap into the latent springs of employees’ passion for their jobs to offset uncertainties.

Richard Chang, author of The Passion Plan at Work: Building a Passion-Driven Organization, believes passion can deliver a crucial advantage. He offers a seven-step model for creating passion-based company change.

• STEP #1: Start from the heart. Overcome traditional biases against business emotion (other than fierce competitiveness) and embrace passion as a source of success. View the heart as a reserve of hidden strength instead of weakness.



• STEP #2: Identify core passions. Examine the forces that motivate employees, individually and collectively. Evaluate business competencies, strengths and growth potential. Then, consider the feelings of managers, staff and clients, and look for connections between emotions and company performance.



• STEP #3: Clarify purpose. Define reasons for existing. When business purpose is aligned with core company passions, a viable means of pursuing and sustaining them exists.



• STEP #4: Define actions. After defining business passions and purpose, create a plan for getting there.



• STEP #5: Perform with passion. When leaders undertake discovery and planning processes privately, changes introduced come as a shock to those both inside and outside the organization. Even when employees are aware of the changes in advance, they aren’t prepared to accept or benefit from them. To ensure a working transition as plans are deployed, be truly aligned in business efforts. Leaders must not only introduce change, they must exemplify it.



• STEP #6: Spread excitement. Once passion begins to roll, it picks up speed and takes others willingly along for the ride willingly. Employees are eager to join and partake of the energy passion creates. Organizations that are sensitive to this effect can capitalize on it.



• STEP #7: Stay the course. Don’t get carried away by success. Remain close to inspiring passion and seek to preserve it.