Pain at the pump

Editor’s note: Not all percentages will equal 100% due to rounding. Results are based off of more than 300 respondents.

Hollie Arnell

Owner of Roots Landscape Design and Consulting // Boise, Idaho

Hollie Arnell says Idaho is one of the most isolated states in terms of proximity to a refinery, which means fuel costs can be outrageous without some creativity.

That’s why Arnell and the Idaho Nursery and Landscape Association, where she serves as the executive director, partnered with a gas station to get good discounts for fleet management.

Arnell also runs her company that she started 13 years ago, Roots Landscape Design and Consulting. It has 18 employees and they’re a year-round company. At Roots, Arnell didn’t implement a gas surcharge. Instead, she just raised her jobs $2 a man-hour rate. But at the association, she knows a lot of people who line-itemized their fuel cost increases, which she believes isn’t a great idea.

“You’re adding fuel to the fire by pointing (the increase) out,” she says. “If you’re going to increase your rate, just increase your rate.”

Arnell says she knows some lawn care companies that increased their costs by $6 but lost some long-time clients because the customers felt slighted by the price jump.

“They’re also still feeling the pain at the pump,” Arnell says of the clients. So, she set out to avoid doubling down on that fuel-related pain.

Arnell still grew her company by roughly 23% in the last year, so she doesn’t think that this year she’ll raise prices again. Fuel prices won’t make her change those bids — if anything does, it’d be if she can add some labor, which would mean she’d need to pay more workers. Even then, most of her employees have been with Arnell for eight or more years, and she commends the group for growing a family-like relationship.

“If they’ve asked for raises, I’ve given them to them because they’re worth it,” Arnell says, adding she still doesn’t foresee raising prices on clients to pay those employees. “If that means I have to take a little bit less to keep them on board, then I’m happy to do that.”

— Jimmy Miller

Dan Bywalec

President of D&B Landscaping // Livonia, Mich.

Right now, in the midst of an unseasonably warm winter, Dan Bywalec says the business has been able to save a little on fuel costs, but that’s not always the case.

“Fuel consumption always goes down in the winter when we have little snow,” he says. “This year we’re really down. We’ve only had about seven inches of snow so far here in the Detroit area since the beginning of the snow season. Right now, the fuel costs aren’t as bad as they normally are.”

But over the course of the last few years the company has been hit hard by high fuel costs.

“It’s definitely impacting the business,” he says. “Just looking back to last year for what we paid for fuel and gas and everything, we paid about $196,000 in 2021 and our year-end this year was about $247,000. It truly has impacted us.”

In Michigan, Bywalec adds taxes associated with gas and fuel are astronomical.

“I look at the invoices from our fuel supplier and just freak out,” he says. “The taxes are overwhelming. It’s definitely been a rude awakening these last few years.”

Bywalec notes that on one invoice recently, the company purchased 144 gallons of gas at $2.65 a gallon. Also included in the bill was $80 in fuel taxes plus an environmental fee and sales tax — bringing the total to $489.66.

“I don’t think people realize the taxes that we have to pay on all of these fuel consumptions,” he says.

Bywalec adds these high fuel costs are also making it hard to retain longstanding partnerships with customers.

“It’s very difficult right now to set up a three-year or long-term contract with commercial establishments, which is something a lot of people in our industry want to do,” he says. “But I don’t feel like we can hold that price for that long or even know what kind of percentage increase to add year-to-year because we don’t know what the big picture is going to be.”

For D&B Landscaping, a fuel surcharge might be a solution to the issue, but Bywalec says implementing one effectively is a delicate balance.

“It’s a tough commodity to put a surcharge on,” he says. “The fluctuation of gas and diesel fuel makes it difficult. It’s hard to find that percentage line.

“We do have it in our contracts that if the price of gas goes over $4 a gallon there would be a surcharge,” Bywalec adds. “But I really think it depends on the customer and what kind of relationship you have with them.”

Bywalec says some clients will get really upset at a fuel surcharge and he isn’t sure that the money recovered is worth risking that relationship.

“Everybody is feeling the same pinch,” he says. “Is that $96 really important when they are already spending thousands of dollars a month?

“I’ve talked it over with the people here and we’re not really sure if we want to put a surcharge on those people,” Bywalec adds.

— Kim Lux

Richard Bare

CEO of Arbor-nomics Turf // Norcross, Ga.

As the price of fuel (and everything else) increases, Richard Bare says his lawn care company is raising prices slowly but surely.

“We went up on our prices last year 20% and I thought that was crazy,” he says.

But it turned out that customers were receptive of the price increase.

“When you raise prices during inflation, people allow it,” Bare says. “But when you go up on prices for really no reason at all, well then, they get really upset and you get a lot more calls. It’s like reading the tea leaves out there with your client list and what they’re expecting.”

When budgeting for 2022 and 2023, the company took fuel costs into account, but Bare noted it didn’t make a huge impact on profit margins.

“We were thinking it’d be a big deal, but it wasn’t an issue,” he says. “(Fuel) is somewhat of a minor expense on the P&L. It didn’t impact us that much.

“Customers think it impacts us a lot, but it’s more so labor,” Bare adds of fuel costs.

Not only is it hard to find labor, but companies are dependent on the labor they do have to drive to work every day. Because of this, Arbor-nomics gave employees bonuses when gas prices were at their peak.

“We gave everyone a nice $1,000-$1,500 bonus in June and then again at Christmastime and boy, was everyone appreciative of that,” he says. “They could tell we really care about them personally. Their fuel costs are more of a concern. A lot of them may live out quite a ways and drive an hour to work in a pickup truck or something so they really appreciated the boost.”

When it comes to combatting fuel prices, some add fuel surcharges into contracts, but Bare says he’s never had any luck with those. He prefers just steady price increases year-to-year when inflation is high.

“We tried it one year and the reaction was horrible,” Bare says of implementing a fuel surcharge. “The phone was ringing off the hook and people were really angry.

“So, the following year we just went up on our prices 5% and hardly got a call about it,” He adds.

While gas prices have been high at times, they are fluctuating — unlike diesel fuel which has remained steadily high, Bare says. And because of this, the company is looking to replace a lot of its diesel truck fleet with gasoline-powered models.

“We’re actually converting over to gasoline trucks,” Bare says. “Which I’m a little upset about because I love diesels. The increased costs of diesel played a role. Diesel prices haven’t been as competitive like gasoline has. We’re not seeing them go up and down as much.”

However, there’s been one unforeseen hurdle that’s been a concern for Arbor-nomics.

“The one thing about the gasoline trucks that we weren’t expecting was we’re having a terrible time with thieves coming in at night and cutting off our catalytic convertors,” he explains. “We think one guy has broken in four times in three years to steal catalytic convertors.”

— Kim Lux

Peter Gallo

Managing partner of Pampabay Landscape Construction // Atlanta, Ga.

After locking in their prices a year in advance, Managing Partner Peter Gallo and his team at Pampabay Landscape Construction felt like there wasn’t much they could do about fluctuating fuel costs.

Gallo’s team primarily uses diesel fuel, which had even more significant price jumps in South Carolina – though in mid-January it’s hovering around $4.25 a gallon, it had hit $6.15 at one point. So, Gallo went to his general contractor, who told Gallo they were already hearing about all sorts of price jumps.

“They were hearing the same thing from every subcontractor,” Gallo says. “What they said was, ‘Fellas, what’s up? Don’t come back today, tomorrow, next week.’ They understood it was an open wound and they wanted to stop the bleeding.”

What the contractors above Gallo really wanted to know was how they could soften the blow on fuel costs. But that wasn’t it: Since they were hearing about it from everyone, they just wanted a list of all the rising costs. Gallo says his team felt the pinch most with freight costs and materials themselves, too. But the contractors understood this because they were hearing it from their subs in all trades, not just landscaping.

“They wanted us to just come in one swoop . They didn’t want to hear endless stories,” Gallo says.

Ultimately, the rise in fuel costs resulted in two additional measures for Gallo: putting a line item under their bid to allocate a number based on total machine hours, and then closely monitoring machine run time with his employees.

The second bit is particularly important for Gallo, who says every landscaper should be avoiding fuel overuse. He’s seen some employees stop for lunch or sit on the phone talking to his girlfriend while trucks were running, burning diesel fuel. Educating the employees on why it’s important to avoid this is critical, he says. Tracking equipment with GPS or other similar devices is important.

“When you put a guy in a machine, he has no idea how much diesel he’s using,” Gallo says. “Everyone should be aware of their consumption. It just goes back to best practices.”

— Jimmy Miller

Barclay Winn

CEO of Winn Nursery, Norfolk, Va.

Barclay Winn says that fuel costs have been impacting the company’s cost of doing business since the onset of the COVID-19 pandemic. “During COVID we never closed…before it, we were running three-man crews in one truck, and ran about 15 crews a day to jobsites. But because of the COVID, we had to go down to two-man crews in a truck and that not only increased what we were spending on fuel, but also the miles we were putting on trucks,” he says.

Additionally, as landscape contractors, Winn says the nature of their workload is already unpredictable but adding in fluctuating fuel costs and it’s even harder to bid jobs accurately.

“We’ve basically have had to just eat it,” Winn says of the extra fuel costs. “We’ve just got to try and be more efficient and work harder and smarter. We’ve tried to adjust to the prices — but we’re bidding on projects that we won’t be able to start until at least this time next year.”

Winn says if prices stay high for much longer, he expects a drop in projects across the industry.

“I think if people in our industry, and all the construction industry, don’t all start figuring out ways to cut costs, you’re going to see projects that’ll stay on the drawing board and not come to fruition,” he says. “You’ll see people pulling back. I see a significant slowdown in the next year or two.”

One way the company is looking to save some money is being as efficient as possible with their routing and jobsite visits.

“Most of our crews go straight to a jobsite and stay there all day except for lunch, so they aren’t rolling all day like a maintenance company would be trying to hit 10 different spots,” he says. “When we go to jobsites as project managers, we plan the visits and try to be efficient when we’re there. We’ll try to meet with the construction superintendents, the architects and all of them in one visit.

“We work a 60-mile radius and now rather than checking on a job twice a week, maybe you only get out there once a week or once every two weeks for quality control,” Winn adds.

Winn says a good relationship with suppliers can also be key to saving time, money and fuel. “We try to plan ahead,” he says. “We’ve negotiated with our suppliers to have the materials dropped off here rather than us go pick them up. Their prices are going up, too, for many reasons. If we need other items we make sure to find everything anyone might need and get it all on one trip.”

— Kim Lux

Charles Glossop

CEO of Hantho Outdoor Services // St. Louis Park, Minn.

Charles Glossop never wanted to nickel-and-dime his clients – after all, they’ve formed a strong customer base in Minneapolis and have service areas anywhere from Illinois to Nebraska. These strong relationships prevailed during COVID-19 and Glossop hopes they’ll continue to prevail as fuel prices continually soar and plummet.

That’s not to say he didn’t raise prices on his clients. For long-term seasonal contracts, they might’ve implemented a fuel surcharge. But by and large, they instead implemented increases ranging from 12-18%. This covered higher labor and fuel costs.

“We received no pushback at all,” Glossop says. “I think for a lot of our clients, they are also dependent on deliveries of materials and they know what the cost of doing business is, how much labor has gone up, and then the cost of commodities.”

Hantho Outdoor Services relies heavily on diesel-fueled trucks to power through snow season – Glossop estimates that on any given snow event, they’re running 1,500 to 3,000 gallons of fuel in the Minneapolis area alone.

Thankfully, the prices have gone down a bit to $4.50 a gallon, but Glossop is still waiting to figure out how much they may need to increase — or not increase — costs for contracts to account for fluctuations this season.

Glossop says they’ve invested in some fuel transportation trailers where they can store fuel onsite or take it out to a jobsite. “When we get a large snow event,” Glossop says, “we have to go, we have to roll, and we have to produce. We do whatever it takes to fuel our equipment.”

One challenge they face on that front is that lots of gas stations close by 10 p.m., a lingering effect from staffing issues and COVID-19 adjusted hours. Just 10 years ago, Glossop says those stations were open 24/7, so it’s a challenge to make sure they’ve got some fuel waiting in the wings in the event of an overnight snowfall.

“We have to be smarter and make sure that the auxiliary tanks we use are always filled,” Glossop says.

— Jimmy Miller