From Where I Stand — It’s that time of year, in offices all across the
country, that professionals lock their doors, sharpen their pencils, and begin crunching the numbers. No, I am not talking about budgets or spring sales projections. Of course, I am talking about brackets for the NCAA tournament. The NCAA tournament is that one magical time of year where college basketball fanatics, compulsive gamblers, and office secretaries can all convince themselves, for one shining moment, that they are college basketball experts. College basketball fans watch entire seasons, break down the numbers, listen to certified bracketologists, and still come in 9th place to someone who went with the taller mascot or gave the bracket to her eight year old. What makes completing a bracket so compelling is that, on one day, before the NCAA tournament starts people need to predict what will unfold over the next month. Anyone who has ever filled out an NCAA tournament bracket has that moment where they have convinced themselves they have perfect bracket - something that will be talked about for decades, maybe even hung in a museum. That afterglow usually fades the second you lose 11 out of the first 16 games. What makes sports wagering so difficult is that it is never an issue of having too little information. Sports information and statistics can send you down rabbit holes located within rabbit holes. All gamblers try to do is find some little Achilles’ heel in the point spread, over/under, or straight-up pick. Anyone who has ever gambled on sports knows the intense pride that comes with picking a winner. Anyone who has ever won an NCAA pool walks around like Yoda for a week laughing at the problems of inferior beings. Charlie Hall’s presentation at iLandscape365 is required viewing. Whenever Charlie speaks I make it a point to pay attention. He’s the guy who never fills out his NCAA bracket based on mascot height. He’s also the first to admit prognostication is an imperfect science. Charlie is a Professor & Ellison Chair in the Horticulture Department at Texas A&M University. Charlie grew up on a nursery in North Carolina. He is an economist by training and that what makes his research so compelling. He is usually the green industry’s resident soothsayer, entrails reader, and bracketologist. For the last year, he has been given the awesome task of trying to figure out what the impact of Covid-19 will be on the landscape, nursery, and garden center retail industries. Obviously, most landscape companies were shocked by the record profits reaped in 2020. The economy and labor markets were bipolar. Certain industries crested while others saw unimaginable despair. Certain segments of the labor market saw job losses not seen since the great depression while others saw salaries rise and unemployment rates drop. Some professionals were able to adapt to a working-at-home environment while others were legally prohibited from even opening their business doors. Everyone just rode the rollercoaster, white knuckled in 2020. Now, the lap bar has been raised, everyone rested, some plowed a lot of snow, and now we take our seats for another ride. Of course, with any prosperous year in the landscape industry there is a spillover effect. Weather dictates the working calendar. Backlogs and exhaustion grow. Finally, the ground freezes and everyone slinks away for a long overdue nap. Most companies are about to start
2021 with the healthiest backlog they’ve had in a decade. Backlogs are stretching from 6-8 weeks to deep into the summer. This is when I leaned into Charlie’s presentation at iLandscape and turned up the volume knob. What do the economic indicators tell us about the health of the landscape industry long-term? Did we really not just survive the pandemic, but thrive? Charlie’s presentation is entitled, “Will Covid Spur Plants Sales Again in 2021?” It is available on the iLandscape365 along with 50+ other presentations to get your team through the season. iLandscape365 also includes all the content from the Turf Education Day and Impact Conferences too. If you haven’t gotten your pass, what are you waiting for? There is a lot of rainy day training opportunities as well as the ability to rack up landscape architect, arborist, and irrigation contractor CEUs. Details are at iLandscapeshow.com. In 2020, gross retail garden center sales were up 20-40% nationwide. In the landscape sector, 75%, and almost all of the landscape companies in states that were not shutdown, saw net profit increase by 5%-20%. This is even before PPP funds are added to the equation. In Illinois alone, that was an additional $225 million into the landscape sector. The US lost 22 million jobs during the pandemic period. That is simply staggering. However, those losses were almost exclusively in the brackets that do not represent the client base for landscape and retail garden centers. Annualized GDP drops in Q3 and Q4 were a yo-yo. There was a 31.4% drop in Q3 that was then followed by a 33.1% rise in Q4. In real terms, that means there was a 9% decline in Q3 and a 7.4% rise in Q4 compared to the previous year. Charlie refers to 2020 as “The Great Shutdown” and economic activity rebounded sharply and a lot of that was tied to the direct stimulus payments and unemployment checks. Removing politics from the discussion, the amount of stimulus money earmarked to low earners means that money was almost immediately returned via consumption. There are still a shade under 1 million unemployment claims per week. This is down from a high of 4.5 million claims per week during the earliest parts of the pandemic. The reason this is concerning to the overall economy is that 70% of the US economy comes from consumer spending. The question is, does that impact the landscape industry? Lower wage workers employment levels are down 19%. Higher wage workers employment levels are actually up 1.2%. Not to be craven, but it is very likely that the current rates of unemployment will not impact landscape companies in the short term. If you take the 70% chunk of the US economy that is related to consumer spending, 60% of that amount is spent by the top 20% of households. To do the math, that means 42% of the US economy is driven by the consumer spending of 20% of the population. That 20% also happens to represent the bulk of the landscape industry’s client base. The four major product areas that suffered the most during the pandemic were gasoline, restaurants, clothing, and electronics. Almost every other consumer expense category went up, dramatically. There is also a major housing boom with high wage workers driving demand. That is coupled with mortgage rates being low and millennials finally coming into the housing market. The bulk of millennials are coming into the housing market in the next five years. The housing boom may be just beginning. Obviously, that
Survive and Advance
The Landscape Contractor April 2021
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