...recent economic news say 2009 will at least be as bad as that. So I wonder how many of us are really prepared for what will come?
2009 Economic Predictions-
-10% unemployment (when you include those that have given up looking for work or have been reduced to part-time that number is closer to 15%)
-10% of the mortgages either in foreclosure or behind in payments now and with the expected increase in unemployment, that may also rise to 15%.
-almost 50% of the the households in the US are essentially broke. That is, they owe so much for mortgage, credit cards etc. that there is nothing left over at the end of the month. And living beyond their means with credit is no longer an option.
-GDP may actually drop 5% next year.
- new construction...well, you know.
We've had it so good for so long that I'm not sure we can really grasp what may happen next year, especially since this year's numbers may not look too bad since the economy actually did not turn until late summer and most of us were probably already booked through the fall at the point.
..that's in foreclosure "or behind in payments." I know a few people in that second group. And that's only people who have openly admitted it...And I'm in a "fairly" low foreclosure rate area.
And the question is, if they are behind in payments after last year, where will they be next year as the recession deepens?
Yeah, I would not be surprised to see a few more competitors go out of business this year. Too bad I'm not in a buying mode now, or I'd snatch up a mini-x.
I think those that keep doing the same-old, same-old for their marketing will find themselves without much work in the coming year. Hope they figure it out for themselves sooner rather than later.
My dad was in coin - op business (arcade games/pinballs) running arcades and also distributing; during that time, he had a tough time not because the amount of business he was getting fell, but more so because the banks did a massive reduction on his company's line of credit which didn't allow him to have the purchasing power he had before. So my dad experienced this first hand with another company;
as for now, I believe in what Stonehenge is saying, if people don't expand their marketing techniques they'll be in a jam when it comes to finding work.
But up here looks like it'll be easier then what you guys will be dealing with BC is predicted to avoid a recession just barley tho, it'll be an interesting year for sure.
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Cameron W. EUROSCAPES Exterior Enhancements Corp.
Good point. I was IN the industry in 1982 and worked for a very successful nursery. I think I'll take a little retrospective look back at their business practices.
I guess what I'm wondering here is this... We all hear the news about the present and impending economic downturn but do we reallybelieve it will effect us.
Those of us who have been around for awhile (since '85 for me) have seen alot of competitors come and go. I think we start to believe that we have "seen it all."
..But have we really.
Or have we just been spoiled by a rather prolonged economic upturn, coupled with a historically unusual obsession with "home improvement" (I don't recall seeing any landscaping contractors such as myself, when I was growing up. Everyone did that stuff themselves.)
What we do is clearly a luxury (I'm talking design/install, not maintenance). Typically only the very wealthy splurged on such things but over the last 15 years I've done alot of $10-$20K jobs for young couples who are very middle class. Either they were super savers (doubtful by the look of the cars in the drive), inherited the dough or, more likely, borrowed on their house.
In the future, they will have to actually make choices. Kid's college or landscaping. Health insurance or landscaping. New car or landscaping...And I think we lose those battles.
I've also done alot of work for retired folks in middle to upper middle neighborhoods. And I believe that alot of that money came from 401K or other retirement "gravy money."...Well that gravy has dried up.
Their actual choices will also have to be addressed. They include many of ones I listed above, as well as helping their adult children pay their mortgage, car payments, health insurance, (grand-) kids college....
So I know that still leaves the very wealthy for everyone to fight over. But they too have retirement funds that have evaporated, businesses effected by the downturn, and, in the next year or two, they will be taxed heavier (someone will have to pay for all this "stimulus" spending).
...So have we really grasped all these negative variables or does our reference point merely extend back 10, 15 or even 20 years.
My point here is not to merely be the bearer of bad news. I've read alot of stories about companies that failed to see how the downturn in the early '90's would effect their previously successful businesses. Afterall, they had great reputations and understood their expenses..(inside their profitable landscaping "bubble", of course).
But they failed to see how their industry fit into the overall economy. Inside their bubble everything was manageable. Therefore, they were more "reactive" than "proactive" when problems appeared on the horizon.
..and that was the early '90's. We've already blown by that in the last three months (which many of us have not felt because our seasons are typically winding down in late summer/early fall).
And in the '90's the country was not already deep in debt (gov't and personally), as it is now... We also were not fighting two wars... The Big Three were not on the edge of bankruptcy... The Baby Boomers were not on the verge of massive retirement (..think health care system overload)... And economic powerhouses such as China and India were barely in the infant stage...
I guees we'll have to wait and see if this recession gives us a new "reference point" on how bad things can get...On the bright side, someday we can tell our grandkids,"Yeah, you don't know how lucky you have it. Why I remember 2009 and 2010...."
..remember foreclosures lag unemployment ( after a few months of no paycheck, you start skipping the mortgage payment). Unemployment is now 6.7%. Expected to be at least 9%, perhaps 10%..not counting those that have simply given up looking. Foreclosures would be expected to increase accordingly.
Last edited by johnkeegan : 12-07-2008 at 10:10 AM.
I have to say that I am starting to get really concerned. We have only been in business for 8 years (me personally for 5)....I was a star student at Sheffield Elementary School in 1982....and things have been good so far. But we have struggled some with really locking down efficient systems, especially with regard to labor, and have had trouble maintaining our focus as we've grown. We live in a strange little world here where mcuh of the potential client base is extremely wealthy, many of the homes are second or third ones and many are not so much "homes" as estates. My partner called me the other day to tell me that one of our clients had, for three years, been under the impression that her 13k maintenance contract had included her entire property and hadn't realised that she'd been paying around $35k more for a part of the property she had added after the fact. FOR THREE YEARS! These are the people we work for. Housing prices have not declined here nearly as much as they have in other parts of the country and there was still a lot of work going on through most of this past year. On the other hand I have spoken to the landscape architects and designers that we work with and NONE of them have ANYTHING going yet for next year. One architect had just come from a conference in boston and said that most there were in the same boat. The consesus seems to be that people are sitting on their money waiting to see what happens and nobody is doing anything until spring. We also have either the highest or second highest unemployment rate in the country (we swap out first place with Michigan every other month).
So things do not look good going forward. We have a decent client base and a good reputation but we have never had to deal with a lot of competative bidding and I am concerned that a lot of the work that was handed to us in the past will be bid in the next year or two. We are not always the highest bidder but we're never the lowest. I'm starting to think about the idea that the focus on doing high-end, high quality work may have to be supplemented by a "sell all the shit work we can at lower margins to fill the gaps" mentality. If so how do we come out the other end with reputation intact? If that is where this goes I am not looking forward to it.
Buyt maybe when spring comes around people will decide to spend their money after all. Worst case scenario...I think that our maintenance work will get us through...but that would mean half the staff. None of us want to see unemployment numbers go up on our account but I think the worst thing is that none of the young guys that work for us have any idea what its like. Around here these guys could always get a landscaping job no matter who they were. Could be a rude awakening for a lot of people.
I have a good friend who teaches in the local horticulture program for the community college and she said enrollment is up and so is interest in the field. What this tells me is that people getting laid off from their jobs are looking at the green industry as their plan B. I bet we can expect to see a lot more lowballers on the weekends next year.
Just attended an economics seminar at the Oregon Landscape Contractors Association last Thursday. The speaker Bill Connerly gave a great presentation that our economy will be tough for the first half of the year. The 3rd and 4th quarters should start to pickup. His bottom line is " don't bet against America, We are a tough and resilient people"
He made the point, yes 8% are unemployed. That means 92% are employed and they need services. The tough and the smart ones will survive.
...In Dec. 07, I remember listening to Jack Welch, ex-GE CEO and supposed guru and economic prognosticator, poo-pooing whether or not we were headed for a recession. He gave a similar rah-rah speech. Like the overwhelming majority of economic experts, he had absolutely no real comprehension of what was in store. He admits now he was drastically wrong.
Considering all the massive structural problems with the US economy. And considering that it took us 8-10 years of living beyond our means (both gov't and individually), hoping that this will all disappear in 6 months is very wishful thinking.
Hoping for that outcome is fine...Basing your long term business planning on it is another thing entirely.
PS- The unemployment rate only includes those "actively" searching for work. It does not include those that have simply given up or have taken part-time work. Adding those two variables probably brings the total closer to 15%.
Even during the Great Depression only 25% of the people were unemployed. I guess a real optimist could say that the glass is actually 3/4 full because 75% of the people are employed.
..but I'm guessing that 75% were not doing alot of landscape installations... or maintenance, for that matter.
And remember the unemployment rate is merely a sympton of the problem. It does not explain how extensive the problem really is. Sort of the proverbial "canary in a coal mine."
Last edited by johnkeegan : 12-08-2008 at 09:58 AM.
We started to see it dry up late in this year, and I agree thet what we do could be considered discretionay income. I think the biggest killer in our market may be what Greensmith points out. Everyone with a pickup truck and a few pointers from the local nursery/block supplier/ HGTV guys will think they can pick up a few extra bucks. We are very concerned.
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