2014 Market Trends

Smart business owners look at trends that will affect their industry to determine if it is something that they need to plan for, or if it is something that they need to implement. North American Sweeper talked to several people that have been in the industry for a long time to determine what trends they are seeing and what will have the biggest impact on the industry in the coming year. While each business is different and different parts of the country experience different pressures, we found that certain trends emerged.

Third Parties and Profit Margins

“The biggest trend that continues with no end in sight is the national chains purchasing price versus service,” says Carl Barton, owner of Aardvark Memphis in Tennessee. “We have been recently contacted by several third parties requesting us to sweep Lowes for $22 – $26 a sweep. It is not possible to give anything that resembles sweeping for this price. Not only is it a ridiculous price but the frequency is way too low.

“The major problem for our industry is that a large amount of sweeping contractors don’t understand ‘KNOW.’ KNOW your costs and say NO to anything that you will lose money on. Any company accepting these jobs are hurting their own company, other contractors, our manufactures and suppliers and even the customer.”

Barton outlined the problem with accepting these jobs and where it hurts:

» Their Company: They will be forced to lose money or cut corners. Most are cutting corners that will eventually destroy any standards that they have set for their workforce on other projects.
» Other Contractors: This undermining fair market pricing and gives a bad reputation for our industry.
» Manufacturers: Without profit there is no money for replacing equipment.
» Suppliers: Maintenance and repairs are omitted with the exception of Duck-Tape.
» Customers: They are allowed to believe that our service is a commodity and are not educated on the true benefits of proper sweeping. Once the sub price is in the customer’s budget it is very difficult to change.

“My company actively searches for customers that understand you get what you pay for,” says Barton. “We will not agree to anything we can’t do honestly and make a fair profit.”

Debbie Jacketta, owner of Jacketta Sweeping in Utah, echoes Barton when it comes to third parties. “Companies that choose to work with (third-party providers) will continue to be squeezed by their customer. They will be constantly trying to figure out how to stay in business with very little or no margins.”

“One part of our industry will always chase price,” adds Mark Carter, president of Bill’s Sweeping Service in California. “The other part will continue to differentiate themselves by actually saying “no” when a project nears break even. Cutting service to meet a third party price can only go so far. At some point the pendulum will swing the other way with quality again entering the picture.”

Equipment

“Equipment concerns have also been an issue the last few years,” says Jacketta. “We are finally getting to the end of all the emission changes. Some companies are now considering gas engines as opposed to diesel. The cost of new equipment is an issue as well as finding good used equipment and/or disposal of used equipment. Along those same lines, finding access to capital will still be difficult through 2014.”

Schwarze’s Jim Adair, director of product management looks at other trends affecting equipment. “Rising fuel costs will continue to drive end-users to look for alternative sources to run their sweepers more efficiently while there continues to be a lack of CNG filling station infrastructure to support the potential demand in new areas.

“While new emission standards will drive the cost of each sweeper substantially, government incentives are still available although they have been reduced. Municipal budgets have also reduced due to slow economic recovery and growth.

“There will also be increased attention on safety in all areas from additional lights on the sweeper, cameras for visibility, and training for the operators that affect the cost of equipment and the bottom line.”

While costs continue to rise, Adair feels that demand will increase for CNG powered sweepers that can operate at half the cost of diesel and burn cleaner. He sees increased demand for stainless steel hoppers to lengthen the life of the sweeper.

Adair also envisions the demand for aftermarket parts and service offerings to increase as companies decide to keep their equipment for longer.

Regulations

Sweepers in California have continued to be those hit the hardest with regulations. However, several other states are looking at similar regulations.
“The sweeping industry as I see it in 2014 will continue to see regulatory pressures at all levels of government,” says Mark Carter, president of Bill’s Sweeping Services in California. “CARB continues to dramatically affect sweeper purchases in CA. Notice the used equipment ads that state ‘not for sale in CA.’ Besides sweepers this affects all trucks and construction equipment.

“Not only are we affected but our construction and paving customers are also forced to early retire still-functioning assets. This disposal of assets affects their bonding ability, and thus their ability to bid some projects. We will see more projects consolidated with larger customers. As we often see, the larger
the customer the slower the pay.”

Adair also sees regulations as something that will help the industry. “I imagine the need to sweep more often to remove the debris before it enters the storm drain and water eco system.”

Technology

Technology is increasingly enhancing our personal and professional lives. Jacketta adds, “I see technology becoming used more and more. GPS systems are pretty standard at most companies now. The next move will be to route optimization systems. Knowing how to use online marketing will also become more important as well as learning how to use our smart phones to their capacity.”

“Technology will move forward at an increasing rate,” says Carter. “GPS systems are now live with route changes pushed out in real time. Route optimization software will become routine if not next year, then by 2015. Checking your Google numbers will be as common as checking your voice mail (unless you join a co-op to manage it for you). Ignoring that ‘Internet thing,’ is no longer an option. When was the last time you did a Google search for ‘parking lot sweeping’ or ‘street sweeping’? Do you rank?”

Professional Organizations and Education

Joining professional and industry organizations can be a great way to keep yourself aware of trends and standards.

“The biggest impact on the industry has to be 1-800-SWEEPER,” says Gerry Kesselring, president of Contract Sweepers & Equipment in Ohio. “The partnership is driving revenue to its partners in an unprecedented way. The buying power of its partners allows them access to vendors never achieved before.

It is the answer to the ever failing consolidators that do not add value to the customers.”

“The education and sharing of ideas is truly revolutionary in our world. It’s partnership requirements add value to the industry overall by requiring membership into NAPSA thus improving the overall level of the industry.”

“Best Management Practices or BMPs are changing,” says Carter. “What worked 30-20 or even 5 years ago may get you by, but at what cost? Those firms that travel to events such as NPE or The Sweeper Summit will extend their lead over those that continue to go it alone. Those that do attend know that it seldom happens that the travel costs are not made up many times over with the new information obtained. Note to competition: Thanks for staying home!

“Becoming a NAPSA CSC will continue to reap benefits by insurance discounts, advance knowledge of equipment changes, networking opportunities and the ability to market the CSC designation. Customers that survived the recession are working leaner and looking for industry designations to pre-qualify potential vendors.
“Price pressures also require a re-examination of buying habits. Joining a co-op or utilizing group buying will drive more to the bottom line than additional income. This is where benchmarking becomes invaluable. The only way to know how your numbers and practices stack up, is to participate in a network of peers that are willing to share.”

Although NPE has most likely come and gone by the time you read this, you can become a member of NAPSA at any time to share information and learn from your peers.

Story by Jennifer Taylor

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