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Serving the American Liquid Waste Industry Since 2002
Forecast 2008
| “Journalist Carol Brzozowski has been on the hunt for inside information from leading economic sources and has found little to offer in the way of exciting news for portable restroom operators. Business as usual for some but those eyeing growth during 2008 will have to find it outside the conventional multi- housing projects. There are segments worthy of serious consideration but waiting for the phone to ring to pave a path for recovery is not likely. The game has changed but definitely is not over. It is only during uncertain times that a business can position themselves for extraordinary growth during recovery even to the point of dominance in a market or two. “ |
| Winding down and taking a look at the future |
| Normally, the turn of a new year brings feelings of anticipation – out with the old, in with the new. The typical expectation is that the next year will be even better than the previous one. Obviously, the housing construction slump and escalating fuel costs will mean that the toast glasses won’t be filled with Dom Perignon this New Year’s Eve. Instead, a jolting cup of double espresso may be in order. Those in the industry who’ve already woken up and smelled the coffee are predicting a 2008 befitting a Darwinian business approach: the survival of the fittest. On the front lines: the manufacturers. Mike Cooper, president of PolyJohn Enterprises, sees 2008 as being the same as last year for his company, adding that sales had been off a bit due to the slowdown in the housing construction market. The company is putting more of an emphasis on value-added products, such as sinks. But PolyJohn plans to introduce new products in the upcoming year as a sign of good faith in the industry. Meanwhile, Tim Blevins, CEO for Wells Cargo Comfort Elite Restrooms, points out that portable sanitation operators are too locked in to the belief that the construction industry has the ‘major’ client potential to the exclusion of other sectors. “There is just as much and probably more potential in catering to special events, corporate needs and small overnight private functions as in the slumping construction industry,” Blevins says. “The expectations for those services are different than those for construction. If a portable restroom operator intends to be competitive in 2008 and beyond, he must invest in units other than the traditional plastic stand-alone portable chemical toilets.” Blevins points out that while restroom trailers have been around for years, it’s only been within the past four years that they’ve “come into their own.” Catering to such new sectors is going to require an investment into restroom trailers that costs significantly more than a traditional single portable sanitation unit. However, the rates that a portable restroom operator can charge for such units can range from $900 a day for smaller units to $1,400 overnight and on week-ends and to $3,000 to $3,500 long-term plus service and mileage costs, says Blevins. Blevins points out special events result in less wear and tear and abuse than construction rentals. “They are usually a big hit at the event and people take note of how nice they are,” he says. “Each time this happens, it educates the public as to what is now available. The next time they are personally involved in an event, they will remember what is now available and request those same services.” Blevins also points out that special event units are more often “in front of decision makers and others with extensive means. That can catapult your operation to the next level.” Many of those portable sanitation operators who are renting restroom trailers and special event units say they’re actually doing well, with one new to the industry saying she “sees a bright future ahead”. Blevins’ tip to portable sanitation operators in marketing: “Look up those entities in your area that promote, plan and perform special events and other public functions and show them what you have.” Some special event portable sanitation unit manufacturers will assist portable sanitation operators in advertising, marketing and financing, he adds. “The bad news is that if you do not choose to make a step in this direction, someone else will,” Blevins cautions. “It is a little-known fact that close to one-third of all restroom trailers manufactured are going to (full-service) rental companies, close to a third to portable restroom operators and the rest to other concerns. “If a portable restroom operator does not provide these services, you can count on a rental company stepping up to the plate and providing such services. At least the portable restroom operator will get a meager pumping out of the deal.” Blevins also is calling upon industry associations to take a harder stand on behalf of the industry. He asks if portable restroom operators “are even aware of the potential irreversible loss and damage to the portable restroom industry” and notes a “poor” turnout at industry association trade shows. “We need to promote the portable restroom industry as a whole,” he says. “Education is needed on all of the potential that is available from every tool at one’s disposal.” As for new products in the upcoming year, Blevins says to look for GPS tracking of waste tank levels, fresh water levels, inside air temperature and unit location from anywhere with a laptop or cell phone. If Steve Crosby’s business is going slow, that doesn’t bode well for the residential construction industry. Crosby’s company, U.S. Septic Specialists, does septic installation and soil testing in Dane County in Wisconsin. No homebuilding not only means no new septic installations, but also no need for portable sanitation during the construction process. Escalating fuel costs are yet another factor that will affect new construction, Crosby adds. “Being the one who is in the front of getting a new house started by taking the soil test, the fall was very, very slow,” he says. “If this is any indication, 2008 will be another slow year in our industry. People in our trades are not buying and are cutting back on staff to deal with this possible problem in 2008.” Meanwhile, in Florida – a state where homebuilding had been synonymous with growth, in both population and economics - state economists are predicting a slower housing slump recovery than initially expected. State economists revised earlier forecasts indicating that the slowdown would continue through 2008; they now say it will extend well into 2009. That comes as no surprise to Eric Anderson, corporate secretary for Anderson Rentals in Mims, Florida. “Speaking only for Florida, I believe the long-term outlook to be rather bleak,” he says. “We have performed many lay-offs and cut all additional spending. I believe we are in this slump for the long haul, meaning for another 24 months.” Expect a period of “survival of the fittest”, Anderson says. “I already see many small companies - especially new start-ups - falling by the wayside,” he says. “We have stopped sliding backwards and have leveled off. But I still fear it is going to get worse before it gets any better. A recession could be in our future. The U.S. dollar gets weaker by the day. It’s not a good sign when these large production homebuilders start closing their doors. Batten down the hatches!” In Michigan, another state that is financially holding on by its fingernails, Joe Williams runs Williams Pumping in the Traverse City area. He echoes Crosby’s concerns about fuel costs. The fuel costs not only affect portable sanitation fleet costs, but it’s going to cost a few thousand dollars more a year for home heating, he points out. Thus, those portable sanitation operators who also do septic pumping will find that people will be more likely to hold off on system maintenance and since homeowners will have less disposable income, restaurants will see a reduction in numbers, so there also will be less restaurant grease trap pumping. Like Anderson, Williams believes those who are prepared will survive. “Fortunately for my business, we upgraded and added a lot of new equipment over the last three years and we don't need to spend any money for a couple of years to maintain what we are currently servicing,” he says. That’s not the case for some of his industry peers. “I see others with older trucks and equipment and they can't afford upgrading so they will suffer from appearance and poorer image,” says Williams. “Also, the value of those businesses is stagnating.” Williams sees a silver lining. “The good news is those prepared can benefit from things like slumping real estate or other investment vehicles that become discounted,” he says. “When the economy turns around - not if but when - those ready will have some fast growth and are hopefully prepared to handle it.” Williams predicts some industry consolidation, reducing competition and creating stronger businesses in the long run. “It’s so important to have a five-year plan with the ability to adjust as the environment changes,” says Williams. Chad Rott is president of Happy Portables in San Bernardino, California – another state that is feeling the pinch of the housing construction crunch, let along topping the lists of high fuel costs. Rott is an advocate of diversification. “If you put all of your eggs in the housing tract basket, you are in trouble,” he says. “Here in southern California, we have seen a few companies go away in the past six months, including one that started with a large housing tract builder contract only to lose it a few month later and then file bankruptcy.” Another company that had a large inventory of other types of equipment rentals had shut down its portable restroom division after only six months, Rott said. Rott also believes that if being dependent upon the housing construction market won’t take a business down, fuel prices will make it a challenge. In mid-autumn, he’d been paying close to $3.60 cents per gallon for fuel. Happy Portables’ focus is on commercial builders. “The houses are built and they now have to build the schools, the gas stations, and the retail stores,” he points out. While seeking portable restroom placements at permanent locations is another good strategy, Rott notes that some of his competition is pricing those units to the point where there’s no money to be made. “Some of the other guys are doing two months for free, the first six months at half off, or free delivery. Our goal is to keep our prices fair, keep our service at the highest levels and keep moving along,” says Rott. Rott’s attitude is to ride out the storm. “The market will come back in a couple of years,” he says. “You just have to wait out the storm. This is the ‘toilet gods’ way of thinning the herd. When the market does return, it will be interesting to see who is left and what condition there companies are in. Our company will be fine and prepared for a huge growth spurt when it does return.” Key strategies going into 2008 should focus on customer retention, good service and diversification, these industry veterans say. “New construction start-up companies will probably be non-existent, so going after the new company or increasing market share should be secondary,” Williams advises. “Efforts should be directed to one’s existing customer base to at least maintain their business to ensure your revenue stream stays in check.” This is not the time to cut corners, Williams points out, adding that such a move can sometimes result in a customer switching companies. “This means no skimping on service or labor,” he says. “Keep those restrooms sparkling clean. Less work equals more time to make customer contacts. Talk to those customers. Spend a day a week driving around to visit. Take them out to lunch or do whatever it takes to let them know you feel their pain in this slowed-down environment.” Cooper says good service should continue to be the primary strategy of anyone in the portable sanitation industry. “You don’t want to lose any customers, that’s for sure,” he says. Cover all the bases, says Blevins. “The public needs a restroom - for now they call you,” he says. “They expect you to have several choices for them: Chevy- Olds-Caddy. If they want a Caddy and you don't have one for rent, who do you think they will call? Product and service diversification will be in one’s best interest in 2008 and into the future. There is one constant in this universe, those that evolve have had better odds of survival since the beginning of time.” |
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Serving the American Liquid Waste Industry Since 2002
Serving the American Liquid Waste Industry Since 2002