Source: www.TurfMagazine.com
Illinois sod growers look for new strategies to stay profitable
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In response to the current economy, Illinois sod growers have developed coping strategies to remain profitable in the face of lower sod demand. Some have reduced the number of acres planted in sod, often converting previous sod acreages to row crops, and others have focused on cutting expenses where possible to ride out the residential slowdown. Reaching markets not previously tapped through innovative marketing approaches is a strategy that appears to work in the diverse Chicagoland market.
Innovative marketing
Central Sod Farms, Inc., Plainfield, Ill., about 50 miles west of Chicago, has taken an innovative marketing approach to selling its sod. Well-established in the Chicagoland market, Central Sod was started in 1975. Co-owner Chuck Warpinski shares ownership of the sod farm with six brothers and one sister. “Our dad had relatively cheap labor with our family when he started growing sod. He started with just 5 acres,” Warpinski said. “As Chicagoland grew, the sod business just snowballed.”
The business includes a wholesale sod installation segment to install sod for major housing or commercial developments. “We work only for landscapers,” Warpinski said.
With the slowing economy and reduced sod demand, landscapers are competing for scarce residential jobs. “We saw that smaller landscapers were doing much of the work in and around Chicago as major development came to a standstill,” Warpinski said. Much of the current sod work involves renovation of older yards. With small landscapers located throughout the many miles of Chicagoland development, reaching them represented a major market for Central Sod.
“We’re 50 miles out, and small landscapers just won’t drive out to our farm for small amounts of sod,” Warpinski said. About 10 years ago, Central Sod opened its first sales yard in Hanover Park to reach a part of Chicagoland some distance from the sod farm location. With the onset of the sod industry slowdown, Central Sod has increased the number of sales yards, continuing to open sales yards in locations to make its sod more accessible to small landscapers and homeowners in the large area of Chicagoland. At the same time, Central Sod is reaching a new retail market as homeowners make retail purchases at the sales yards. Sales yards are located in Hanover Park, Marengo, Cicero, Palatine and Oak Lawn, covering much of the Chicagoland market.
“We looked at areas where we didn’t have a strong presence,” Warpinski said. Central Sod opened its most recent sales yard in Oak Lawn this past spring. “The yards give us a presence and allows us one-on-one contact with the landscapers,” he said.
Wholesale versus retail
“We wholesale to Home Depot and a number of other stores,” Warpinski said. “We have almost a consignment arrangement with Home Depot,” he noted. “They pay only for what they sell, and we take the loss on what’s not sold.” While the presence of Central Sod is promoted through sales at Home Depot and other locations with the sod carrying Central Sod’s name, those retail outlets don’t reach the small landscapers throughout the area.
“Landscapers won’t go to retail stores and pay retail price for their sod. They just can’t afford to do that,” Warpinski said. The sales yards have traditionally been wholesale outlets with wholesale pricing that allows the small landscapers to obtain the amount of sod needed in a convenient location.
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Operational challenges
Warpinski noted that a number of challenges exist to operating the sales yards in the diverse locations. “One of the major challenges is determining the amount of sod to take to the yards,” he said. “We want to be sure that we have a continual sod supply there for the landscapers, and we would rather have to dump some sod than run out and not be able to supply our landscapers. It’s been a learning curve to determine the right amount.”
He cited the additional challenge of finding the right people to staff the yards. “Finding motivated people is difficult. The one-on-one contact of the manager and staff is very important to our relationships with landscapers,” Warpinski said. “With deliveries, our only contact is the driver. This way, the manager can help educate the landscaper about our sod.”
Maria Bahena manages Central Sod’s Oak Lawn sales yard. She noted, “People can just come in, or they can call in to be sure that they have their sod.” Additionally, the retail market is increasing at the sales yards. “We have more and more people coming in to ask about the sod to install themselves,” Bahena said. That one-on-one contact takes on a different significance as the retail market increases with more education about different grasses and installation and establishment techniques are explained. While the retail pricing is higher than wholesale, it is usually less costly than at large retail stores.
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Warpinski noted the importance of Central Sod’s name association with high-quality sod throughout the area. “I recently saw that somebody had leftover sod and wanted to sell it. It was advertised with the Central Sod identification.”
Although some sod fields have been converted to row crops, Central Sod usually grows about 2,800 acres of sod with farms in several counties, as well as on a sod farm in Maryland. The majority of sod grown is Kentucky bluegrass, along with some tall fescue and state-inspected, salt-tolerant grass. A small amount of specialty bentgrass is grown for golf courses.
“We carry sod-related items for landscapers,” Warpinski said, and Central Sod is a distributor for seeds from Barenbrug and Jonathan Green. Landscapers can purchase seed to match the sod they are using, and professional fertilizers are also carried.
Focusing on commercial jobs
While Chicagoland as a major population center has enjoyed tremendous growth in the sod industry over the years, central Illinois has had a strong economy with business and residential development over several decades. Central Illinois homebuilding has felt the impact of a downturned economy with few new homes built during the past year greatly reducing the residential sod demand. Additionally, although several landscapers have gone out of business, a number of new landscapers have entered the field increasing competition for fewer residential jobs.
Converting former sod fields to row crops, focusing on commercial jobs, operating conservatively are the major responses emphasized by Chad Kelch, Kelch Turf Farms and Landscaping. Kelch, turf manager, is the third generation involved in Kelch Turf, owned by his father, Daniel. Located in Kickapoo, Ill., the company is just outside Peoria in the heart of heavily industrialized central Illinois where a number of employers have closed their doors. Kelch Turf previously wholesaled about half its turf, and installed about 25 percent in commercial jobs and 25 percent residential. The company now installs about 80 percent of its turf, almost exclusively in commercial jobs.
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“We’ve held the line on our prices as we know a number of others have done,” Kelch said. “We’re quoting the same prices on residential lawns that we were two or three years ago, but we can’t compete in laying sod with somebody who has just a truck and a wheelbarrow. We’ve not had to lay off anybody, though we’ve had to shuffle some employees around.”
Kelch pointed out that focusing on commercial jobs and converting extensive acreages to row crops are the major steps taken in response to reduced sod demands. He emphasized the importance of networking in the community to find jobs that are still available. “Networking has helped us more than anything in getting commercial jobs,” Kelch said.
Operating conservatively has been a byword at Kelch, and that conservative approach is even more strongly adhered to with sod demand down. Careful equipment purchasing has been done all along, so equipment payments are not looming. Kelch emphasized that turf producers should carefully evaluate actual efficiency benefit before making impulse equipment purchases when used equipment comes on the market as sod producers cut back on their operations.
“There are lots of good buys out there in equipment now, but if the grower is not going to be cutting enough sod to justify the expense, it’s not a good deal,” Kelch said.
Nancy Riggs is a freelance writer and has been covering the green industry for Turf for almost 20 years. She resides in Mt. Zion, Ill.