Who are these CRAZY contractors????????

[tlbuser]

You can not cost cut when fuel is $3.00 per gallon that is the same for all of us and we all burn at least 5 gallons per hour. We all pay close to the same for insurance, the government mandates pay rates for employees. What I am saying is that for the most part costs are the same for all of us. My machines may cost twice that of a CTL but I am more productive and reliable...making my per acre cost the same. My point is that you cannot even clear an acre for $170/acre much less make any money at that price.

Well, not knowing the details, I currently am paying 2.159 for equipment fuel. I do know that we are running $100.00/hr for everything up to a 953 and profits are decent. I can only guess that a mulching head must be a horribly intensive maintenance item to warrant an extra ~ $100/hr. Everytime I've looked into buying a mulcher, I couldn't make the numbers work on my terms.

 

[livincountry]

We are in the lawn and landscape maintenance business (lawn mowing, pruning, etc.). We get undercut regularly by companies that ride high for a while thinking growth for the sake of growth is good..... a few years later they are in trouble.

We just lost a bid to a GM related distribution center. Bid the work at our typically agressive but not a stupidly low estimate...... I was contacted and asked to bid 10% less. Did so and then were told many contractors wanted the business and were asked to drop another 10%. I responded by saying we would negotiate at this point.... keep in mind their payment terms were net 60 days. The other guy got the work. I call them busy fools.

Funny part? while I was waiting to talk to management at the facility the security guard showed me how the building (less than two years old) was sinking and exterior doors would no longer close becasue the door jambs were askew by 2 inches or more..... perfect example of what a low bidder supplies

My advice..... "avoid the low bidder wins" submissions or find a new profession.... sad but it's the new world we live in.

 

[tlbuser]

But to be bidding on the size jobs they are you need more equipment and skilled operators. Now if they were bidding high you could sub. Not with these prices!!
I have a few of the biggest mulching contractors in the southeast near me and and in my talks with them we have run the numbers and they wouldn't even go look at the job if the bid is where they are. It would be pointless.
Now onto the competition part. Yes it does create competiton but it would be like a guy coming in and doing your job for half the hourly pay you receive. Then someone doing it to that to them. It is detrimental to the business as a whole. Plus when the prices get back closer to where they should be the money will not be there for they will be used to the low bidding and only alot what was spent last year.

Well, somehow this co. thinks they can complete the job on time and at their proposed price. Sometimes we let our egos get in the way of sensibility too. "I won't work for less than x". But, when it comes time to feed the family, you end up doing different. I think more than one person here has had a hard time earning what others here have told them they could. Maybe the high dollars the mulching crews were trying to command is slowly creeping down. Maybe people are starting to realize they can do without things looking as pretty.
Competition is not detrimental to any business. Not being responsive to your customers needs and concerns is. Putting yourself in a position to have 0 customers is. No one is happy with the way things are going, but with unemployment being at or above 10%, there are alot of people out there just trying to keep their heads above water. For the most part, sales and profits are down and there are cutthroat things happening.
Steel prices are down-how many cuts in price have you seen as a result?
Fuel prices are down-yet many co's. are still adding a fuel surcharge for deliveries?

We all have to sit down and sharpen our pencils to find the new bottom lines.
There may very well be new careers in many of our near futures.

 

[tlbuser]

My advice..... "avoid the low bidder wins" submissions or find a new profession.... sad but it's the new world we live in.

Sad, yep. Maybe the end of an industrial superpower as we know it.
Now, figuring out what will be profitable is a problem. Start selling blood or other body fluids?

 

[cbturf]

TL,
With all due respect I do not think you understand the costs involved with a mulching business. My direct costs not my profit are more than these guys are bidding. The guy in SC is only getting an acre a day with his two machines! I have done the math and at GOVERNMENT MANDATED pay rates and other considerations like insurance, fuel, machine replacement maintenance and repairs you need to make $1,000 per day before even a penny goes in your pocket. You mentioned feeding the family, I guarantee that guy is not feeding his family @ $170/acre. Read some of the other posts those cheap small machine stay broken down all of the time, meaning you are paying and not earning. My ego is not the problem my calculator is. Every time, and I can give you four examples that I know of, the government awards one of these yahoos a contract they default. My main problem is the contracting officers, early 20s women, know nothing about this or any other business. Don't get me wrong, I really do love women but there needs to be some sort of common sense added to the selection process.

 

[Heavyduty]

Maybe they are using the old contractor trick when you bid low and ask for more money latter.

Also, we all know the contract business can be crooked as you know what. Somebodys uncle, cousin, or whatever is getting a inside scoop on the job. Like not grinding to specs which means you can cover more ground, faster.

A local state employee just got 3 years for taking kick-backs and signing off on subpar road contracts. If thing don't add up, you can usually guess what's going on.

 

[Eagleview]

If my machines can't make $1000 + tax a day they stay home , people just don't understand the costs involved and the fact that we are trying to save for retirement as well as feed the kids and pay the mortgage . Those under bidders would not get away with that in OZ , if they tender a price and are successful and default for ANY reason , the contract is given to someone else and the difference in rate , no matter how much is to be payed by the defaulter . It's in black and white in every contract , if they can't pay , they lose their house . I charge $165 for a 1/4 acre building block in town with 2' tall grass , I shudder to think that these fools are mulching 4 times that area with trees , rocks and engine blocks to kill their gear .

Ive watched guys like that come and go for years , Ive heard people say " at least they will be broke and out of the way soon" . That never happens , as stated , there's more lined up waiting to take their place . Ive seen it in trucking and also in grain harvesting , it's the nature of the beast , they'll work for stupid rates just to make the next machine payment . The ones that miss out are the fuel company and tyre company etc. because there is no money left over . The only way around it is to prove your worth , keep the gear new and keep the customers happy , word of mouth is your best advertising .

 

[tlbuser]

TL,
With all due respect I do not think you understand the costs involved with a mulching business. My direct costs not my profit are more than these guys are bidding. I have done the math and at GOVERNMENT MANDATED pay rates and other considerations like insurance, fuel, machine replacement maintenance and repairs you need to make $1,000 per day before even a penny goes in your pocket.

You're right, I don't get it. Maybe you guys can help me understand. According to your statement, you need to earn $125.00/hr/8hr. day to begin to clear a profit. Also according to you, Th mac had 140 hours on it when I left ddivinias place. Getting about an acre per hour.
So, assuming ~ an acre/hr is closer to 0.75 acres @ $170/acre = $127.50 per hour x 8 = $1020 per 8 hr. day. $20.00 above your 1,000 dollar mark. What am I missing?

 

[Egon]

It's all about "Cash Flow". When the larder is empty.

 

[QwikDraw]

I think CB said he needs to make $1000 a day before any goes in his pocket. So if he makes $1000 a day he is breaking even. For that he could stay home.

And NO people who who don't do this for a living don't understand the maintenance and costs, I didn't when I got in and it's a steep learning curve. Get in a very expensive unit, put the throttle at 100% and beat he heck out of tress all day...no iding, not half throttle, wide open 10 hours a day. While driving over rocks, stumps, logs. The fuel consumption compared to dirt work is 500%. My dirt work buddy runs all week on half of his transfer tank, I fill every other day and CBs machines are higher HP than mine. How about one bad impact with a rock and you break three teeth...that's $240, I've had a bad week in rocky terrain and gone through half a set...$1250. Add in track wear, rubber or steel they both wear, a blown hydraulic line or broken window or ? Yeah, $1200 gross a day is minimum with a skid steer...more for a larger machine.
And the comparison on an acre at ddivinias and an acre in the south are two completely different types of brush/trees. ddivinias place looked like spaced out cedars and the southern acreage sounds like very dense growth.