How could coronavirus impact the commercial sector?

How could coronavirus impact the commercial sector?

How could coronavirus impact the commercial sector?

Phil Jones of ESL Landscape Contractors discusses the impact coronavirus could have on the commercial landscaping industry and how his company remains robust despite COVID-19

The current situation is worrying for all business owners and employees in the landscape industry. First and foremost, the responsibility we all feel for the health of our staff and their families is a burden above anything else in order of priority. It doesn’t help that some decisions are being left to landscape contractors to make for themselves, with some customers closing sites and others choosing not to. At the end of the day, however, protecting the safety of our people and their families is a straightforward and easy choice.

Commercially, it is a different and potentially more worrying picture.

Traditionally, landscape companies don’t sit on large pots of money, enabling them to see off economic threats easily.

The landscape industry, however, is well known for its members working together when met with enormous challenges. It has proven to be extremely resilient following times of trouble.

There are going to be a number of incomplete projects because of customer closures, landscape contractors rightly deciding to close temporarily to protect their staff and the public, and the supply of materials being restricted. The resultant threat of commercial and contractual disagreements, when the moral and human rationale are long forgotten, could be worrying to some.

The resultant issues will not be easily resolved. We saw in the last recession that it took a while for supply chains to re-engage and for the availability of materials to return to normal. Firms were less willing to carry large stocks of materials, resulting in lack of availability and extended lead times. One assumes that the flow of imported goods may well be slowed for a time.

I think there may well be opportunities for companies to work together to complete outstanding contracts. Certainly, there will be a need for mutual understanding. I think it more likely that some firms will fall away, unable to sustain their working capital sufficiently enough to fulfil their obligations.

As a passionate supporter of landscaping l hope that all landscape and associated businesses can survive. I guess the positive difference between the 2008 recession and this situation is that there is help available for employers this time around, and they are able to take advantage of that help. However, the indications are that many small to medium size commercial construction companies will have been living from hand to mouth before COVID-19 hit. Sadly, that means that there will be a number of businesses that will struggle to survive. I’m not sure there will be a huge number of acquisitions as a result, but I suspect there will be some.

ESL has been engaged over the last 18 months in strengthening all areas of its business. I have overseen the work our people have carried out in updating a lot of our processes, significantly improving the quality of the end product, recruiting a number of key industry players, reducing our cost base and consequently building strong customer relationships. I have invested in many parts of our business, particularly in people, project delivery and sales. This means the company is strong in the face of adversity.

Consequently, we are in a position to further invest, not just in the current business, but to look at any other opportunity that fits our strategy. As with any crisis, there are always opportunities, as well as the obvious risks. There will be a number of people in the industry who will maybe see this current crisis as the sign to hang up their boots and retire or those who are faced with a decent order book and little or no cash to fund their operation. There may also be people out there who have little work ahead but have a decent retention portfolio.

ESL has recently expanded its geographical coverage and now operates across the south of England. As a commercial landscape construction company, I’m looking to add quality volume to our existing operation. I have also been naturally expanding our grounds maintenance portfolio and wish to further extend this.

I see these current challenging times as an opportunity to support the industry through consolidation and to ensure that the industry thrives post COVID-19. I like to think that ESL and its shareholders are well placed to help achieve this.

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