How do they do it?

[treeman82]

So I tend to talk with guys who are licensed and insured. We have all been experiencing the same problems lately more or less. We're all hurting for good jobs, and therefore money... living on scraps.... the smaller jobs. Meanwhile the underbidders are coming in and doing jobs for a LOT less than we are, and they are the ones buying the new equipment. For example, a job I bid a few years ago had 5 bidders. 3 of us bid at $15,000 and $17,500. 2 bid at $5,500 and $8,500. Another job I bid at $7,000... it got done in the end for around $3,000. Those guys were there for almost a week! and had to haul off willow and pine. Bid a nasty pine last winter at 6K, it was done for 2. I still can't figure out how these guys are able to not only DO the job, but also buy new equipment... which is only increasing in price. Can somebody explain to me how they are able to do this?

 

[Single_Shooter]

I don't know where I fall into the mix but we are insured and growing all the time. We have a licensed/certified arborist as well as 2 other climbers we call depending on the job.

We would rather do 3 small jobs in a day than one big job for 3 days. We get more money at the end of the day from smaller jobs than we do from the big ones - we prefer to leave the big jobs to the big guys with all the big shiny equipment. And we are growing rapidly. I am in the process of buying new equipment this week in fact.

We have a company here who underbids us constantly and they have multiple crews. They bid a job just a block from my home and got it. It was a 1 day job for us with a 4 man crew and we bid it at $1,400. The other guys came in at $800 (according to the homeowner) for 2 medium size maples. It required the power lines be dropped to two houses and they spent 2 full days there working with a crew of 6 guys. A month later they have yet to return to grind the stumps...and the homeowner asked me how much to do that for them...lol

Anyway...I have no idea how they can run a 6 man crew for 2 days with a bucket truck and a chipper/truck combo and a Dingo and make any money at $800. I am truly dumbfounded as well how they can pay their bills let alone have all that equipment and meet their payroll.

 

[Single_Shooter]

I asked a buddy in the tree biz this question today and he said it is rampant here in St. Louis that the crews for the bigger companies will work jobs in the neighborhood for cash using the company equipment while the company job waits for days for them to get it done. Apparently it is a huge issue here...I was not aware of it.

So I guess if a crew all joins in and they each get an extra $200-$400 in pay for the week they are all happy...especially when there are no taxes taken out and the equipment use is free.

 

[pro94lt]

So I tend to talk with guys who are licensed and insured. We have all been experiencing the same problems lately more or less. We're all hurting for good jobs, and therefore money... living on scraps.... the smaller jobs. Meanwhile the underbidders are coming in and doing jobs for a LOT less than we are, and they are the ones buying the new equipment. For example, a job I bid a few years ago had 5 bidders. 3 of us bid at $15,000 and $17,500. 2 bid at $5,500 and $8,500. Another job I bid at $7,000... it got done in the end for around $3,000. Those guys were there for almost a week! and had to haul off willow and pine. Bid a nasty pine last winter at 6K, it was done for 2. I still can't figure out how these guys are able to not only DO the job, but also buy new equipment... which is only increasing in price. Can somebody explain to me how they are able to do this?

I wonder this each week best I can tell is they live at a much much lower level of living than the average American or simply don't last but a couple years...

 

[Single_Shooter]

Found a partial answer to this query.....

I went to a gun show here in St. Louis a couple weeks ago and happened to speak to the woman running the ticket counter at the front door. I found that she works for the company who bought the tree company who keeps underbidding us.

I asked her how they can run a job like the one I described above and make any money at it. Her response....we hire a lot of Mexicans and we really don't pay very well. According to her they pay their crews about $8 an hour and the crew leaders $8.50 an hour.

And basically they hire the chronic unemployable (read as: alcoholics and dope fiends) and pay poverty wages.

I did the math real quick and told her that they still lost their asses on that job. She says they hire guys to bid the jobs and the salesman gets 10% off the jobs they schedule and get deposits and signed contracts on. Sooooo....it looks like they got some sales reps who are killing their bottom line just to make a quick buck. Not sure how this works for them...but I would have to fire some sales reps after a couple of those deals.

 

[pro94lt]

So how is that company doing? What's everyone's opinion of the long term success of the low balling ones?

 

[blades]

work for cash only, pay out cash only, no taxes no insurance no books

 

[sonny08]

Turn their sorry arses in. Hiring illegals - cheating on their Workers Comp - paying labor as subcontractors when they are really employees -

 

[BuckmasterStumpGrinding]

If I had a really good sales plan and could stay busy (40 hours a week) I could lower my prices if I needed to.

 

[BuckmasterStumpGrinding]

If they are independently wealthy and trying to get into the tree business (They bought an established business). They could run at a loss for a while to drive out competition before they raise prices and make real money.

 

[BuckmasterStumpGrinding]

If they are big enough they can work at a loss in your area and cover it with profits from other areas until you are gone.

 

[sac-climber]

Happened to me recently too. Bid at $780 checked in a week later and the HO said a company was next door and did it for $300. I know the crew pocketed the cash. It's ok though, I went back by the joint to see the job and they left a dead-eye sling so I picked it up for them

 

[mckeetree]

All over the south, employees of line clearance companies were a huge problem up until about ten years ago. Still a problem but not like they were. They would do side jobs using the companies equipment and basically they had no over head when they did that. Did them dirt cheap. Asplundh's people, Trees Inc., Wright, ABC...hell, all of them. Mostly Mexicans. I remember complaining to one in particular about it and they denied it was going on. I told them well, your people did about $10,000+ worth of damage to a property we were working next door to last Saturday and it looked like one of your people got hurt in the process so I imagine you will be figuring it out within the next 48 hours or so. And that wasn't an isolated case, there were others.

 

[gorman]

Things are hurting here as well. It's just that there are a lot of new companies who sprouted up in the last year. Five or six in my county alone. I'm just going to wait this year out and not make any purchases.