Aug. 17 2015 10:43 AM
Contractors Choice Snow
You roll out of bed while it’s still dark, bolt down some coffee, then bundle up in hat, gloves, boots, pants and parka. You head out into the cold, dark streets to push, shovel and melt ice and snow so other people can get to work, to school, to the grocery store or the hospital.

If you’re a snow-and-ice removal contractor, you know it’s some of the hardest work there is, in the green industry or any other. “We call it, ‘blood money,’” said Craig Scharf, owner of Greg’s Lawn and Landscaping, Inc., in Cedar Rapids, Iowa.

“We work endless hours, and everything we do is usually breaking a DOT law. When we’re out working, our clients are still looking at the backsides of their eyeballs.”

One winter, Scharf went to Boston and plowed for 56 straight hours— and that was after driving 20 hours to get there. “We put in plenty of 30- to 50-hour shifts. That’s hard on the body. If you’re going to be in this business, you’d better damn well be making good money.”

The money can be very good, indeed. Pushing snow can be a high-margin business, if a contractor can successfully navigate some of the special challenges he’ll face.

Labor

Many landscape contractors add snow removal as a way to retain good workers during the off-season. Even so, not everyone is up to this type of work. One contractor said he had an employee give up in the middle of a job, exclaiming, “I can’t do this anymore!” Brian Birch, chief operating officer of the Milwaukee, Wisconsin-based Snow & Ice Management Association, Inc., (SIMA), says that sort of thing happens all the time, judging by the war stories he hears from members attending SIMA’s annual convention. A quantified study the organization conducted a few years back showed that labor is one of a snow contractor’s top challenges. It’s hard, thankless work, so it can be tough finding good people to do it.

When you do, it pays to pay them well. That’s what Edith Snyder, CSP, (certified snow professional), ASM (advanced snow manager), owner and president of A Growing Commitment, Inc., in Freehold, New Jersey, has always done. As a result, many of her crew members have been with her for decades.

“I have a wonderful shovel crew of about 50 people,” says Snyder. “They enjoy the work, and are very dedicated, with a strong commitment to producing exemplary results.”

Gerry DuBreuil, snow operations manager at Gilford, New Hampshire-based Belknap Landscape Company, Inc., said, “In winter, to be fully staffed, I’d enjoy having 120 to 130 people. Do we always get that type of staffing? No.”

Having that many workers gives him the ability to create shifts. “At times, we get storms that go on for 24 to 36 hours, then there’s cleanup afterwards. I don’t like to push people beyond the 12- to 15-hour range, but occasionally, I have to.”

Mostly, DuBreueil’s winter crews consist of the team leaders who work with him during landscaping season. Shovel crews are filled out with temporary workers. He also hires equipment operators who’ve been laid off from paving companies. Putting them on loaders or skid-steers works out well, as they already know how to run them.

Unfair contracts and high insurance rates

These two problems are the biggest ones snow-and-ice contractors face, and they go hand-in-hand.

It used to be, the bigger the site, the more money you’d make. Not always, not anymore. In some cities, local snow-and-ice removal companies have been finding themselves outbid for big-box-store plowing jobs by some very large multistate landscape- and property-management companies. Once the firms win these contracts, they sub out 100 percent of the work back to the local contractors.

Sounds like that should be a good thing. According to Matthew Peterson, president of the Mills Insurance Group, LLC, in Marlton, New Jersey, it’s not.

“The big companies ask the stores, “How much is your annual snow budget? $50,000? Well, we’ll do it for $10,000.” And then they turn around and sub it out, to the very contractors who had been doing the work, but now have to do it for less. Their prices get cut in half, in many cases.”

Peterson says that somewhere around 2005, a kind of ‘perfect storm’ happened, where at the same time as contractors were seeing smaller paydays, they were also being hit with skyrocketing liability insurance premiums.

Part of the problem was that the insurance industry didn’t have ‘good data’ on snow-and-ice removal contractors. “The insurance industry puts things in boxes, and they didn’t have enough data to put these contractors in the right box, to judge whether snow-and-ice removal was ‘good’ or ‘bad,’ in terms of liability,” said Peterson.

In fact, up until that time, carriers didn’t even have a general-liability code for snow-and-ice removal companies, and lumped them together with ‘street cleaners.’ A landscape contractor who had a snow operation in the winter months was typically charged a flat fee of $800 or so a year, in addition to his regular landscape-company premium.

Here’s the next part of the ‘perfect storm’: for reasons that aren’t really well understood, around that same time insurance companies started seeing a lot of ice-andsnow-related slip-and-fall claims with very large payouts—$50,000 to $70,000 a pop.

“It’s basic math; suddenly the insurance carriers were paying out these big dollars, but only taking in, on average, $1,200 to $1,300 in premiums annually,” said Peterson.

“That’s a bad business, when you’re paying out 300 to 400 times the loss ratio.”

So the insurance carriers started putting pressure on building owners to transfer their slip-and-fall risk elsewhere. And who got this marvelous gift? The snow-and-ice contractors, who, in many cases, didn’t read these new contracts carefully enough, especially when they’d worked for that same client for many years. Then, when an accident happened, they discovered that the entire liability burden fell on them.

Scharf has seen this happen frequently. “A guy will say, ‘Woo hoo! I just signed up a big-box store! Man, I’m a big dog now!’ but he has no clue what the contract he just signed really says. And his insurance carrier has no idea what their insured just signed them up for.”

“I’ve got one of these big national management companies right now wanting me to sign a contract to do a big-box store. They tell me, ‘We don’t change the terms of our contracts.’ They’re dealing with the wrong contractor, because I don’t ‘just sign.’ I go through and make adjustments, add things, redline out certain others. I tell them, ‘If you don’t like it, go find a different contractor, because I don’t have to work for you.’” Scharf says he could care less about plowing big-box stores, as he plowed them for “enough” years. “But when I did it, I was making big money. Now, they’ve made it so you can’t even afford to take the jobs, because they only want to pay you enough to maybe cover your salt bill for the season.”

Fortunately, things are being done to fix this problem. The Valley View, Ohio-based Accredited Snow Contractors Association (ASCA) was founded in 2011, largely to address the liability issue.

“It’s very tough to get insured, because snow-and-ice contractors continue to get sued for slip-and-fall accidents,” said executive director Kevin Gilbride.

“These lawsuits continue because the legislative community doesn’t pay attention to our industry. The laws are completely favorable to the people outside of it and don’t protect snow-and-ice management companies at all.”

Peterson says that things are improving. Contractors are starting to learn about the indemnification language in contracts, and getting more focused, more professional, and a lot more educated. “Education is the big, bright, shining beacon in this whole thing.”

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