Weathering the Economic Storm


Former landscaping giant back in the ring

La Bella, a high-end residential development in Los Angeles, features a formal lawn in the internal courtyard courtesy of LDI.

Gary Horton looks back at 2007 as possibly the worst year of his 45 years in the landscaping industry. It was also the year that his Los Angeles-based landscaping company, Landscape Development, Inc. (LDI), began to crumble as California’s housing market collapsed, because 90 percent of its business was tied to regional and national homebuilders. “We grew to be the second or third largest landscaping operation in California, with revenues just under $100 million and annual growth of 35 to 40 percent,” says Horton. “Our five district offices were capitalizing on the state’s 250,000 housing starts a year. In 2007, we had a great year top line, but our worst ever bottom line, incurring $3.5 million in bad debt write-offs as builders began defaulting and going bankrupt in large numbers.”

Gary Horton, owner of Landscape Development, Inc.

That was the kick-off year to what Horton believes to be at least a five-year long homebuilding recession in California that still hasn’t shifted. In all, California housing starts have fallen a full 80 percent, down to just 30,000 last year.

Horton has worked through previous California homebuilding recessions, all cyclical in nature, but he believes this one is different, with no turnaround anytime soon. After his business fell precipitously for several years after 2006 in what leading economists say is California’s worst financial crisis since the Great Depression, Horton was well-aware of the emotional and mental toll the stress was taking on him. He didn’t want to be like other landscapers who were filing for bankruptcy or shutting their offices for good.

“In 2009, I concluded I needed a good, hard reboot, a refresher on business and a time to myself to regain my bearings and revive my creative energy.” As an avid reader of The Economist, Horton noticed an ad in the back of the education section for Wharton Business School’s Advanced Management Program. In the fall of 2009, Horton signed up on the spot and flew east to become immersed in Wharton’s intensive five-week course with 38 other CEOs and C-suite professionals from around the globe, all at the top of their field, and taught by some of the most revered business professors in the world. “The new ideas given to me by my new peers started my entrepreneurial juices flowing again,” says Horton. “I came home recharged and ready to take on the continuing challenges the homebuilding recession continues to deliver.” At Wharton, Horton learned to pivot fast in order to survive the landscaping maelstrom.

LDI’s product mix shifted considerably, largely out of necessity, and was made possible by its preparation and diversity. The focus is now on the infill, public assistance and high-end custom home builders. Twenty-five percent of its projects service high-end residential estates, with the largest custom home contract exceeding $3.5 million. Single-family production homes are now only 30 percent of revenues versus 85 percent in 2006.

Westfield Valencia Town Center Mall featuring an expansion fountain.

LDI is capitalizing on its strength as early innovators in the erosion control and earth services industries, with products like sandbags and silt fences and expanding its environmental mitigation projects with Cal Trans (state highway and light rail department) and other government agencies awarded economic stimulus funds. It is involved with Earthaid USA marketing primary SWPPP (stormwater pollution prevention plan) products to direct customers who chose to be do-it-yourselfers. Earthaid USA becomes an easy, direct source for the primary elements contractors need for their basic SWPPP requirements. “We continue to push our earth services SWPPP team, however, now we’re into water retention tanks, water filtration and heavier engineering type projects,” says Horton.

LDI had an advantage in the California market because it had already been developing its in-house landscape architecture and design build program. “In this recession, customers are looking for efficient designs to save money, and our design team has the ideal approach for the moment,” says Horton.

Although LDI always had a maintenance arm, efforts are underway to increase it. “Certainly, those firms more devoted to maintenance have fared better than us lately,” says Horton. “I wish I would have pushed recurring revenue harder and much earlier on. In a no-growth area like California, maintenance remains a great business, yet under tremendous competitive pressures.”

Other than generating top line revenue and cutting overhead, Horton took on what he believes was the biggest management challenge: the motivation and encouragement of its remaining employees who endured the years of downsizing. Peak employment stood at 1,300 in 2006 and is now just a fraction of that number. “Management must communicate with staff openly, honestly and regularly,” he says. “‘We’re in this together’ is a good message that motivates.” Horton believes that the silver lining in the current recession cloud is the building of a “battle-proven” core team for LDI’s future – all supermen and superwomen – who are able to stay in the game at the company despite the recessionary woes.

A $3 million water infiltration system installation for a Southern California beach community estate.

For LDI to sharpen communication in gaining new clients and retaining established ones, it created a Raving Fans program based on business concepts developed by Ken Blanchard. “The customer wants to be heard and you want to listen,” says Horton. “We developed proprietary systems to push this customer service mentality all through LDI, from project specialist staff right down to the crewmen with the shovels.”

Horton recognized that his clients no longer appreciated large, glossy brochures. “We found that they wanted more up-to-date, project-specific information that could be sent via e-mail in a PDF,” he says. “That means good marketers need a strong, ready portfolio of images, case studies and referrals ready to gather, collect, combine and send off to target clients. That is exactly what we created.” LDI is using Apple photo books for specialty marketing in iPhoto and Photoshop, customizing small print runs for various niche markets.

LDI is also changing its old model that established large, full-service facilities in every market it served – Los Angeles/Ventura, Riverside, Bakersfield, San Francisco’s inland suburbs and San Diego. It has already closed offices in San Francisco and the landscape architectural division in Ventura, and will be looking at consolidating other offices and further adapting its structure to serve remote locations. “Our clients have consolidated into remote central areas,” explains Horton. “We realize it’s our response and job performance, not necessarily our proximity to either them or their actual projects that will ensure our success.”

LDI has been fortunate in gaining the national spotlight during this time. Last year, the company was involved in a $2 million project of its own design to save 25 high-profile homeowners in Malibu from shifting tidal patterns that threatened their estates with flooding and destruction. LDI set up a crew of 80 working around-the-clock for a month with two full-time operating cranes, a night lighting system and conveyers. “The scene looked like something from a beach battle during World War II,” says Horton. National news crews were out in helicopters taking pictures daily. LDI was also the landscaper for a recent “Extreme Makeover” segment in Whittier, Calif., where solar panels were installed.

LDI has been a leader in Southern California’s Building Industry Association’s various Home Aid projects. These projects feature home builders that display super high-end playhouses that are auctioned to raise money for assistance housing and shelter for people and families at risk. LDI has built complete model home parks for the playhouses, with the most ambitious being a six-home model site built inside the promenade of Thousand Oaks Mall.

Tesoro Del Valle master planned community in Santa Clarita features formal clubhouse gardens, man-made lake with recreational paths and a pool with a pergola.

For Horton, 2011 is looking up. LDI’s landscape architecture revenue is at its highest level in five years. And, he believes that within five years his company will regain its growth mojo and creative aura. “We held steady from 2009 to 2010 when others were still in decline,” he says. “Maybe a little less flash than 2006, but hopefully a lot more cash. The next one or two years is about continuing to heal, tighten up and right our ship after a tremendous storm.”

For the past 20 years, Tom Crain has been a regular contributor to B2B publications, including many in the green industry. He is also a marketing communications specialist for several companies in the travel, agriculture and nutrition industries.