Weathering the Challenges

Many values separate one company from another in such a way that the company can thrive irrespective of what the conditions are in economies both good and bad. Such has been the case for Arteka Companies in Shakopee, Minnesota, which has grown tremendously in four decades, proving its resilience time and again.

Arteka’s focus on integrity and dependability has assured it a place in the local business sector for the long term, says Stewart Hanson, president.

In 2013, Arteka management budgeted for $10 million in revenue, which was a 5 percent increase over the previous year. Instead, the company churned out revenue of $11.8 million.

Arteka Companies has gone through many changes since Jerry Bailey, a landscape architect, founded it in 1970. In 1991 it merged with Natural Green, a company started by the late David Luse in 1976. In 1998, it was one of the seven original companies comprising LandCare USA. It then became affiliated with TruGreen and ValleyCrest before Luse and Hanson bought it back from ValleyCrest in 2005. Hanson started with the company in 1973 as a laborer.

Strong work ethic

The company pays its employees at or above the regional market rate and is increasing pay to the productive people who stay with the company. Finding good employees remains Hanson’s greatest challenge. “If we find good people and train them, we’re pretty good at hanging on to them,” he says.

Mike Staber, maintenance operations manager, says the company seeks adaptable individuals. “We’re looking for guys willing to learn and take on more of a scope of work and, like Stewart, rise through the ranks at Arteka,” says Staber.

“Many people around here talk about looking for work ethic before looking for skill sets. A lot of times, this industry is one where people learn the skills starting in the field as a laborer and as they get trained, they grow through the company. You can take someone with a work ethic and mold them into an incredibly good employee who will stay for a long time,” adds Jake Voit, project manager.

Arteka Companies provides landscape installation and maintenance services primarily to the commercial sector and a limited amount of high-end residential properties. When the companies first merged into one, only landscape installation was provided.

Presently the mix is 35 percent maintenance, 65 percent landscape installation, but Hanson’s goal is to flip that in the next five years. It’s also part of his exit strategy to focus on maintenance to make the company more attractive and marketable.

Hanson says if he were to have done anything differently since he had bought the company, he would have had better systems in place. “I also would have developed the maintenance side of the business before the recession set in, but hindsight is 20-20,” he adds.

Through its diversification efforts, Arteka is engaged in a big push not only to be more attractive and financially stable, but resilient to quickly changing markets and adaptable, he adds.

“We’re focusing on learning what the future will be, what opportunities exist for innovation, and then stay ready to adapt quickly to be resilient,” Voit says.

Pulling together

One factor that helped get through the recent recession was its strong relationships with key businesses in the market, Voit adds. “When times get tough, you turn to the people you trust the most to make it through,” he says.

Arteka, faced with disintegrating margins in installations, downsized during the 2008-2009 recession. Remaining employees had to assume more responsibilities, and margins for installation work crashed.

“We’ve been working hard to pull those up and we’ve been helping our competitors to pull them up, too,” says Hanson.

“We were fortunate to have a lot of maintenance contracts with homeowners’ associations that did not have a lot of foreclosures, so they were able to keep us on as their maintenance contractor,” Voit adds.

Sustaining landscapes, profits

Arteka Companies takes a hybrid approach toward the use of traditional chemicals and organics.

Voit has experience in sustainability regarding organic procedures and fertilizations, which he gained while working for Cagwin & Dorward in California for seven years. He helped that company earn PLANET’s Sustainable Company Award in 2009. He has been with Arteka for one year.

“There are a lot of small landscape firms that are just starting to become successful at doing organic lawns and organic maintenance,” he says. “The demand is just barely starting to move into commercial sites and homeowners’ associations in the Midwest for large property managers. I’m happy that I’ve had the experience in California helping the company become more organic, and I feel fortunate that I’m in a company that’s sizable and can do some innovative things as that demand continues to grow here.”

Voit says it’s an “an interesting dance” between trying to inform customers about organic approaches and to be able to start offering those services more. “It really helps us to be a resilient company,” he says. “If we’re always dependent upon chemicals and fossil fuel-based business, then we’re going to feel the impact of the increase of the price of those resources as time goes on. We’d like to be resilient enough to not have that be the case so we do not need those things to create a high-quality landscape.”

Reaching out

Voit says the most important approach on gaining new clients is to leverage existing relationships and ask for referrals.

Educational events are another approach, such as conducting a soil management class and inviting property managers to show them how the company can help reduce water, pest and fertilization costs, Voit says. “It’s about empowering them with knowledge on how they can manage their properties better by hiring us,” he adds.

Part of Arteka’s educational efforts is to partner with landscape architects who are designing green roofs from a plan view. “We help specify kinds of soil, soil quantities, drainage, rooftop protection and irrigation needs that will make a successful green roof,” says Hanson.

Much of that entails meeting budget expectations in a market with strained budgets, he says.

“Everybody is trying to get their budgets smaller all of the time and it’s about managing quality within budget,” he says.

A third approach is public speaking and writing articles, Voit says. “It’s about building up the Arteka brand, whether it’s innovation, resiliency, customer relationships, quality or whatever the focus might be, but to be out in front of the industry and being a spokesperson for the industry really helps a lot,” he says.

Ahead of the weather

Providing snow removal helps to expand services, keep people employed and increase the bottom line. Unlike a summer maintenance schedule, however, the snow schedule is unpredictable.

“We have done a good job of planning for it operationally,” Hanson says. “We’ve got people on call and dedicated subs we’ve had for years, plus our own people. He says pricing snow services is the biggest challenge now. His market had the biggest winter ever this past winter, the 2013 winter had hardly any snow and the season before thathad lots of snow.

Creating monthly contracts in that unpredictability can be difficult, he adds.

“We’re looking at how we can try to change that pricing model because it’s tough,” Hanson says. “You go from 42 inches of snow last year and now we’re up to 70 this year.”

The ongoing climate variations have, to some extent, affected the company’s summer maintenance schedule.

“It snowed all the way until the first week of May last year, so that did take away a month’s worth of our season, leaving everyone in a rush to get everything done,” says Staber. “The snow seems to be eating into our summer over the past couple of years here.”

Redefining “green” industry

Looking ahead, Hanson expects the company to develop the urban landscapes even more, with constructing and maintaining green roofs and green walls being the calling card of the future.

“We’re trying to become well-versed in that,” he says. “Architects can draw what they want to see, but they don’t necessarily know how to engineer it. That’s an important piece on the maintenance side that we can help put in the design. We want to continue to add scope on that side.”

Hanson envisions additional services over time, although he’s not sure what those will be. “To me, a bigger piece is we have the ongoing revenue on a monthly basis,” he says.

Voit has a prediction for the next decade and envisions the role that Arteka will play going forward. “It’s becoming really important for people in general to become much more connected and aware of our landscapes and the way that we are managing the ecology around us,” he says. “I think that’s one way the industry is going to increase its importance in our world. I’m speaking about colony collapse disorder, food access, bee habitat, pesticide use and herbicide use.”

Voit also sees what he calls an “interesting tension” between the landscape industry and urban agriculture as some small landscape firms are starting to provide edible landscaping.

“That’s starting to take off pretty big,” he says. “It hasn’t hit big companies here yet, but I think somebody is going to break into that market and start to figure out the math on providing a lot of value through food on properties versus having clients just paying to mow the grass.”