Rental Strategy Helps Landscaper Succeed

Photos and story by Mike Larson, Editor | September 28, 2010

Northern Landscape Contractors, LLC, Menomonee Falls, WI, has built a reputation as one of the premier retaining-wall experts in Wisconsin, and as a first-rate landscaping company, as well.

The company is one of the Midwest's largest installers of modular block retaining wall systems, installing anaverage of 50,000 square feet of walls per year.

It specializes in large, engineered walls, difficult situations and unique applications.

Commercial Focus, High-Profile Clients

Focused on commercial customers, Northern Landscape works on office buildings, condo and apartment complexes, municipal projects, churches, recreational venues, colleges, manufacturing facilities, and retail developments within 500 to 600 miles from its Menomonee Falls headquarters in suburban Milwaukee, WI.

The company's work takes its five crews throughout Wisconsin and into Michigan, Minnesota, Illinois, and Iowa, too, doing both new retaining-wall and landscape construction, as well as repair, rework and rebuilding of work done by others. Its capabilities include everything from designing through construction.

Some of its more high-profile clients include Miller Park (for which it constructed all the decorative stone retaining walls), Walmart, Menards, Costco, Petco,

Northern Landscape owns six skid-steer loaders and rents additional units as workload requires. They try  to rent units that are similar to the ones they own and thier work crews are familiar with.

Home Depot, Carroll College, and West Bend Savings.

Tackling Tough Jobs Is One Key To Success

Owner Herb Larsen, a state-licensed landscape architect with decades of experience, grew up working with his father and brothers in the family landscape business. He is also a journeyman mechanic and a certified welder.

After detouring into other careers, Larsen found his way back into the landscaping field when he went to work as a laborer for Northern Landscape Contractors in 1988. Just six years later he bought the business, which he, his son and his son-in-law now manage.

The company also has a core group of about 30 mostly long-term employees, which it supplements with seasonal workers as needed. The company generally works about 11 months of the year, depending on temperature, snowfall and customer demand.

Larsen is proud of Northern Landscape's capability to take on even the most challenging projects. “We're often called in on the really challenging jobs that have some difficult site conditions, or restrictions, or other complexities because we usually can provide a solution and have crews that can implement it well,” he says. “It's been a big part of our success.”

Multifaceted Equipment Strategy Also Helpful

Another big factor in Northern Landscape's success has been the equipment strategy that defines what equipment to own and what equipment to rent.

“Having a well-defined rental strategy,” says Larsen, “lets us make the best use of our working capital while maximizing productivity. Any piece of equipment we own or lease has to save us time or labor, otherwise there's no reason to invest in it.”

That strategy includes owning equipment that it uses frequently, and supplementing its fleet with rental equipment when a job is far away or requires infrequently used specialty equipment.

Says Larsen, “When considering whether to own or rent a piece of equipment, we consider how we'll use it, how often we'll use it, how it will help us be more productive, how easy it will be to move, how available it is in the rental market, how much it costs, and how reliable it will be to operate and maintain.”

Northern Landscape's extensive fleet of equipment includes compact excavators, skid loaders, compact track loaders, ride-on and walk-behind compactors, telescopic lifts, tractors and attachments, dump trucks, small dozers, rollers, and one mid-sized hydraulic excavator.

Own Smaller, Rent Larger

Larsen says that the size cutoff point between owning and renting for excavators is about 45,000 pounds. Equipment larger than that, he says, becomes too expensive and difficult to move frequently, so the company will either rent it, or find a subcontractor to do that part of the excavating.

“In general,” he says, “if a piece of equipment is easy to haul without a permit, we'll own it. If it's larger, we'll rent it – as long as it's a type of equipment that will be readily available when we need it.”

Own Hard-To-Rent Specialty Equipment

“There are some pieces of specialty equipment,” he says, “that we don't use often, but that we need to own because they are hard to find when you want to rent one.”

For example, the company owns a machine that can lay large rolls of sod. Northern Landscape keeps the unit in its fleet even though 70 percent of thecompany's work is retaining walls, and only 30 percent is traditionallandscaping.

“It was the first large-roll sod layer in the industry,” he says, “and we bought it in 1998 for a 60,000-square-yard sod job. Working by hand, our crew could lay 2,500 to 3,000 square yards per day, but the sod-laying machine could place 7,000 to 8,000 yards. The machine paid for itself on that first job. We don't use it as often as some of our other equipment, but it's not costing us anything and would be hard to rent, so wekeep it.”

Rent Equipment Near Site For Far Away Jobs

For jobs that are far away from Menomonee Falls, say for example in Upper Michigan or in Iowa, Northern Landscape generally tries to rent equipment locally for the duration of the job, rather than trucking its fleet to the site.

“We will find a local dealer or rental company we are comfortable with,” says Larsen, “and rent all the equipment we need. It's just more cost effective than transporting equipment all over.”

Experience has taught Northern Landscape what to look for in renting equipment far from home. It tries to rent machines similar to those that it owns, so the operators are familiar with them and can be immediatelyproductive.

The company has also learned to look for hidden costs in contracts. “We had one case where we were working far from home,” says Larsen, “in which a skid-steer loader was quoted at $400 a week, but turned out to cost $1,000 after all the special charges and hidden add-ons. Now we make sure the real cost is clarified at the beginning.”

Near home or far away, Northern Landscape also chooses to carry its own insurance for the equipment it rents, feeling that it's more economical than taking insurance through a rental company. “We carry a $200,000-per-unit general policy to cover us during rentals,” says Larsen. “That covers skid-steer loaders and most other smaller equipment. If we rent a larger piece, we have sources from whom to get more coverage.”

Develop Relationship With Local Dealer

When working near home, Northern Landscape does most of its buying and renting from Milwaukee Tractor & Equipment, Milwaukee.

“My dad did business with Milwaukee Tractor when I was a kid working for his landscaping business,” says Larsen, “and I began working with them when I got back into the business in 1988. They've always treated us right, been fair on pricing, good on service, and easy to work with. That long-term positive relationship has built a strong trust. We buy and rent from others, too, but Milwaukee Tractor is our primary partner forequipment.”

Larsen also says that New Holland equipment seems best suited to his company's work and crews. “All of our operators are used to hand and footcontrols rather than joy sticks, so we like the New Holland controls. Also, the New Holland skid steers can lift more weight for their size and climb hills better, which is important in our work.”

Rent To Test Before Buying

Northern Landscape also rents equipment when it is interested in buying a new unit, but wants to make certain that the piece of equipment is right for its operation before investing in thepurchase.

Says Larsen, “A one- or two-day demonstration doesn't really give a good feel of how the machine will perform over the long haul, its fuel consumption, reliability, and productivity. Renting a machine for a few months helps provide reliable data for accurate decisions.”

Generally, Northern Landscape's trial rental lasts three months or more to be sure everything about the design, performance and reliability is right before making a purchase.

“In one case,” Larsen says, “we rented a compact excavator for a year and a half before we actually bought it. By then, we knew exactly what we were getting, how often we'd use it, and how productive and reliable it was. We were thoroughly comfortable with it. It's been performing wellever since.”

Rent To Meet Special Customer Demands

Sometimes Northern Landscape rents equipment to meet a particular job's requirements.

For example, says Larsen, parking structures having more than 1,000 stalls are required by law to have equipment with Tier II or Tier III engines and warm-up and shut-down times of no more than five minutes.

If a contractor doesn't own a machine that meets those special requirements, it may make more economic sense to rent the machines he or she needs for the duration of that job, rather than investing in new equipment.

Understanding how and when to rent equipment is one key that has helped Northern Landscape Contractors to expand its success continuously over the past 14 years, and it will continue to play a vital role in the company's strategy for future success.