Tree Services Magazine - January, 2013

FEATURES

Money in Mulch

Turning wood waste into profits
By Patrick White

Most companies working in the tree care business see themselves as service providers. However, some have added "products" to their lists of services as a way to generate extra revenue. While some focus on firewood, many tree care companies have turned to mulch.


S&S Tree and Landscaping Specialists handled about 100,000 yards of mulch in 2012 and expects that figure to rise next year, making it one of the largest mulch producers in the Twin Cities area.
Photo courtesy of S&S Tree

Langer's Tree Service (www.langerstree.com) in White Bear Lake, Minn., has been selling mulch for about 15 years. Owner Ryan Langer explains: "We had excess byproduct that we wanted to utilize and make some money with it. We started off selling basically a landscape wood chip from a large industrial wood chipper that we used. From there we branched off into more of a retail mulch operation."

Today, crews typically bring the wood back to the company's yard in log form, where the logs are fed through a 275 hp Brush Bandit 1850 whole-tree chipper. Langer says that the equipment investment to manufacture and sell the mulch has been relatively minimal, as the company has been able to utilize machines, including trucks and a front-end loader, that are also needed for its tree services. "There wasn't much we had to purchase specifically for the mulch," he states.

For a tree care company to get into the mulch business they need to look for equipment that's versatile enough to be used in both capacities. Langer says, "The mulch season is too short in this region, and if we didn't have other uses for the equipment it would just be sitting around, and that wouldn't be too profitable."

It was necessary to construct large bins in the yard that each hold about 100 yards of mulch. This helps the company organize the different types of mulch it sells. In addition to its own natural mulches, Langer's Tree Service also offers western red cedar mulch and several different colored mulches that it purchases from a distributor. "The wood that we produce from our operations wouldn't be enough to supply the demand for mulch, so that's why we do some purchasing," Langer explains. "As that business has grown, we've begun to carry more and more products."

Langer's Tree Service sells mainly to residential customers, but uses several large dump trucks and a roll-off truck to deliver mulch in larger quantities to landscape contractors. Spring is the busiest time of the year for mulch in the area, and also a busy time of year for tree services. "It's pretty hectic here in the spring; we have to juggle both ends of the business and the days are long," says Langer. "We sell so much of it that, when it is in season, the inventory turns over very quickly. It's in and out of here very fast."

He stresses that making and selling mulch isn't an easy undertaking. "There's a lot of time involved," says Langer. "There's a lot of machinery and overhead, and you have to do a lot of sorting of logs and work to produce the mulch. But there is a little bit of profit in it."

For Tree Care by Robert Miller (www.millerstreecare.com) in Brooksville, Fla., mulch is a sideline product, designed mainly to find a use for wood debris. Crews use large Vermeer BC1800XL chippers to chip wood out on job sites, and then it's transported to the company's 10.5-acre site and dumped.

"We sell the mulch by the yard relatively cheaply," explains General Manager Jovan Zeller. "There's a lot of companies around who don't have a place to dump their mulch, so they just give it away for free. So we really don't make that much money from this part of our business - a little bit here and there. We probably spend more money on the mulch than we make on it, but we do it in hopes that demand will eventually pick up and we'll sell more of it. Plus, we'd rather recycle it than just do nothing with it."

The company sells mulch mainly by the yard (at $10 per yard) to homeowners and landscapers.

"Everything here is 100 percent organic; we don't use any chemicals or dyes," explains Zeller. Tree Care by Robert Miller also operates an "Ecocare" division that provides organic lawn care and pest control services, so the organic mulch dovetails well with that, she points out.


Tree Care by Robert Miller in Florida markets its mulch (and also some mulch-based topsoil products) to residential customers and typically sells in smaller quantities.
Photo courtesy of Tree Care by Robert Miller.

A front-end loader is required to handle the mulch, so that was an added investment. Skid steers also are used, but Zeller says that the Bobcats are needed for the company's tree care work. The company will deliver minimum 5-yard quantities for an additional fee. "And it's also at our convenience, when we have a truck available or we're working in a given area," she notes.

Debris that includes palm fronds doesn't make the best mulch, so that material is composted into topsoil. "We built a screening machine and we use our front-end loader to turn the material and dump more on top. It will sit for a year or more and eventually we strain it and make topsoil," she explains. Zeller thinks there might be a larger local market for this material than for mulch, but the company hasn't really targeted that market.

S&S Tree and Landscaping Specialists (www.sstree.com) in the Twin Cities area of Minnesota has taken a different approach to mulch. Rather than making it a sideline to its tree work, mulch has become a dedicated, and critical, part of the company's overall business. "Our company started in 1976, and we started doing mulch as a revenue source about 2002. Really, it was born out of desperation: It was costing us about $40,000 to $50,000 a year to dispose of our wood byproduct that we were creating," says president and certified arborist Steve Sylvester. A nearby bio-energy plant briefly solved the problem, but even that plant soon began to charge for drop-offs.


In addition to its own natural mulches, Langer's Tree Service also offers western red cedar mulch and several different colored mulches that it purchases from a distributor. "As that business has grown, we've begun to carry more and more products," says Ryan Langer.
Photo courtesy of Langer's Tree Service.

Sylvester says he read about tree care companies who were selling mulch and discussed that prospect with representatives from Rotochopper. "We started with a small machine and developed a product that is 100 percent virgin wood - we have no byproducts or fillers or construction debris. That makes us unique in this area," he says, noting that offering a high-quality mulch was critical to the company's early success in this product area. "We marketed our product that way and that helped build and create a market with the large wholesale garden centers and landscape supply centers. It took some years, but now I think we're the second-largest mulch producer in the Twin Cities." In 2012, S&S Tree went through nearly 100,000 yards of material and expects that figure to rise next year.

As the mulch business took off, the decision was made to make it a dedicated division within the company. Sylvester says this approach has been important to the continued sales success of its mulch products: "We have eight full-time people devoted only to mulch. That's all they do, so they really do a good job," he points out. It takes a crew dedicated only to mulch to produce the best product, Sylvester stresses, and also ensures they know how to properly operate the expensive equipment involved without damaging it.

In addition to three Caterpillar front-end loaders with 6-yard buckets; three 105-yard walking-floor Peerless trailers for larger deliveries; and several 40-yard straight trucks used to deliver smaller loads, S&S Tree uses a 1,000 hp Vermeer TG7000 tub grinder and three Rotochoppers. "We've found that the Rotochopper B-66 horizontal grinder is perfect for what we need. We wanted a machine that could grind and color, and with this unit we can color over 200 yards per hour. We needed production, and we couldn't find another machine that could do this," Sylvester states.


Langer's Tree Service began producing mulch about 15 years ago as a way to get rid of excess wood debris its crews were generating, explains owner Ryan Langer.
Photo courtesy of Langer's Tree Service.
The Vermeer tub grinder is used to grind piles, and then that material is run through the Rotochopper, which also colorizes it. Part of the reason for the double-processing is to meet state specifications relating to the emerald ash borer. The state also requires extensive paperwork and conducts regular checks to be sure ash trees are being handled properly. "We've had to raise our price to reflect that, but our business is growing," notes Sylvester.

As wood comes in, it must be carefully sorted, because of the emerald ash borer and to ensure that certain woods with lighter tones are used to make lighter color mulches. Organization is also crucial to be sure that sufficient quantities of each type of mulch are being produced to meet market demand. Customers have to know that the mulch they want is available when they need it or they will look for another supplier, says Sylvester.

S&S Tree offers a variety of different mulches, including certified playground mulch (which has been tested to help minimize injuries to children) and a New England mulch (a finer mulch which is ground down to about 1 inch and allowed to age for six months to produce a dark, rich mulch). "Our best sellers are our colored mulches: We have red, brown, gold, green and black mulches," says Sylvester. "We also have a mulch called our Premium Double-Grind, which is 3 inches in diameter or less, so it's a smoother, finer mulch." S&S Tree is also one of the state's few suppliers of "Minn DOT 6" mulch, which the company created to meet Minnesota's standards for use on highway projects.

Sylvester says that looking for markets to serve and then offering specific mulch products to meet the needs of those markets is critical for success. "You have to create markets. For entrepreneurs who want to get into the mulch business, you can't just sit around and wait for people to come to knock on your door. You have to create the demand, and that's what we've done," he says.

As new markets have been developed, S&S Tree has expanded its mulch operations and it now produces mulch on three different sites, as well as some off-site contract work. These sites provide locations for S&S Tree's crews and other private and municipal tree care professionals to drop off woody debris free of charge. "We do not accept debris from homeowners, because that's when you get the couches and washers and dryers thrown in," he jokes.

S&S sells mainly wholesale to garden centers and has entered into agreements with these customers that largely preclude the company from selling retail. "We could make a lot more money if we sold retail. We're selling the product for $20 per yard wholesale and they're turning around and selling it retail for $40 per yard. But at the same time we have fewer customers, and we know we're going to get paid," Sylvester explains.


Mulch has become its own division within S&S Tree and Landscaping Specialists. President Steve Sylvester says the key to making money with mulch is to work hard to develop markets. "You can't just sit around and wait for people to come to knock on your door," he emphasizes. "You have to create the demand."
Photo courtesy of S&S Tree.

It's taken many years of hard work, but he says S&S has successfully turned what had been an expense into a profit center for the company. "I would say that mulch is a highly profitable undertaking; it's one of the highest-profit parts of our business," says Sylvester. "There's higher margin money in wood products [when] done right than there is in plant health care and tree care. There's very good money in mulch."

Patrick White is a freelance writer and editor who is always on the lookout for interesting and unusual stories.