“It would take a lot of initial capital to just jump into the mulch business whole hog,” says John Ritzler, one of three owners of New Urban Forestry. “That’s the kind of capital that we just don’t have.” But that hasn’t stopped the Athens, Georgia, tree service provider from finding a way to enter the mulch market. The company started slowly and is gradually building the mulch enterprise as it goes.
New Urban Forestry opened its doors as a tree care provider in 2008, and didn’t really get into the mulch business until 2010. “It was at our core from the very forming of the business that we were going to find a way to run an urban tree care operation that didn’t have the spectacular wood waste you see with many operations. So our goal with this was to make it economically self-sustainable, because we believed it was the right thing to do,” Ritzler explains. He emphasizes that even now, four years in, the mulch segment is not a profit-generator. The hope is that by slowly growing the mulch business and making smart decisions the mulch will eventually produce revenue.
Even now, mulch is making a positive contribution to the company’s bottom line. “We do have zero wood waste disposal costs – it’s net zero on that end,” Ritzler notes. “So, if anything, it makes my pricing somewhat more competitive. Not only in straight-up cost, but we also have many customers who understand the value of what we’re doing – that there’s sort of a sense of community service involved in the way that we manage our wood waste.”
Ritzler says two major challenges to starting a mulch business are the cost of the equipment and the space (land) required. “Ideally, you want a central place relative to your work area, so that you aren’t having to drive farther to get the material to your own yard than you would to take it to some other location,” he explains. “If you’ve lost time, then any efficiency gain from the lack of disposal costs is just gone.” It was in 2010 that New Urban Forestry found the right site – a good piece of land in a good location with an affordable lease. “That’s what’s made all the difference,” says Ritzler.
The company took an innovative approach to overcome the equipment hurdle. “What we did, rather than building big buildings and setting up a huge yard and investing in a half-million dollar grinder, was to develop contacts with the people around us who already had these pieces, and have very much worked as a community in a cooperative way and pooled our resources to make this happen,” he explains. For example, a local business that has a Bandit Beast grinder is contracted to bring it two or three times a year to the New Urban Forestry yard, where wood waste is stockpiled.
“We know when their slow season is, when they’re looking to fill in work with that grinder, so we’re able to get our grinding done at a manageable rate, while they’re able to fill in an additional part of their calendar each year,” says Ritzler. About two to three grinding runs are done annually, with each taking about one week to complete, he notes.
Similarly, New Urban Forestry has found local contractors who can provide the right pieces of equipment, such as articulated wheel loaders and track hoes, at the right times of the year. “They are necessary to handle this volume of material,” states Ritzler. “I would love to own those, and they are in the plans as this part of the business is slowly growing, but right now we’ve had to find work-arounds – people who have these machines but aren’t using them for the periods of time that we need them. That way they get a revenue stream from it, and we get the work done that we need. It’s been a matter of working in partnership with other people in our community.”
While these arrangements have allowed New Urban Forestry to start up an otherwise cost-prohibitive enterprise, they do come with limitations. For starters, there’s a significant, and unbillable, time commitment required on Ritzler’s part to line up the necessary equipment and figure out what’s available and when, while factoring in what makes the most sense from a mulch-making standpoint and how it all plays into the company’s tree care services, which must be given priority. This balancing act does have a cumulative effect of limiting how quickly the mulch business can grow.
Eventually, when the company is able to purchase the necessary equipment and control the system, there will be increases in the overall quantity of mulch that can be produced, as well as the profit margins involved, Ritzler predicts.
The learning that took place during the first two years of making mulch has already led to a process that’s more efficient, he notes. The learning curve took about that long, and Ritzler is confident the company has developed the systems necessary to consistently produce a high-quality mulch product. “We’re doing that better now than we were three years ago. We now know what equipment is needed and when we have to have it there. We know what screen to use and how to separate all the material,” he explains. “When you get all of the ingredients going in at the right time, you get this nice, even, dark, quality product that’s coming out the tail end of the grinder.”
Achieving that proper mix is not rocket science, he says, but it does take a little while to perfect. “When customers got the wrong kind of product, they were not afraid to let us know about it,” he jokes of the company’s early mulch-making days. After several rounds of adjustments, they were able to produce a 4,000-cubic-yard run of high-quality mulch. “That’s when we were able to say, ‘OK, we’ve got this part figured out,'” he says.
One part of the equation was setting up the yard so the various types of separated material are logically placed so they can be readily mixed in the grinder for the type of mulch desired. “It’s important for us to be able to separate pine products from hardwood products so we don’t end up with a high volume of softwood in our hardwood mulch product,” Ritzler explains. Another key factor is material size: “We can’t have brush and tops going into the high-quality mix; we need to be able to have stuff that’s a minimum diameter of about 12 inches. On the flip side, because we’re an urban tree operation, we also get some very large wood coming in. We have to break down some of that large stuff; if you send chunk wood that’s too big through the grinder, you’ll get different stuff coming out.” And too much “limby” material will produce a stringy mulch product. It’s all about getting the proper mix, he stresses.
None of this has changed how New Urban Forestry’s tree care crews handle wood in the field. “Job site rules are that whatever is most efficient goes. Whatever makes it to the wood yard makes it to the wood yard, we triage it there,” Ritzler says. It doesn’t make sense to slow down the end of the business that generates profit to benefit the mulch yard, he adds.
Two mulch blends are currently offered: a double-ground hardwood mulch and a straight wood chip mulch. The latter is simply the wood chips generated on tree jobs that are shot into the back of a dump truck and unloaded at the wood yard. “That’s how we keep the brush out of the mix [for the other mulch],” says Ritzler. “The wood chips are going to be irregular; they’re going to have stringy parts, they’re going to have chunks and needles and leaves, but there are definitely uses for that material as well, including erosion control and economy mulch.” It also furthers the company’s zero wood waste goal.
New Urban Forestry is producing about 6,000 to 7,000 cubic yards of mulch per year, using only its own wood material. “Until we have a few more pieces to the puzzle lined up, we will not be able to open our gates and start accepting material from other companies,” states Ritzler. He says the plan is to do just that. While all the details remain to be worked out, he says one thing is clear: “There’s no way it would be sustainable without tipping fees; just the biomass itself doesn’t have enough value.”
New Urban Forestry is also taking a slow, measured approach when it comes to selling the product. “We haven’t had any major marketing campaigns on the radio or advertising anywhere. It’s taken time and a lot of phone calls to landscape companies to establish wholesale contracts,” Ritzler says, adding, “We’ve used the Internet to talk about how this is a part of our whole concept of urban forestry.” He thinks word will continue to spread: “I think there’s still a substantial customer base that’s out there.”
In particular, Ritzler is hoping to grow the retail end of the mulch business. That will mean set hours at the yard and a dedicated employee to help load customers. Currently, he says, “We don’t have someone on-site from 9 a.m. to 5 p.m. who can load your pickup truck … but we are exploring how to increase our sales volume by doing that.” The yard is open at designated days and times, but most of the mulch is delivered to customers in dump truck loads. “We have a dump truck, a skid steer and an employee who are pretty much devoted entirely to that process during the busy season,” explains Ritzler. That approach works for now, but it will evolve as things continue to grow.
“In the next year or two we would like to increase our retail visibility. For year-round and seasonal sales, I think that’s a good idea. And we would like to increase the equipment we do own, even if it’s still not the total ownership package,” he says. “We envision being able to produce much more mulch in the future. As soon as we can open the gates for tipping fees, and ensure ourselves that we have the outlet for the material, I think we could produce easily five times as much mulch as we do now.”