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Fuel-reliant companies feel pinch

Landscapers, waste removal businesses see profits shrink as gas price rises.

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By Cornelius Frolik, Staff Writer Updated 9:18 AM Monday, May 9, 2011

As area gas prices shot to a record high of $4.159 per gallon last week, local business owners were considering how to balance the need for equipment fuel with their bottom lines.

Higher costs for consumers are likely to cope with gasoline expenses. But those increased costs could mean that consumers will cut back on spending and that in turn will lessen the demand for certain kinds of services including transportation and landscaping.

Landscaping firms consume huge volumes of gasoline because they employ a fleet of trucks and an arsenal of gas-powered devices.

Marty Grunder, founder and president of Grunder Landscaping Co. in Dayton, said his company spends between $75,000 and $100,000 on fuel annually to power his 30 trucks and 128 pieces of equipment.

When oil prices spiked in the last few weeks, Grunder said it took a significant financial toll on his business because he already had projects that were locked into prices based on cheaper fuel.

In the last three weeks, Grunder said he had to raise prices to recoup fuel expenses and make prices more accurately correlate with expenses.

“People think that because you have a $4 million company, you’re making $2 million, but you’re not,” he said. “A $30,000 hit is a big deal.”

Grunder said he is also worried that consumers who feel the pinch at the pump will feel poorer and more closely scrutinize their expenses, softening the demand for landscaping services.

Other companies, such as Joe’s Landscaping of Beavercreek Inc., utilize fuel surcharges to account for fluctuating prices at the pump. But Chad Leopard, vice president of Joe’s Landscaping, said his business is locked into long-term contracts with some clients that cannot be adjusted to reflect higher expenses.

“You do eat a lot of your costs in current contracts with big commercial clients,” he said. The company typically spends about $15,000-$18,000 per month on fuel.

Rumpke, a waste and recycling company that serves Xenia, Vandalia, Trotwood, Englewood and other communities in the Miami Valley, has about 1,700 vehicles and purchases about 9.3 million gallons of fuel annually.

Amanda Pratt, a Rumpke spokeswoman, said even with a fuel surcharge, Rumpke’s fuel costs are exceeding their budgeted expenses for the month. The company’s fuel surcharge is 15.75 percent when gasoline is $4.16 per gallon, compared to 10 percent when gas is $3 and 5 percent at $2.

“We absorb the expenses as much as possible in an effort to keep costs at a minimum for customers, but as the cost of doing business rises, new considerations are inevitable,” Pratt said.

Patrick DeHaan, senior petroleum analyst with GasBuddy.com, said he does not expect the spike in prices to be as devastating on businesses as they were in 2008 because consumers are more accustomed and prepared for more expensive services.

“In 2008, we saw a lot of businesses not know how to respond to high prices, and some went out of business because they were unwilling or couldn’t pass the increase along,” he said. “This time around, clients and customers are more accepting and know what’s going on.”

Contact this reporter at (937) 225-0749 or cfrolik@DaytonDailyNews.com.

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