By Dawn Buzynski
In the spring and summer months, hauling away trees and brush — from storms or land-clearing efforts — is a steady business for tree care contractors. It’s a big job in itself and much of the time, the job is complete once the wood and waste is hauled away. However, tree care contractors are leaving money on the table if they drop off and walk away. There is a prime opportunity to expand their business by recycling the wood waste themselves. Most of the time, tree contractors haul away the material to a yard-waste or wood-waste recycling operation for processing, but there is no reason to pass on additional revenue. With some forethought and strategic planning, a tree contactor can become a supplier of mulch, biomass or compost.
“A contractor wanting to enter any of these markets needs to understand the potential in their area, the demand, and how far they can economically transport the end product,” said Jay Sarver, recycling and forestry sales manager for Vermeer Corporation. “They also need to know what their costs will be related to operating the equipment on a daily basis.”
Mulch is the strongest market derived from processed wood waste. Biomass is second, which, according to Sarver, is a driving force in the mulch market.
“The more outlets you have for your end product, the better price you get for it,” said Sarver. “Mulch is still strong throughout the U.S., but biomass is rising.” Although it’s small, compost is another market for wood waste because of the need for carbon in the composting process. However, by far, mulch is the leading end-product use of wood waste, and can be lucrative for tree-care contractors if the market potential/demand is there.
There are different kinds of mulch, and each has a different processing specification. A contractor needs to study the needs of potential customers and where the mulch will be used before determining how to process it.
“You need to make sure that you’re providing the best end product that you can for your customer base, but also that you’re not spinning your wheels spending too much time on a spec product that has no demand,” said Sarver.
A business plan is essential before investing time and money into the new venture. Sarver suggests planning out at least five years.
“They need to look at a five-year growth plan and see how much potential they have — now and in the future — and then match the equipment to meet those forecasted needs,” he said. Different outlets have different requirements. Retail stores will require bagged mulch, whereas a mulch yard sells in bulk. Being flexible allows for a broadened customer base.
According to Sarver, there is a definite market for specialty mulch — such as colored mulch or mulch for playgrounds — but those take additional time and cost to process. The colored mulch needs to be screened to eliminate fines prior to the color process, while certification is required to produce playground mulch. It may also require the use of magnets on the conveyors to remove any ferrous metal pieces.
“It can give you an edge in the marketplace, because you’re producing a higher quality product,” he added.
First, and most importantly, a tree-care contractor looking to process wood waste for any market will need a grinder or chipper. Whether it’s a tub or horizontal grinder is determined by several factors. A tub grinder requires more room to operate than a horizontal grinder, but it can handle more material. Tub grinders are designed to process heavy, large-diameter material such as stumps and root balls, while horizontal grinders work best for longer, bushier material. This is mainly because the tub is only so deep, so when processing the longer material, branches may be difficult to feed.
“If a contractor has a wood-waste yard, most of that material will be under 8-foot lengths because it’s transported in,” explained Sarver. “A tub grinder makes sense for that if they have a big open area to run it. A horizontal grinder will do a good job, and since the load height isn’t as high as a tub grinder, you can use a wheel loader to feed the grinder.”
Loading equipment is necessary to feed material into the grinders and move processed wood to the next stage. A wheel loader would suffice for a horizontal grinder, but a tree-care contractor with a tub grinder may need an excavator with a grapple attachment. Depending on specific needs, a contractor can also look at a tub grinder with an integrated loader option.
A trommel screen is very important, especially if a contractor is trying to meet certain specifications. Sarver suggests screening material prior to grinding to limit the amount of fines entering your grinder, and then again on the back side to yield a higher-quality product. In addition, this will go far in extending the life of your equipment.
If a tree-care contractor wants to offer colored mulch, they will need to purchase a coloring system in the grinder or a standalone system, as well as bagging equipment to package the end product if going to retail outlets. Distribution logistics need to be considered and planned out well in advance.
Operating costs and determining fair price
The largest up-front expense will be the purchase of the grinder. Sarver said a tree-care contractor can spend anywhere from $300,000 to $700,000, depending on size of the grinder and business needs. Fuel is the biggest operating expense, but a contractor needs to factor in maintenance costs, wear parts, labor and equipment depreciation. Operating costs should be figured to determine a daily or even hourly rate.
“You have your scheduled maintenance items, such as oils and filters, but you also need to include other wear items like conveyor belts,” said Sarver. “Factor in everything so that you’re breaking that overall cost down to an hourly operating cost. Then you look at what you are producing in an hour and figure out what your profit margin needs to be. That will help set a sale price for your product.”
Let’s not forget raw material. Tree-care contractors cannot depend on getting material solely from their own tree-care business. They need to find secondary sources. Sarver recommends contacting companies that have used pallets and also local municipalities and landfills. There may be an opportunity for additional revenue if the contractor has the land to open up a wood-waste yard.
“With the high diversion rate for green waste, a tree-care contractor can set up a yard and charge a tip fee for residents or other local tree contractors to drop off their wood waste,” said Sarver. “Contact landfills and find out their green-waste diversion plan. Some may be taking it off-site, and you can work out an agreement to take the burden away from them and add to your raw source for your product.”
In all, research and crunching the numbers in the beginning are key for a tree-care contractor to expand his or her business and do so successfully.
“Choose the client now, the retail outlets, as well as end users,” he said. “It is important to understand the market in their area and what prices are being received. What the product is going for today will help you work your way back and size your equipment to make sure you’re successful.”
Dawn Buzynski is a features writer at Two Rivers Marketing. Article provided by Vermeer Corporation, Pella, Iowa.