UK Update: Planning ahead
What happens when unpredictable factors affect your business?
Two factors impact demand for drainage more than anything else here in the U.K.: the amount of rainfall and the price of wheat. The phone tends to ring more often after a month or two of rain or steady price increases. I have expressed my puzzlement that short-term events can affect the purchase of such a long-term investment before, but such is life. Rain and commodity prices are out of my control – if I had a method of controlling either, I would not be wading in the mud as a drainage contractor!
As contractors, our only option is to focus on what can be affected. This does not, however, mean that the weather or the price of commodities should be ignored. The price of wheat is currently low. Making matters worse, virtually every forecast and prediction suggests that the price will stubbornly refuse to rise for a while. It was low last harvest and nothing special the year before. A prolonged dip in price means less money in the hands of our clients. The easiest expenses to delay (or cut altogether) are long-term investments. Individual contractors or geographic areas may buck the trend, but in my opinion, the industry as a whole will be down this year.
We have had a good run and commodity prices fluctuate; it’s their character. Complaining diverts your attention from where it should be, which is facing up to the reality of selling in a more difficult market. For some, a reduction in workload might be welcome; certainly we struggled to keep our word and turn up on time last autumn. But for many here in the U.K., keeping enough work in front of the drainage machine will be difficult. Unfortunately, I do not have a magic solution to persuade people to part with their cash (once again, if I did, I would not be wading in the mud... you know the rest!). However, I will impart this: a problem ignored never goes away. Planning, hard work and facing up to issues is the only way I know to succeed.
I’m expecting the usual glut of post-harvest work to be down compared to last year. I might be wrong – and if I am wrong, I will be happy. Being slightly less busy might not be bad, though. Last year we had to draft in extra short-term help, which meant an increased cost in order to get the job done. For us, the key to surviving is to be flexible. We have machines that trench and we will work anywhere, which offers us the prospect of profit at different sites, from a golf course to a construction site or farmer’s field. This year we have been able to find off-farm work and have been aggressive when tendering for that work. It might not succeed, but it is a plan. With a fair wind, this strategy should keep profits and turnover somewhere near to last year – which can certainly be considered a success.
I also think our size helps us cope with the ups and downs of our workload. Often I think that the size of our company is just at the wrong level: too big not to employ people to manage people, but not big enough to employ a human resources manager; too big not to have all the necessary health and safety red tape, but too small to employ a health and safety manager. If there’s a task to be completed, I have to do it, as I can’t afford to employ someone else to do it. I’m sure many of my drainage colleagues in the United States are in the same situation. However, our size does help with being flexible. We are big enough to take on a large contract for a large company with their love of paperwork, and at the same time, small enough to carry out one-day jobs. Another true benefit is that a large job (or two) can transform our year on its own – something that would not be true if our company was bigger.
We can never anticipate what’s to come, but with the trends we’re watching this year in commodity pricing (and unpredictable things, like weather), it’s something all drainage contractors should be thinking about. Whether by design or accident, having a plan is a fine idea. You should never be too busy to come up with a plan.
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LICA Pennsylvania State Convention
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The International Commission on Irrigation and Drainage 2018 Conference
August 12-17, 2018