IBISWorld Industry Report E4251 Landscaping Services in Australia · 2020-05-12 · Garden design...

2 About this Industry2 Industry Definition

2 Main Activities

2 Similar Industries

2 Additional Resources

3 Industry at a Glance

4 Industry Performance4 Executive Summary

4 Key External Drivers

5 Current Performance

8 Industry Outlook

11 Industry Life Cycle

13 Products & Markets13 Supply Chain

13 Products & Services

14 Demand Determinants

15 Major Markets

16 International Trade

17 Business Locations

19 Competitive Landscape19 Market Share Concentration

19 Key Success Factors

19 Cost Structure Benchmarks

21 Basis of Competition

21 Barriers to Entry

22 Industry Globalisation

23 Major Companies23 Programmed Maintenance Services

Limited

25 Operating Conditions25 Capital Intensity

26 Technology & Systems

27 Revenue Volatility

27 Regulation & Policy

28 Industry Assistance

29 Key Statistics29 Industry Data

29 Annual Change

29 Key Ratios

30 Jargon & Glossary

IBISWorld Industry Report E4251Landscaping Services in AustraliaNovember 2011 Anthony Kelly

Flourishing investment: Industry growth will stem from increased construction activity

www.ibisworld.com.au | (03) 9655 3881 | [email protected]

www.IbISwOrLd.COM.Au Landscaping Services in Australia November 2011 2

This industry consists of companies mainly engaged in constructing landscapes, including land forming, provision of retaining walls and paths,

garden drainage control and garden watering systems, garden features and planting. Initial planting by the same unit is included.

The primary activities of this industry are

Fence construction (except agricultural)

Garden and streetscape planting

Garden design implementation

Garden drainage systems installation (except agricultural)

Garden sprinkler systems installation (except irrigation systems)

Landscape construction

Lawn construction

Rockery work

Basic landscape design and planning

Land clearance activities

Industry definition

Main Activities

Similar Industries

Additional resources

The major products and services in this industry are

Fence construction

Garden and streetscape planting

Garden design implementation

Lawn construction

Sprinkler and drainage system installation

About this Industry

L7821 Architectural Services in AustraliaCompanies in this industry design landscapes and are involved in landscape architecture consultancy.

Q9525 Gardening Services in AustraliaBusinesses in this industry engage in garden maintenance activities.

For additional information on this industry

www.lcansw.com.au Landscape Contractors Association of NSW & ACT

www.landscapequeensland.com.au Landscape Queensland Industries

www.landscapingaustralia.com.au Landscaping Australia Inc.

www.liav.com.au Landscaping Victoria

www.fairtrading.nsw.gov.au NSW Office of Fair Trading

www.bsa.qld.gov.au Queensland Building Services Authority


Market ShareProgrammed Maintenance Services Limited 2.0%

Key External driversdemand from general constructionPopulationTotal level of household outsourcingreal household disposable income

Key Statistics Snapshot

Industry at a GlanceLandscaping Services in 2011-12

revenue

$2.9bnProfit

$406.0mwages

$1.2bnbusinesses

14,850

Annual Growth 12-17

3.1%Annual Growth 07-12

1.5%

Industry Structure Life Cycle Stage Mature

Revenue Volatility High

Capital Intensity Low

Industry Assistance None

Concentration Level Low

Regulation Level Medium

Technology Change Medium

Barriers to Entry Low

Industry Globalisation Low

Competition Level High

FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIx ON PAGE 29

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SOURCE: WWW.IBISWORLD.COM.AU

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Revenue vs. employment growth

Business locations

28.4%NSW

1.8%ACT

25.7%VIC

1.4%TAS

1%NT

20.6%QLD

13.3%WA

7.8%SA


p. 23

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Key External drivers Demand from general constructionFluctuations in investment into housing and non-residential construction directly affect demand for landscaping services, particularly for new construction services

such as design implementation, irrigation installation and streetscape planting.

PopulationThe shift to high-density housing reduces

Executive Summary

Contractors in the Landscaping Services industry tackle a large range of projects, from humble backyard makeovers to roadside parks and public botanical gardens. The industry often competes for market share with DIY home owners, other special construction trades (e.g. site preparation firms) and the Gardening Services industry.

Landscaping activities undertaken by this industry include laying feature paving, brick, slate, cobblestones or rocks; and installing watering systems, sprinklers, ponds, pools and drainage and irrigation systems. Additional activities include laying turf and instant lawns, seeding lawns, positioning sleepers, and laying scoria, gravel, pine bark and other mulch. Industry

participants also have a hand in arranging spa- and pool-scapes, which are landscape gardening activities.

The industry is forecast to generate revenue totalling $2.9 billion in 2011-12, with value added of $1.6 billion, or 0.1% of Australia’s GDP. Industry revenue is expected to decline by 0.5% during 2011-12, and to average modest cyclical growth by 1.5% per annum over the past five years. This performance lags well behind the pace of GDP growth (2.9% per annum). The industry’s performance has been contained by the subdued trends in spending by the household sector on landscaping services, but will be supported by strong demand conditions in the non-housing construction markets, and on institutional building projects (notably schools and hospitals).

The pace of industry expansion is forecast to rebound over the next few years as stronger economic growth conditions support spending by households and the business sector. The industry will derive some stimulus from reconstruction activity in Queensland and northern Victoria in the aftermath of the devastating floods of early 2011 and Cyclone Yasi. Industry revenue is forecast to climb by an average 3.1% per annum over the five years through 2016-17 to reach $3.37 billion. The industry will lag marginally behind the expected pace of GDP growth (3.4% per annum) due to divergent trends in the downstream building and infrastructure markets.

Over the longer term, this industry has benefited from improved public appreciation of professional landscape design and installation services. Concurrently, the nature of industry activities has changed in response to the prolonged drought conditions across Australia. The drought heralded a focus on the installation of drought-tolerant lawns and plants, rock or stone gardens, the laying of artificial grass in household gardens and the installation of greywater systems.

In 2011-12, industry employment is expected to total 31,500 people in 15,000 establishments. The number of industry participants has remained fairly stable since June 2009, when the industry comprised 5,833 employer establishments and 9,129 small-scale non-employer firms (i.e. sole proprietors and partners). The industry is characterised by its many small and geographically dispersed contracting firms, and has a particularly low concentration of ownership, with the four largest firms contributing less than 5.5% of annual industry revenue.

Industry PerformanceExecutive Summary | Key External drivers | Current Performance Industry Outlook | Life Cycle Stage

The nature of industry activities has changed in response to prolonged drought conditions


Industry Performance

Current Performance

Australia’s slow economic growth following the global financial crisis contained the pace of industry expansion in the late 2000s, although landscaping work on primary school projects helped buoy demand conditions. Contractors also derived substantial stimulus from the unprecedented investment into infrastructure construction and the resulting landscaping on golf courses, public parks and areas adjacent to highways and mining sites.

The industry has recorded subdued revenue growth averaging 1.5% per year over the five years through 2011-12, lagging behind the pace of GDP growth (2.9% per annum), and reflecting widely divergent trends in the downstream construction markets. This subdued growth stems from the weak trend in the value of total building construction over the five years through 2011-12 (0.6% per annum), but contractors derived buoyant

demand for landscaping services in the institutional building and infrastructure markets. Landscaping contractors have performed at record levels since the mid-2000s, with annual industry revenue averaging $2.89 billion per annum over the five years through 2011-12, or 16.5% above the average for the five years through 2006-07 ($2.48 billion per year).

In addition to trends in the downstream construction markets, the demand for landscaping services has been significantly influenced by the heightened household preferences for professional landscaping on residential properties and community amenities. Demand in the household market has been boosted by strong growth in residential property values and the growing popularity of lifestyle TV shows featuring landscape design (e.g. Better Homes and Gardens). Rising residential property values during the mid-2000s

Key External driverscontinued

the available land for landscaping and therefore limits the demand for landscaping services per dwelling unit.

Total level of household outsourcingThe trend towards the outsourcing of household activities (such as cleaning, gardening and ironing) to service industries has generated opportunities for professional landscaping services.

Real household disposable incomeDemand for landscaping services is partly dependent on growth in household disposable income, particularly in the middle to higher income range. As disposable income increases, households are more likely to undertake discretionary spending on landscaping and renovations.

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Current Performancecontinued

encouraged home owners to invest in landscaping and, at the same time, lifestyle TV programs improved household appreciation of specialist landscaping techniques. This resulted in contractors expanding services to incorporate the installation of water features, automatic irrigation systems, false walls and trellises.

The swing towards drought-tolerant gardens has opened new opportunities

for industry contractors. Severe water restrictions in many metropolitan areas have resulted in heightened demand for drought-tolerant lawns and plants (often native plants); greater use of rocks, gravel, river stones, pavers and concrete paths; the installation of water-conserving irrigation systems; and the establishment of greywater and tank-water recycling systems for residential and public gardens.

Profit squeeze Profit margins have narrowed for landscaping services in the new housing construction, home renovation and commercial property markets since the mid-2000s. However, this has been partly balanced by the profits generated from lucrative contracts in the institutional building and infrastructure markets. In addition, greater community awareness of landscaping issues has

enabled contractors to offer a broader range of services.

Industry gross operating surplus (i.e. operating profit before taxes, interest and depreciation) has grown by an average 1.5% per annum over the five years through 2011-12, keeping pace with growth in industry revenue and value added. Growth in wage costs reflects growth in employment and increased real unit labour rates.

demand and building investment

The demand conditions for landscapers have deteriorated during the past two years, reflecting the current downturn of investment in the new housing market and the downward trend in the non-residential building market. Within the non-building infrastructure markets, demand conditions have remained strong, with much work stemming from the completion stage of several large-scale road projects. Some contractors

have generated significant work from the provision of landscaping services on public parks, golf courses, dam sites and land reclamation projects.

High mortgage interest rates, uncertainty about economic growth prospects and the withdrawal of the additional first home buyers subsidy (Commonwealth BOOST scheme) have factored into the downward trend in housing commencements by 5.5% per

Growth in key construction markets*

yearNew housing (% growth)

Home improvements

(% growth)

Non-residential building

(% growth)

Non-building infrastructure

(% growth)

2006-07 0.2 3.3 10.1 14.22007-08 0.4 2.1 11.2 11.22008-09 -0.2 -3.8 0.9 18.12009-10 3.0 -1.8 3.4 0.22010-11 -0.7 2.9 -4.3 3.72011-12 -2.6 2.0 -3.5 9.4

*Growth in the value of work doneSOURCE: ABS



demand and building investment continued

annum over the two years to 2011-12 (currently about 148,000 units), and the moderate decline by about 3.5% over two years in the value of new housing construction. This points to a decline in landscape design and installation work in recent years, while the downward trends in residential property values and the upward trend in household savings points to reduced spending by existing households. The absence of the Building the Education Revolution (BER) funding of primary school refurbishments has severely affected non-residential building activity in the current year and eroded local demand for the installation of landscape furniture (e.g. pergolas,

seating, sandpits, partition walls).Industry revenue is estimated to

have fallen by 0.9% in 2010-11 and a further 0.5% to $2.9 billion in 2011-12, with employment remaining stable. Landscaping contractors operating in the flood-affected regions of southern Queensland and northern Victoria have generated additional work from repairs and reconstruction to retaining walls and landscaped pathways on public and private properties. The boost in reconstruction investment into these regions will stimulate increased demand for the landscaping design and construction services supplied by this industry.

Falling building investment

Demand conditions for landscaping services moderated in the late 2000s as housing investment stalled and commercial building activity slumped due to the onset of the global financial crisis. The industry recorded subdued revenue growth of 1.0% to 2.5% per annum over the two years through 2009-10 to reach a record peak at $2.94 billion, with employment climbing marginally to 31,500 people. Work for landscaping contractors dried up at the top end of the housing market, where volatile property values contained household spending on gardens. This significantly heightened competitive conditions, and contractor pricing margins were squeezed to retain existing customers and to win new contracts.

In the non-housing construction market, demand conditions were buoyant for landscaping contractors. The injection of massive federal funding towards primary school refurbishments stimulated demand for accompanying landscaping services. The surge in the road and bridge construction market (boosted by counter-cyclical spending by the state and federal governments) stimulated demand for roadside landscaping developments. The 30% slump in the value of commercial building activity over the two years through 2009-10 eroded demand for high-value landscaping services, notably resort garden settings, atriums and theme park developments.

Non-housing markets The industry maintained a solid performance through the mid-2000s, despite the minor downward trend in housing investment and new housing commencements. Demand for landscaping services was supported by the growing household preference for outdoor living, the high level of housing transactions (i.e. landscaping prior to sale), and the demand for drought-

tolerant gardens (i.e. installation of water retention and reticulation systems, and drought-resistant plants).

Opportunities for industry expansion were driven by accelerated growth in the non-residential building and non-building construction markets. The value of non-residential building construction surged by over 10% per annum to a record peak in 2007-08. The surge



Non-housing marketscontinued

stimulated demand for landscaping services adjoining small- to medium-scale commercial building projects such as non-CBD offices, shopping complexes, other business premises (e.g. car parks) and institutional building projects (e.g. aged-care and hospital facilities).

Contractors also benefited from the heightened demand for industry services in the road and bridge construction markets, including for the installation of road-side landscaping associated with the EastLink road development in outer Melbourne, and the WestLink M2 freeway and Lane Cove Tunnel in Sydney.

Profit rebound Industry profitability is forecast to maintain strong cyclical growth, despite some volatility in the longer term. Industry gross operating surplus (i.e. operating profit) is forecast to grow by 5.5% per annum over the five years through 2016-17, climbing to a 17% share of industry revenue, up from about 15% currently. This profit performance will support growth of 3.5% per annum in value added, which will rise to about 56%

of revenue in 2016-17. Wage costs are projected to grow by 2.5% per annum, reflecting growth of 1.5% per annum in industry employment to 34,000 people by 2016-17, along with increases in real unit wage rates and hours worked.

Competition remains quite open for this industry, and relatively small organisations can generally tender competitively even on the largest of development projects, though some

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Industry Outlook

Landscaping contractors will benefit from the anticipated short-term upswing in new housing and commercial building investment, although demand conditions will diminish in several infrastructure markets and in the educational building market (notably public sector projects). Demand for industry services will continue to be supported by the upward trend in household expenditure on landscaped features in gardens and courtyards, as home owners seek to add value to properties and to extend their outdoor living areas.

Industry revenue is forecast to grow by an average 3.1% per annum over the five years through 2016-17, lagging behind the pace of Australia’s GDP growth (3.4% per annum). This performance corresponds with projected cyclical expansion in the downstream building

markets, as the value of new housing construction rebounds to grow by 4.0% per annum over the next five years. There will be moderate growth in the total non-residential building market (2.0% per annum) as the collapse of investment into school construction offsets the resurgence of business investment into offices and other commercial buildings. The value of commercial and industrial building construction is projected to climb by 5.3% per annum over the next five years, while the institutional building market will shrink by 2.6% per annum due to the sharp decline in educational building construction (10% per annum).

Annual industry revenue is forecast to average $3.24 billion per annum over the next five years, or 12% above the average over the five years through 2011-12 ($2.89 billion per annum).



Profit reboundcontinued

landscaping contractors have long-standing arrangements with regional or national developers. Developers are the price-setters and landscape gardeners the price-takers, particularly in recessionary conditions. The major distinguishing feature between landscaping contractors is expertise,

rather than price. Landscape activities are often perceived as a fringe aspect or an add-on to total building development. This contains profit margins, as project developers can easily postpone or halt the landscaping component of a project, but they are unable to halt partly completed projects.

Solid conditions prevail

Landscaping contractors are likely to maintain solid cyclical growth through the next five years, despite the expected correction in housing investment late in the period and weaker investment in the infrastructure markets from 2014-15.

Industry revenue is forecast to climb by 3.5% in 2014-15 and to maintain solid growth by 1.0% to 1.5% per annum over the subsequent two years to reach a record $3.37 billion in 2016-17, with employment climbing to a peak at

Housing upswing Demand conditions are forecast to improve due to a cyclical upswing in the housing construction market in the near term. However, much of this expansion will concentrate on the lower value first home buyers market and the apartment market, which typically have lower landscaping components of construction. Growth in housing demand is expected to be highest in Western Australia, driven by resource-induced economic growth. Growth will also be high in southern Queensland because of reconstruction activity in the aftermath of the 2011 floods.

Investment trends in the infrastructure markets will remain buoyant in the near term, with continued record levels of activity in the road construction market. The cyclical

upswing by 8.0% to 10% per annum in the commercial building market will help offset the falling demand for landscaping services in the institutional building market over the next two years due to the winding back of the national refurbishment of primary schools.

Industry revenue is forecast to increase by 4.5% to 5.0% per annum over the next two years to reach $3.18 billion in 2013-14. This performance will correspond with the growth by 8.0% to 9.0% per annum in the value of new housing construction and commensurate growth in housing commencements to 172,000 dwelling units. Industry employment will grow by 1,500 people over the two years to about 33,000 people in 15,250 establishments.

Forecast growth in key construction markets*

yearNew housing (% growth)

Home improvements

(% growth)

Non-residential building

(% growth)

Non-building infrastructure

(% growth)

2011-12 -2.6 2.0 -3.5 9.42012-13 8.9 5.2 -2.8 8.52013-14 8.3 4.9 1.1 6.82014-15 6.1 4.1 2.5 -6.62015-16 2.9 1.7 4.6 -8.92016-17 -5.1 1.7 4.6 0.5

*Growth in the value of work doneSOURCE: IBISWORLD



Solid conditions prevailcontinued

34,000 people.The housing market is forecast to

maintain solid growth through to a cyclical peak in 2015-16 (housing commencements peaking at 184,500 units). This will partly dampen demand for residential landscaping design and installation services, although activity will remain high by historical standards. As the pace of economic growth strengthens through the course of the next five years, property values are also expected to gather momentum, encouraging householders to leverage on their mortgages to spend on landscaping services.

The demand for landscaping services will continue to strengthen in the commercial building market through the mid-term, presenting contractors with opportunities to enter into long-term design and maintenance arrangements with property developers. The ‘greening’

of inner city buildings will provide scope for supplying niche landscaping services for the establishment of rooftop gardens, vertical gardens and accompanying infrastructure. Investment into the institutional building market will also gradually recover through the mid-term, particularly focused on hospital expansions and new aged-care facilities, which will include landscaping installation and maintenance components.

Within the infrastructure market, landscaping demand will contract towards the mid-term due to the scaling back of investment into large-scale road and mining projects. This will be an area of concern for some contractors, as will the scaling back of landscaping services on public parks, golf courses, dam sites and land reclamation projects, and declines in design and installation services on roadside landscapes.


Industry PerformanceThe industry is principally tied to investment trends in downstream construction markets

Demand can be stimulated by popular lifestyle TV programs and changing household preferences

Growth has been partly driven by the trend towards the outsourcing of household garden activities

There are no substitute products or rapidly changing market trends

Life Cycle Stage


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Potential Hidden GemsFuture Industries

Quality GrowthHigh growth in economic importance; weaker companies close down; developed technology and markets

Time wastersHobby Industries

MaturityCompany consolidation;level of economic importance stable

Shakeout

Shakeout

Quantity GrowthMany new companies; minor growth in economic importance; substantial technology change

Key Features of a Mature Industry

Revenue grows at same pace as economyCompany numbers stabilise; M&A stageEstablished technology & processesTotal market acceptance of product & brandRationalisation of low margin products & brands

Architectural Services

House Construction

Plant Nurseries

Gardening Services

Multi-unit Apartment and Townhouse Construction

Landscaping Services



Industry Life Cycle The industry is in a mature stage of its life cycle, with demand principally determined by the cyclical fluctuations in building and construction investment.

The industry is estimated to maintain a stable share of the total economy over the long term, although its performance has lagged behind the economy in recent years due to the severity of the decline in commercial building markets and subdued household demand. Industry revenue is forecast to average moderate cyclical growth of 2.3% per annum over the 10 years to 2016-17, lagging well behind projected growth in GDP (3.2% per annum).

In the short to medium term, growth in demand for landscaping services may be stimulated by changing preferences in landscape design (e.g. trends towards native plants, oriental gardens and water features) and the rise in popularity of lifestyle TV shows on landscape design

(e.g. Better Homes and Gardens).There are no significant substitute

products or emerging trends that would reduce this industry’s established methods for landscaping industrial, residential, commercial or institutional surrounds.

A potentially negative effect on demand for landscaping services may result from the shift in residential construction trends towards high-density multi-storey apartment developments and the consequent reduction in landscaping per residential unit constructed.

The long-term trend towards outsourcing household services may stimulate stronger growth in the garden maintenance segment of this industry, however, this trend is unlikely to generate substantial growth in the core landscaping design and implementation segment in this industry.

This industry is Mature


Products & Services The segmentation in landscaping services is based on the size and complexity of the contracts undertaken. Landscaping operations range from implementing the complex designs of landscape architects (generally undertaken by large-scale contractors) to working with topsoil by the garden trailer load (small-scale contractors). Landscaping contractors generally have expertise or training in

landscape design; earthworks; contouring; paving; building pergolas or retaining walls; or installing water features, exterior lighting, drainage, reticulation or stonework. They often also have knowledge of selecting and planting trees, shrubs and flowers to meet client specifications.

Garden design implementation and the installation of sprinkler and drainage

KEy buyING INduSTrIES

E4111 House Construction in Australia Businesses in this industry use landscaping services on newly constructed residential buildings and on renovations or repairs to existing premises.

E4112 Multi-unit Apartment and Townhouse Construction in Australia Multi-unit apartment and townhouse builders require landscaping services on newly constructed buildings and on renovations or repairs to existing premises.

E4114 Commercial and Industrial building Construction in Australia Landscapers are required to work at non-residential buildings such as office complexes, hotels and shopping centres (e.g. on paving, seating, fence, sprinkler and turf installation).

E4115 Institutional building Construction in Australia Companies in this industry require landscaping services (e.g. paving, seating, fence, sprinkler and turf installation) for non-residential buildings such as office complexes, hotels and shopping centres.

E4121 road and bridge Construction in Australia Landscaping work is required for areas adjoining roads and intersections.

E4122 Heavy Industry and Other Non-building Construction in Australia Areas adjoining heavy industrial zones and reclaimed areas require landscaping.

E4210 Site Preparation Services in Australia Businesses in this industry demand landscaping services to beautify prepared land.

KEy SELLING INduSTrIES

A0111 Plant Nurseries in Australia Plant nurseries supply plants to landscapers.

E Construction Firms in this division supply specialist trade contractor services such as plumbing, concreting, tiling and bricklaying services.

F4523 Chemical wholesaling in Australia Landscapers purchase chemical additives (e.g. fertilisers) from chemical wholesalers.

F4531 Timber wholesaling in Australia Timber wholesalers supply timber for the construction of pergolas, garden edging and seating.

F4539 building Supplies wholesaling in Australia Landscapers purchase gardening materials, aggregate, rocks, concrete and clay building products, steel products, cements and mortars from building supplies wholesalers.

L7743 Plant Hiring or Leasing in Australia Companies in this industry lease bobcats and pumps to landscapers.

L7821 Architectural Services in Australia Landscape architectural services are often needed for structural landscaping and design.

Products & MarketsSupply Chain | Products & Services | demand determinants Major Markets | International Trade | business Locations

Supply Chain


Products & Markets

demanddeterminants

The industry derives the bulk of its revenue through subcontracting services on residential, industrial and commercial construction projects and on domestic garden and swimming pool landscaping. Contracts on commercial and industrial projects are generally the most lucrative areas of industry activity. However, the smaller scale domestic jobs are the mainstay of many landscaping enterprises. Most contractors look to service all market segments.

Landscaping work associated with the construction of new office blocks, shopping complexes and industrial estates accounts for about 15% to 20% of industry activity, while work on the

construction of hotel and resort complexes (particularly four- and five-star complexes in non-CBD locations) accounts for 10% of industry activity. Industry activity in the non-residential building market is principally driven by trends in company profitability, interest rates and employment growth.

Landscaping work on the construction of new housing developments and housing estate developments accounts for 25% to 30% of annual industry revenue. Increasingly, full landscaping costs are included in the finished price of new housing. Work on alterations and additions to residential buildings generates a further 10% of industry

Products & Servicescontinued

systems are included across the range of landscaping contracts. Garden and streetscape planting and landscape construction are particularly associated with public and commercial works.

Lawn construction varies in size and complexity from domestic lawns to industrial buffers. Contracts for lawn construction contribute about 15% of annual industry revenue, but represent a much smaller proportion of industry employment due to the trend towards installing prepared turf. The suppliers of the turf deliver to the site and can be

subcontracted to do the initial laying, thereby limiting the labour input by industry participants.

Fence construction is a distinct segment of the industry, contributing about 20% of annual industry revenue and employing 20% to 25% of industry personnel. This segment is particularly related to the residential component of demand, especially the additions and alterations component. However, the fiscal stimulus spending on primary school refurbishment has boosted work on temporary and permanent fencing in this market.

Products and services segmentation (2011-12)

Total $2.9bn

45%Garden design

implementation

20%Fence construction

15%Lawn construction

10%Garden and

streetscape planting

10%Sprinkler and drainage

system installation



Products & Markets

Major Markets The industry derives half its revenue from contracts associated with the construction, alteration or repair of residential buildings. Contracts with home owners generate about 40% of annual revenue, including about 30% derived from work on new housing and 10% from alterations to existing residential premises. A further 10% of revenue is generated from landscaping services work in the flat and apartment construction market, funded by residential property developers and body corporates.

The provision of landscaping services associated with the construction of private sector non-residential buildings generates about 30% of annual industry revenue (funded by commercial property

developers), with activity in this market heavily focussed on major hotel, office and shopping complex developments.

The provision of landscaping services to public access areas and park lands is estimated to generate 10% of annual industry revenue (mainly funded by public authorities and local governments). The landscaping of new industrial sites (e.g. power plants or waterworks) and roadside landscaping generates about 10% of industry activity and is typically funded by the lead construction contractor on the project. These contracts are generally undertaken by larger operators, while they are sometimes carried out in-house by the project developer or owner.

demanddeterminantscontinued

revenue. Landscaping activities in the flats, apartments and other residential construction market contributes about 10% to 15% to industry revenue. Apartment developments, an increasingly popular mode of housing, particularly in the Sydney and Melbourne markets, have less potential for landscaping activities of the type undertaken in this industry category. Industry activity in the residential market is primarily driven by trends in housing affordability and household preferences for landscaped gardens.

The industry generates 20% to 25% of annual revenue in the non-building construction market. This includes work on engineering infrastructure (industrial sites) and public access areas (park lands) along with landscaping areas adjacent to roads and other transport infrastructure. Activity in this market is mainly influenced by public sector capital works spending and hence the government fiscal position.

Other factors that can affect the long-term demand for landscape gardening services include trends in population growth in the middle to upper income range, trends in housing and commercial property design, developments of new landscaping

products and trends in fashion and tastes. Demand has also been supported by the current Commonwealth spending on primary school refurbishment.

Several large-scale construction projects in the late 1990s substantially boosted activity in the industry, notably the multiple venues for the Sydney 2000 Olympic Games and waterfront developments in Sydney (Darling Harbour and Finger Wharf), Melbourne (Docklands and Southbank) and Brisbane (Kangaroo Point and Southbank).

There is also likely to be stronger demand for landscaping services in the reconstruction of gardens, lawns and exterior features damaged by the recent floods in Queensland and northern Victoria and the periodic cyclones. The inundation by the floods destroyed paving and retaining walls and washed away plants and lawns. Other natural disasters such as bushfire also stimulate investment into landscaping.

Demand is influenced by population trends in the middle- to high-income group of consumers


Products & Markets

International Trade Landscaping services are not traded internationally as the industry is labour-intensive and has a relatively low skill requirement. Landscape architectural and design services are to

a minor extent traded internationally. However, local contractors are typically used to undertake landscape construction activities on offshore contracts.

Major Marketscontinued

Major market segmentation (2011-12)

Total $2.9bn

30%Commercial property

developers

10%Residential property

developers

30%Home owners –

new construction

10%Government –

public access areas

10%Home owners –

alterations and additions

10%Prime project developers – roads and industrial sites



Products & Markets


TAS1.4

wA13.3

QLd20.6

VIC25.7

NSw28.4

NT1.0

SA7.8

ACT1.8

Total establishments (%)

Cold Zone (<10) <25 <50 Hot Zone (<100) Not applicable

business Locations 2011-12


Products & Markets

business Locations The distribution of industry establishments by state and territory broadly corresponds with the distribution of national population and building activity across Australia. However, there is a slight skew in representation towards Western Australia and Queensland and away from New South Wales.

New South Wales accounts for 28.4% of total industry establishments (in June 2009), and 30.7% of industry employer establishments. This is considerably below the state’s share of the national population and economic activity (at about 35%). This lower representation of establishments may reflect the tighter licensing requirements for structural landscape works (licences issued from the NSW Office of Fair Trading). It is estimated that the employer establishments operating in New South Wales are of a larger scale than the national average.

Queensland, which also has relatively tight regulatory requirements for structural landscaping and segmental paving, has a relatively high representation of industry establishments, accounting for about 20% of establishments. This compares

with Queensland’s share of national population and economic activity (18%). Queensland has a high share of employer establishments (21.4%), which may reflect the tighter licensing requirements.

Western Australia accounts for 13.3% of total industry establishments, exceeding the state’s share of national population and GDP (10% annually), although Western Australia has about 10.7% of the industry’s employer establishments. Victoria accounts for about 26% of industry establishments, which corresponds with the state’s share of national population and economic activity.

Small-scale operations tend to be localised in the suburbs and regions where the contractors reside, while operators in the non-residential side of industry generally work on contracts within local metropolitan areas.

Perc

enta

ge

40

0

10

20

30

WA

ACT

NSW N

T

QLD SA TA

S

VIC

Total establishmentsEmployer establishments

Distribution of total establishments vs. employer establishments


Perc

enta

ge

40

0

10

20

30

WA

ACT

NSW N

T

QLD SA TA

S

VIC

Total establishmentsPopulation

Distribution of total establishments vs. population

Small-scale operations tend to be localised in the suburbs and regions where contractors reside


Cost Structure benchmarks

Operating profitProfit as a share of revenue has increased steadily over the long term as contractors have moved into more complex design and installation services (e.g. water tanks, automated watering systems, water features and vertical gardens) to meet growing demand.

The industry’s profit performance fluctuates in line with investment trends in downstream construction markets and the subsequent widening and narrowing of profit margins as competitive

conditions change. Industry gross operating surplus (i.e. profit before tax, interest and depreciation) accounts for about 15% of revenue in 2011-12, including depreciation charges of 1.0% of revenue. This corresponds closely with the average operating profit of the special construction trades sector of 15.6% of sectoral revenue, including depreciation of 1.4% annually.

Labour costsLabour costs represent the largest component of the industry’s cost structure,

Key Success Factors Ability to alter goods and services produced in favour of market conditionsOperators need be able to meet demand for a broad and changing range of services.

Access to the latest available and most efficient technology and techniquesOperators need to employ state-of-the-art communications and other technology.

Management of seasonal productionSuccessful contractors typically display good management skills in controlling the workload and managing the flow of new contracts.

Economies of scopeOperators must have the capability to

undertake a wide range of landscaping activities, and must have the capacity to undertake or subcontract specialist skills.

Having contacts within key marketsSuccessful firms undertake effective marketing and establish a reputation for quality and timeliness among local builders, developers and landscape architects (designers) in key markets.

Maintenance of excellent customer relationsAs much of this industry generates business by word of mouth, having good customer relations is essential. This is even more evident as industry participants seek to contest long-term maintenance contracts with commercial or institutional clients.

Market Share Concentration

The industry has a particularly low level of ownership concentration, with the four largest operators accounting for much less than 10% of annual industry revenue. Typically, medium to large operators establish relationships with major building developers, and this enhances the prospects for capturing regular large construction and maintenance contracts.

Most landscaping services contractors maintain very small-scale operations (one or two people) and operate in narrow geographic or

niche service markets. These contractors take construction contracts on a case-by-case basis and no enterprise can independently influence the market.

The fragmented structure of this industry is evident from the periodic business register or business counts surveys, which indicate that about 61% of the landscaping contractors have no paid employees (i.e. sole proprietors), and of the employer establishments, only about 330 establishments or 2.2% employ more than 20 people.

Competitive LandscapeMarket Share Concentration | Key Success Factors | Cost Structure benchmarks basis of Competition | barriers to Entry | Industry Globalisation

Level Concentration in this industry is Low

IBISWorld identifies 250 Key Success Factors for a business. The most important for this industry are:


Competitive Landscape

Cost Structure benchmarkscontinued

underlining the labour-intensive nature of landscaping construction and design services. Total industry labour costs, comprising employee wages and payments to subcontractors, absorb about 45% of annual revenue.

Wage costs absorb 40% of industry revenue, while payments to subcontractors absorb 5.0% of revenue (principally for the supply of services such as plumbing, earthmoving, concreting and landscape architecture). This excludes the significant proportion of operating profit that is drawn as income by business owners and working proprietors.

PurchasesThe purchase of materials and supplies accounts for 25% to 30% of annual industry revenue (at about 27.5% in 2011-12). These costs principally comprise expenditure on consumable materials such as plants, aggregate, irrigation equipment, cement, timber, fertiliser scoria, in-fill, pavers and ceramic tiles; fuel and energy; and equipment parts. Industry participants usually buy material inputs at trade discounts for volume and build in a margin to the final price. Fencing contractors tend to be agents for large fencing manufacturers and carry a

certain amount of stock.The industry also incurs general

overhead costs (absorbing 3.0% to 4.0% of annual revenue), which includes office administration expenses such as power, IT, stationery and equipment repairs. General overheads include the steadily expanding cost of communication services (notably mobile phones).

The costs of rent or lease of machinery and equipment absorbs 2.5% of annual revenue and typically includes the long-term or piecemeal lease of excavation and land preparation equipment (bobcats, skips and rollers) and mulchers.

Motor vehicle expenses represent one of the largest components of landscape contractors’ budgets. The industry allocates about 6.5% of annual revenue to the lease and running costs of motor vehicles, essential for transporting personnel, equipment, materials and waste products between sites of operation. Vehicle expenses account for a larger share of operations of the smaller contractors that turn over $50,000 to $200,000 per annum (at about 8.0% of revenue). Vehicle costs account for a smaller yet still significant share of revenue in the larger firms, at 3.5% of revenue for firms turning over more than $500,000 per annum.

Industry costs and average sector costs■ Profi t■ rent■ utilities■ depreciation■ Other■ wages■ Purchases

Industry costs (2011-12)

Average costs of all industries in sector (2011-12)

100%

14.0Profit

27.540.015.01.02.5

14.1Profit

26.723.131.61.4

0.7

2.4




barriers to Entry The barriers to entry into the landscaping services industry are not prohibitive, and therefore the number of participants fluctuates according to the cyclical patterns of demand.

This industry tends to attract individuals and couples seeking a low capitalised, labour-intensive, unlicensed alternative to an uncertain employment market. New entrants are attracted by the possibility of establishing a full-time living based on low initial capital outlay (i.e. rudimentary equipment and a suitable vehicle).

Currently, New South Wales is the

only state that imposes a registration and licensing requirement for landscape services contractors,

basis of Competition The basis for competition within the industry is principally to obtain contracts through referrals from landscape architects and designers, prime builders and wholesalers (e.g. suppliers of fencing, swimming pools or garden products) or through direct advertising (e.g. local newspapers and pamphlet drops). Landscaping contractors typically rely less heavily than most construction trades on links with prime building contractors.

Price differentiation is an important aspect of competition in this industry as home owners often consider the option of contracting a qualified tradesperson or doing the work themselves. Price is not, however, the only determinant of competition, as clients also look for quality of workmanship and the range of services provided.

Most contractors advertise services directly through one form or another (e.g. Yellow Pages, mail drops or local newspapers classifieds) and the more experienced operators do not rely heavily on the vagaries of advertising. Word-of-mouth referral is an important method of marketing for most established small-scale operators as this builds on their reputation and skills base and enables them to compete with the itinerant operators in the industry.

The larger scale operators compete on the basis of providing a wide range of

landscaping services and some offer a technologically advanced service using computer aided design and implementation.

There is a recent trend towards firms of all sizes marketing their services on the internet. However, there is limited scope to target internet advertising towards particular markets (regional or household). It is not yet certain whether this avenue will bear fruit.

The industry maintains intensely competitive conditions over the long term. It is characterised by its many small-scale contractors competing for shares of relatively narrow regional markets. The relative ease of entry and exit in this industry ensures competitive conditions remain high throughout the various phases of the construction cycle. Industry contractors are increasingly facing competition from DIY home owners and larger scale landscaping franchise firms, and broad-based facilities management firms (which also provide cleaning and industrial plant maintenance). Therefore, competitive conditions in this industry are estimated to be increasing over the long term.

Price differentiation is an important aspect of industry competition

Level & Trend Competition in this industry is High and the trend is Increasing

Level & Trend Barriers to Entry in this industry are Low and Steady

barriers to Entry checklist Level

Competition HighConcentration LowLife Cycle Stage MatureCapital Intensity LowTechnology Change MediumRegulation & Policy MediumIndustry Assistance None




Industry Globalisation

The level of globalisation within this industry is very low, with little, if any, trade in landscaping services and little foreign ownership of firms participating on the domestic market.

barriers to Entrycontinued

although Queensland enforces registration of structural landscapers (contractors erecting fences, pergolas and ornamental structures). These registration requirements would tend to inhibit the entry of new competitors into the industry and would avert competition from

competitors in other states.New entrants into this industry are

confronted by a geographically fragmented market that is already serviced by existing contractors. Hence, new entrants must market aggressively to establish a stable customer base and cashflow.

Level & Trend Globalisation in this industry is Low and the trend is Steady


Player Performance Programmed Maintenance Services Limited is a leading international provider of staffing and maintenance services based in Australia. Programmed began as a painting contractor in 1951, listing on the ASX in 1999. Since listing, Programmed has added international operations (New Zealand in 1986, and the United Kingdom in 2000 with the acquisition of UK painting group Whittle). In June 2007, Programmed merged operations with Integrated Group, a workforce management and marine services group, and in 2008 acquired Western Australian offshore oil and gas and mining engineering group SWG (Programmed later sold SWG’s offshore contracting business to DOF Subsea). In 2010 Programme acquired KLM Group, a specialist electrical, data, audiovisual and communications provider.

Programmed’s strategy of diversification reduced the company’s reliance on painting revenue and opened up paths to new markets, including the resources and mining market in Western Australia. The addition of a workforce division was also seen as complementary

to the property services division.However, economic conditions in the

United Kingdom affected results and the future outlook for Programmed in the United Kingdom. Programmed sold the Whittle painting group in 2010 and exited the UK business. Programmed now operates across three divisions: property and infrastructure, resources and industrial, and workforce.

Programmed’s property and infrastructure division provides property, electrical and facilities management services (i.e. painting, building services, ground services and corporate imaging) to more than 6,000 customers in the commercial, industrial, government and educational sectors.

Programmed began a ground services business in 1993. The service provides programmed garden and grounds maintenance, fine turf and sports turf management, lawn maintenance, landscape master planning, design, construction and project management, water conservation management strategies, design and installation of efficient irrigation systems, and

Major CompaniesProgrammed Maintenance Services Limited | Other

Major players(Market share)

98.0%Other

Programmed Maintenance Services Limited 2.0%


Programmed Maintenance Services Limited – fi nancial performance

year*revenue ($ billion) (% growth)

EbIT ($ million) Employees

Sales* ($ million)

2006-07 0.29 5.6 35.7 3,500 50

2007-08 0.89 206.9 51.4 11,000 51

2008-09 1.22 37.1 58.4 10,000 57

2009-10 1.14 -6.6 56.4 11,000 59

2010-11 1.22 7.0 41.6 10,000 58

*year end March *Landscaping services

SOURCE: ANNUAL REPORT

Programmed Maintenance Services Limited Market share: 2.0% Industry brand Names PMS Ground Services


Major Companies

Other Companies The industry is predominantly made up of small-scale establishments. While there are numerous lone operators in the industry, the physical nature of the industry is such that many consider two-person operations the optimum for small enterprises. Smaller operators in the industry generate revenue ranging from $40,000 to $150,000 per annum, while a few of the larger operators earn several million dollars in revenue.

Jim’s Mowing (Australia) Pty Ltd Estimated market share: 1.0%Jim’s Mowing began in Melbourne during 1982 as a single-person operation, and it has since grown to become one of the largest home service franchises in the world, with 2,300 franchisees operating in Australia, New Zealand, the United Kingdom and Canada. Group operations now include antennas, bookkeeping, building maintenance, carpet cleaning, car cleaning, computer services, dog wash, driving school, fencing, floors, mowing, painting, paving, pergolas, pool care, pressure cleaning, roofing, security doors, test and tag, trees, window cleaning and windscreens.

Jim’s Mowing initially focused on providing lawn mowing and rubbish removal services to customers, with franchisees paying for a regional monopoly. The firm has since spread its garden services to cover gardening, sprinkler installation, landscaping, lawn laying and domestic and commercial ground maintenance. Jim’s Mowing group revenue in the Landscaping Services industry totals $10 million to $15 million annually.

VIP Home Services Pty Ltd Estimated market share: 1.0%VIP Home Services began in Adelaide in

1972 as a lawn mowing service, and in 1978 the company began a franchise operation. New services were later added, including residential cleaning, commercial cleaning, carpet cleaning, fencing, window cleaning and handyman services. VIP Home Services is expected to have over 1,000 franchisees Australia-wide. VIP employs more than 500 casual staff and the corporate business has more than 40 employees nationally.

Services undertaken in the landscaping market include structural landscaping such as the erection of fences, pergolas, gazebos, retaining walls and ornamental structures; site preparation, design and excavation work; and the installation of reticulation systems. VIP ensures its franchisees are fully certificated by TAFEs and are capable of undertaking basic landscaping design and reticulation installation activities.

VIP’s group revenue in the Landscaping Services industry is estimated to total about $10 million, while the total VIP Home Services group revenue is estimated to be in excess of $70 million per annum.

Other important playersAustralian Native Landscapes, a Sydney-based private firm, began as a traditional landscape gardening business and later added the production of recycled waste products for sale as compost material.

Scape Shapes Landscaping of Queensland began in 1986 with a commercial project in Surfers Paradise. Today, the company has offices on the Gold Coast and Sunshine Coast, and in Brisbane, Hervey Bay and Townsville. Clients include developers, landscape architects, major construction companies, builders, government (local, state and federal) and community groups.

Player Performancecontinued

arboricultural services including audits and maintenance.

In 2009-10 the company’s grounds services segment recorded an increase in

revenue and earnings, due to an increased market size as clients moved to outsourced grounds maintenance. Revenue remained stable in 2010-11.


Capital Intensity Landscaping services require a low level of capitalisation and a high labour input. Most of the capital input into landscaping operations is provided through specialist subcontractors or using hired equipment. Most operators are small-scale establishments, which do not generally own equipment such as bobcats and bulldozers and typically hire the equipment and driver by the hour.

The ratio of industry direct labour costs to capital depreciation charges is indicative of an industry’s labour to capital intensity as it shows the amount of revenue absorbed by labour inputs relative to capital inputs. The industry has direct labour costs totalling 40% of revenue and depreciation charges of 1.0% of revenue. Therefore, the industry has a labour costs to depreciation ratio

of about 40:1, much higher than the average for the total Construction division (12:1) and eight times the average for the general economy.

The cost of establishing operations in this industry is comparable with that of most building and construction trades where labour is the most important input into production. The start-up costs for a new operator in this industry are about $50,000 to cover the purchase of a heavy-duty truck, gardening equipment and to cover cashflow for the first six months.

Landscaping services involve the shaping and coverage of the grounds surrounding residences, institutions, factories and commercial premises. At one level, the technology of the industry is fairly basic and labour intensive but there is frequent use, particularly on

Operating ConditionsCapital Intensity | Technology & Systems | Industry Volatilityregulation & Policy | Industry Assistance

Tools of the trade: Growth strategies for success


Labo

ur In

tens

ive Capital Intensive

Change in Share of the Economy

New Age Economy

recreation, Personal Services, Health and Education. Firms benefi t from personal wealth so stable macroeconomic conditions are imperative. Brand awareness and niche labour skills are key to product differentiation.

Traditional Service Economy

wholesale and retail. Reliant on labour rather than capital to sell goods. Functions cannot be outsourced therefore fi rms must use new technology or improve staff training to increase revenue growth.

Old Economy

Agriculture and Manufacturing. Traded goods can be produced using cheap labour abroad. To expand fi rms must merge or acquire others to exploit economies of scale, or specialise in niche, high-value products.

Investment Economy

Information, Communications, Mining, Finance and real Estate. To increase revenue fi rms need superior debt management, a stable macroeconomic environment and a sound investment plan.

Architectural Services

House Construction Plant Nurseries

Gardening Services

Multi-unit Apartment and Townhouse Construction


Level The level of capital intensity is Low


Operating Conditions

Technology& Systems

The industry is subject to a medium level of technological change resulting from advancements in materials used, improvements in earthmoving and installation equipment, advancements in computer design facilities, and improved communications technologies. These technological advancements are often slow to permeate through all levels of this industry and many small-scale contractors limit their adoption of new technologies to building materials and mobile phones.

Landscape contracting frequently involves the use of earthmoving equipment including bulldozers, bobcats, rotary hoes, spreaders and trucks for transport of materials. This equipment is subject to rapid technological advancement and enables contractors to achieve improved results at a steadily decreasing cost. Advancements in the capability of construction machinery enable projects to be completed in a shorter time. The smaller-scale landscaping establishments typically hire earthmoving equipment and drivers.

Successful landscaping services firms are increasingly employing new communications technology for advertising, quoting and inter- and intra-organisational communications. An increasing number of landscaping contractors promote their activities through web pages on the internet, where potential customers can view

photographs of completed work.While computer aided design (CAD)

technology is widely used by landscape architects and designers, only the largest landscaping services contractors would utilise CAD techniques to more efficiently plan and allocate resources on a project.

Specialist techniques and plant applications have been developed by industry leaders to address particular problems such as high salinity soil, areas without permanent irrigation and environmental constraints.

Developments in building materials, notably for paving materials and retaining wall bricks and blocks, are adopted quickly by this industry in order to meet changing customer demands.

The onset of drought conditions in many metropolitan markets has led to the introduction of more drought-tolerant plants and grasses, along with techniques to minimise water consumption in gardens (e.g. using greater areas of paved or stone-covered surfaces, grey watering systems and water crystals).

Capital Intensitycontinued

major projects, of earthmoving equipment including bulldozers and bobcats as well as rotary hoes, spreaders and trucks for transport of materials.

A typical project dealing with a 1,000 square metre industrial site involved delivery of 130 cubic meters of soil, gravel, rock and pine bark chips; 50 railway sleepers; lawn seed and some 250 seedlings. The contracting company owned and operated the rotary hoe used on the job, the delivery trucks were supplied by the materials suppliers and the two bobcats were supplied at an hourly rate with their drivers.

Capital intensity

0.5

0.0

0.1

0.2

0.3

0.4


Dotted line shows a high level of capital intensity

Capital units per labour unit


ConstructionEconomy

Level The level of Technology Change is Medium

Successful landscaping firms are increasingly employing advanced communication technology



regulation & Policy The industry is considered to have a medium level of regulatory control, with only New South Wales currently imposing a registration and licensing requirement. However, Queensland does enforce registration of structural landscapers (i.e. contractors erecting fences and ornamental structures).

Even though the regulatory environment for this industry varies between states, each state has industry associations that seek to promote the professional advancement of the industry through endorsement of its membership. Landscape contractors may also be eligible for membership of the Master Builders Association (MBA) or the Housing Industry Association (HIA) in each state and some qualify for the Quality Assurance ISO 9002 standard, which is of assistance when tendering for public sector contracts.

The NSW Department of Fair Trading issues a licence for structural landscape works. To be a member of the Landscaping Contractors Association of NSW (LCA) the contractor must hold this licence and be assessed on the basis

of competence, quality of past work and professionalism. The LCA sponsors seminars and product displays to promote technical advancement among its members, enforces a code of ethics and undertakes a credit check to ensure financial integrity.

Queensland’s Building Services Authority (BSA) licences two areas involving industry practitioners: structural landscaping, and brick and segmental paving. BSA applicants must meet qualification requirements: any relevant qualification (carpentry apprenticeship), or successful completion of a recognised vocational training course along with completion of a recognised managerial course (typically at TAFE). Applicants must also have at least four years full-time practical experience in this area to qualify for registration and have proven financial solvency. Industry participants are represented in Queensland by Industry Landscaping Incorporated (QILI) and the Queensland Association of Landscape Industries (QALI).

revenue Volatility Volatility in this industry results from the wide cyclical fluctuations in the downstream construction markets. Cyclical volatility is moderated by maintenance activity

and the trend towards long-term contracts. Volatility is also partly moderated by the spread of demand across all types of construction markets.


Volatility vs Growth

reve

nue

vola

tility

* (%

)

1000

100

10

1

0.1

Five year annualised revenue growth (%)–30 –10 10 30 50 70

Hazardous

Stagnant

rollercoaster

blue Chip

* Axis is in logarithmic scale


A higher level of revenue volatility implies greater industry risk. Volatility can negatively affect long-term strategic decisions, such as the time frame for capital investment.

When a fi rm makes poor investment decisions it may face underutilised capacity if demand suddenly falls, or capacity constraints if it rises quickly.

Level The level of Volatility is High

Level & Trend The level of Regulation is Medium and the trend is Increasing



Industry Assistance No tariffs are applicable to this industry.

regulation & Policycontinued

In the less regulated states, membership of the relevant state landscape association (e.g. Landscape Industries Association of Victoria) is an indication that the operator has some training and experience. This is partly

due to demanding membership requirements, which new players in the industry would find hard to meet. Nationally, membership of the industry associations represents about 20% of total participants in the industry.

Level & Trend The level of Industry Assistance is None and the trend is Steady


Key Statisticsrevenue

($m)

Industry Value Added

($m)Establish-

ments EnterprisesEmployment

(People) Exports Importswages ($m)

domestic demand

Total building done

(Index)2002-03 2,250 1,165 12,075 11,925 26,750 -- -- 902 N/A 80.32003-04 2,410 1,280 12,900 12,750 28,350 -- -- 965 N/A 87.12004-05 2,500 1,345 13,100 12,950 29,250 -- -- 1,005 N/A 89.92005-06 2,565 1,400 13,350 13,200 29,750 -- -- 1,032 N/A 90.82006-07 2,690 1,480 14,075 13,925 30,650 -- -- 1,074 N/A 94.72007-08 2,835 1,580 14,500 14,350 31,250 -- -- 1,106 N/A 99.32008-09 2,867 1,580 14,962 14,812 31,250 -- -- 1,117 N/A 99.22009-10 2,940 1,645 15,000 14,850 31,500 -- -- 1,137 N/A 1022010-11 2,915 1,615 15,000 14,850 31,500 -- -- 1,148 N/A 1002011-12 2,900 1,595 15,000 14,850 31,500 -- -- 1,160 N/A 97.42012-13 3,030 1,690 15,125 14,975 32,200 -- -- 1,197 N/A 1012013-14 3,175 1,790 15,250 15,100 33,000 -- -- 1,239 N/A 106.22014-15 3,285 1,860 15,325 15,175 33,500 -- -- 1,270 N/A 111.12015-16 3,335 1,890 15,365 15,215 33,800 -- -- 1,294 N/A 114.82016-17 3,370 1,890 15,400 15,250 34,000 -- -- 1,315 N/A 113.8Sector rank 16/23 15/23 6/23 6/23 11/23 N/A N/A 14/23 N/A N/AEconomy rank 275/495 169/495 39/495 30/495 100/495 N/A N/A 145/495 N/A N/A

IVA/revenue (%)

Imports/demand (%)

Exports/revenue (%)

revenue per Employee

($’000)wages/revenue

(%)Employees

per Est.Average wage

($)

Share of the Economy

(%)2002-03 51.78 N/A N/A 84.11 40.09 2.22 33,719.63 0.112003-04 53.11 N/A N/A 85.01 40.04 2.20 34,038.80 0.122004-05 53.80 N/A N/A 85.47 40.20 2.23 34,358.97 0.122005-06 54.58 N/A N/A 86.22 40.23 2.23 34,689.08 0.122006-07 55.02 N/A N/A 87.77 39.93 2.18 35,040.78 0.122007-08 55.73 N/A N/A 90.72 39.01 2.16 35,392.00 0.132008-09 55.11 N/A N/A 91.74 38.96 2.09 35,744.00 0.132009-10 55.95 N/A N/A 93.33 38.67 2.10 36,095.24 0.132010-11 55.40 N/A N/A 92.54 39.38 2.10 36,444.44 0.122011-12 55.00 N/A N/A 92.06 40.00 2.10 36,825.40 0.122012-13 55.78 N/A N/A 94.10 39.50 2.13 37,173.91 0.122013-14 56.38 N/A N/A 96.21 39.02 2.16 37,545.45 0.122014-15 56.62 N/A N/A 98.06 38.66 2.19 37,910.45 0.122015-16 56.67 N/A N/A 98.67 38.80 2.20 38,284.02 0.122016-17 56.08 N/A N/A 99.12 39.02 2.21 38,676.47 N/ASector rank 5/23 N/A N/A 21/23 5/23 21/23 22/23 15/23Economy rank 58/495 N/A N/A 464/495 50/495 461/495 409/495 169/495

Figures are inflation-adjusted 2012 dollars. Rank refers to 2012 data.

revenue (%)

Industry Value Added

(%)

Establish-ments

(%)Enterprises

(%)Employment

(%)Exports

(%)Imports

(%)wages

(%)

domestic demand

(%)

Total building done (%)

2003-04 7.1 9.9 6.8 6.9 6.0 N/A N/A 7.0 N/A 8.52004-05 3.7 5.1 1.6 1.6 3.2 N/A N/A 4.1 N/A 3.22005-06 2.6 4.1 1.9 1.9 1.7 N/A N/A 2.7 N/A 1.02006-07 4.9 5.7 5.4 5.5 3.0 N/A N/A 4.1 N/A 4.32007-08 5.4 6.8 3.0 3.1 2.0 N/A N/A 3.0 N/A 4.92008-09 1.1 0.0 3.2 3.2 0.0 N/A N/A 1.0 N/A -0.12009-10 2.5 4.1 0.3 0.3 0.8 N/A N/A 1.8 N/A 2.82010-11 -0.9 -1.8 0.0 0.0 0.0 N/A N/A 1.0 N/A -2.02011-12 -0.5 -1.2 0.0 0.0 0.0 N/A N/A 1.0 N/A -2.62012-13 4.5 6.0 0.8 0.8 2.2 N/A N/A 3.2 N/A 3.72013-14 4.8 5.9 0.8 0.8 2.5 N/A N/A 3.5 N/A 5.12014-15 3.5 3.9 0.5 0.5 1.5 N/A N/A 2.5 N/A 4.62015-16 1.5 1.6 0.3 0.3 0.9 N/A N/A 1.9 N/A 3.32016-17 1.0 0.0 0.2 0.2 0.6 N/A N/A 1.6 N/A -0.9Sector rank 7/23 10/23 1/23 2/23 7/23 N/A N/A 5/23 N/A N/AEconomy rank 74/495 75/495 69/495 60/495 93/495 N/A N/A 65/495 N/A N/A

Annual Change

Key ratios

Industry data



Jargon & Glossary

bArrIErS TO ENTry Barriers to entry can be High, Medium or Low. High means new companies struggle to enter an industry, while Low means it is easy for a firm to enter an industry.

CAPITAL/LAbOur INTENSITy An indicator of how much capital is used in production as opposed to labour. Level is stated as High, Medium or Low. High is a ratio of less than $3 of wage costs for every $1 of depreciation; Medium is $3-$8 of wage costs to $1 of depreciation; Low is greater than $8 of wage costs for every $1 of depreciation.

CONSTANT PrICES The dollar figures in the Key Statistics table, including forecasts, are adjusted for inflation using 2011-12 as the base year. This removes the impact of changes in the purchasing power of the dollar, leaving only the ‘real’ growth or decline in industry metrics. The inflation adjustments in IBISWorld’s reports are made using the Australian Bureau of Statistics’ implicit GDP price deflator.

dOMESTIC dEMANd The use of goods and services within Australia; the sum of imports and domestic production minus exports.

EArNINGS bEFOrE INTErEST ANd TAX (EbIT) IBISWorld uses EBIT as an indicator of a company’s profitability. It is calculated as revenue minus expenses, excluding tax and interest.

EMPLOyMENT The number of working proprietors, partners, permanent, part-time, temporary and casual employees, and managerial and executive employees.

ENTErPrISE A division that is separately managed and keeps management accounts. The most relevant measure of the number of firms in an industry.

ESTAbLISHMENT The smallest type of accounting unit within an Enterprise; usually consists of one or more locations in a state or territory of the country in which it operates.

EXPOrTS The total sales and transfers of goods produced by an industry that are exported.

IMPOrTS The value of goods and services imported with the amount payable to non-residents.

INduSTry CONCENTrATION IBISWorld bases concentration on the top four firms. Concentration is identified as High, Medium or Low. High means the top four players account for over 70% of revenue; Medium is 40 –70% of revenue; Low is less than 40%.

INduSTry rEVENuE The total sales revenue of the industry, including sales (exclusive of excise and sales tax) of goods and services; plus transfers to other firms of the same business; plus subsidies on production; plus all other operating income from outside the firm (such as commission income, repair and service income, and rent, leasing and hiring income); plus capital work done by rental or lease. Receipts from interest royalties, dividends and the sale of fixed tangible assets are excluded.

INduSTry VALuE AddEd The market value of goods and services produced by an industry minus the cost of goods and services used in the production process, which leaves the gross product of the industry (also called its Value Added).

INTErNATIONAL TrAdE The level is determined by: Exports/Revenue: Low is 0-5%; Medium is 5-20%; High is over 20%. Imports/Domestic Demand: Low is 0-5%; Medium is 5-35%; and High is over 35%.

LIFE CyCLE All industries go through periods of Growth, Maturity and Decline. An average life cycle lasts 70 years. Maturity is the longest stage at 40 years with Growth and Decline at 15 years each.

NON-EMPLOyING ESTAbLISHMENT Businesses with no paid employment and payroll are known as non-employing establishments. These are mostly set-up by self employed individuals.

VOLATILITy The level of volatility is determined by the percentage change in revenue over the past five years. Volatility levels: Very High is greater than ±20%; High Volatility is between ±10% and ±20%; Moderate Volatility is between ±3% and ±10%; and Low Volatility is less than ±3%.

wAGES The gross total wages and salaries of all employees of the establishment.

Industry Jargon

IbISworld Glossary

GrOSS OPErATING SurPLuS Effectively gross operating profit, including profit before the deduction of taxation, depreciation charges and interest costs.

LANdSCAPE ArCHITECTurE A profession involved with the design, planning and implementation of external environments, including structures, water courses and landforms.

NON-EMPLOyEr ESTAbLISHMENTS Establishments without payroll employees, typically a sole proprietorship or partnership.

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