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The dreaded nationals USM etc

Discussion in 'Commercial Snow Removal' started by procut1, Sep 1, 2010.

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  1. procut1

    procut1 Senior Member
    Messages: 380

    My thoughts.

    Theyre not going away. They are the way of the future. More and more pop up every year, and every year we say on here that USM and their likes are going to go under.
    Yet every year USM is growing and signing more contracts.

    We drive by the local Walmarts and see less than stellar performance and think to ourselves "Ha, when I did the lot you could eat off it. Ill have that contract back next year"

    Then next year, you inquire only to find out that the National still has the contract.

    How can that be?
    Could walmart and the other big boxes be so stupid?

    It all comes down to dollars and cents.

    Walmart (as an example) is not in the property maintenance business. They are in the business of moving product. Thats what they want to concentrate on.
    Their power is buying. Thats where their focus is. As long as they can buy their products cheaper than anyone else, and get that product to the shelves cheaper it will sell itself.

    Marketing, presentation, quality, is all secondary. Thats not the area they are competing in.

    Thats why walmart associates are poorly paid and its a lousy high turnover job.
    They are not critical to Walmarts operation. They are bodies to stock shelves and they have an endless supply.

    On the flip side. Did you know that walmarts trucking division, is one if not THE best trucking job you can get out there? They are some of the highest paid, best compensated drivers on there. Drivers who get in with Walmart usually stay forever.

    So the store workers are paid nothing, treated like crap, and hate Walmart, while the truck drivers are top paid, well taken care of, and love the company.

    Why is that?

    Exactly the reason I stated. Walmarts main business is getting the product from the supplier to the store. They are a transportation company more than they are a retailer.
    The customers know that if they go to walmart, its going to be cheaper than going somewhere else. Plain and simple.

    Their truck drivers are their bread and butter. They are the main focus. Walmart must keep their transportation division steady.

    Going with a national maintenance company only makes sense for these stores.

    Now they dont need an entire division to deal with bids, contracts, legals, and every little detail of thousands of stores. They dont have thousands of invoices to process, thousands of individual contracts to deal with. Thousands of individual checks to write. Thousands of contractors to "qualify" etc

    They can now outsource all of that to one company and keep their focus on their core business.

    Now how about service?

    As contractors we look at a "good job" by the appearance. Does the landscaping look nice? Does the snow look well maintained?

    Walmart looks at the numbers. Not the appearance.

    They save millions and millions of dollars by outsourcing.

    Its a simple formula

    They outsource and save $100,000 a year on your local store by not hiring individual contractors for each little service.

    So USM hires who they do and gets the job done. And we think the guys do a pretty crappy job and Walmart is furious.

    But how is it affecting their sales?

    Are they losing business because the lawn doesnt look as good?
    Are they losing business because the plowing isnt as good?
    Are they losing business because the powerwashing isnt as good?

    And are they losing more than $100,000 a year in profit due to that?

    I guarantee you they're not.

    Nobody is going somewhere else to spend more money on an item because they have a nicer looking lawn than Walmart.

    If they leave their house in the snow and drive all the way to walmart on snow covered roads and have to park in a "less than zero tolerance" parking lot, theyre not going somewhere else to spend more because they do a better plow job.

    Walmarts "standards" are in the numbers not the appearance.

    Walmart is also able to transfer the liability to USM.
    They in turn transfer the liability to the contractor.

    USM and walmart both win BIG in this department.

    Its called the Hold Harmless and DEFEND. Clause.

    That is the scariest clause to agree to in the whole contract.

    If you sign a USM contract, which I have one here right on my desk, you agree to HOLD HARMLESS AND DEFEND both USM and WALMART.

    Not too many people know what that clause means.

    What it means is the following.

    Someone slips and falls and sues.
    They name in the lawsuit YOU, USM, And Walmart.
    Yes, all 3 are sued.


    USM agrees to Hold Harmless and DEFEND walmart.
    YOU agree to Hold Harmless and DEFEND USM and WALMART.

    Hold harmless is fine.......Its that little DEFEND word thats the killer.

    What that means is that YOUR insurance company agrees to provide the lawyers to defend YOU, provide the lawyers to defend USM, and provide the lawyers to defend Walmart.

    Your insurance company will pay for the defense of EVERYONE.

    So there is not much risk on walmart or USMs part by having a slippery parking lot.
    You agree to pay their lawyers if there is a problem.
    Whats the downside?

    That ONE clause is the ONLY reason I wont work for USM.
    I set my own pricing and if they take it they take it, if not, I walk away. So I could care less about what "they pay".

    But I will not agree to accept 100% liability.

    But thats just me.

    For every one of me, there are 100 guys who would give their nuts to be able to be "bigtime snow plowers" and plow their local Walmart.

    Look at all the threads on this board or others. How many pop up as small time guys asking "How do I get the big commercial accounts?"

    Years ago, they couldnt. Years ago, you had to be a well established, proven company, to be able to get a shot at a big commercial site.

    Now, its open to anyone and to most of these small inexperienced guys price is secondary. They are so excited to have the job, making money off it is just a bonus.

    A lot of these guys will pull it off. Maybe not a good as a bigtime guy, but they will pull it off for the season. They may make money, may break even, or may lose money, but in the meantime the work will get done for the price that USM is willing to pay.

    If that guy falls on his face, USM has hundreds of others lined up right behind him.

    This is plain reality guys. What we THINK the customer wants, is way off from reality.

    Theyre not coming back.

    As long as guys are willing to work for USM and others, they will be just fine.

    We think theyre screwing up bigtime, yet walmart is signing them hundreds more stores every year.
    The deal is working out GREAT for them. They LOVE Usm.
    Youre not going to sell them on quality. You cant compete against USM.

    The ONLY thing you can do is worry about your own business. Find work that you can profit from and you;ll be fine. But that $60,000 walmart contract you had that is now $25,000 will not be crawling back. Dont keep your loaders on standby.
  2. Lily

    Lily Junior Member
    Messages: 18

    Well said

    Yes, it is the sad reality of it. And agreed, cry and try and protest all you want - its not changing anytime soon. Adapt or be left behind, being in denial about it is not going to do anything for your bottom line. This has been in the works for a while, the hammer came down and there are going to be a lot of shocked people come snow season. It stinks but the writing has been on the wall for quite a while now - it was a trial run last season, now its full on after kinks worked out. USM is not going away anytime soon, and they want to clear their desk as quickly as possible - heck, you cannot even call most of these companies anymore, its all faceless email correspondence. Like it or not, if its not USM, it will probably be another firm. Like it or not, if you refuse to agree to terms, someone else would love to. Its all numbers and bottom line to them in the end. This is the reason they are big business, they know how to play the game and get best price - that is their power and lets be real, their job. Don't fool yourself in thinking otherwise.

    People will come no matter what, if they fall or get into an accident or by how clean the lot is, no big deal because they will trickle liablity down onto contractor anyway for most part if they get sued. Really the "little guy" is the one that is the loser - damed if you deal with them, damned if you don't.
  3. hoskm01

    hoskm01 Senior Member
    from AZ
    Messages: 475

    Haven't we covered this 100 times, maybe more?
  4. procut1

    procut1 Senior Member
    Messages: 380

    Well considering most of the threads are from the point of view that USM is going under and walmart and such will be crawling back.

    I figured I would spend some time to type out my thoughts which seem to differ from the norm to maybe provoke some different discussion on a topic apparently interesting enough to come up 100 times or more.
  5. dayexco

    dayexco Senior Member
    Messages: 312

    procut, VERY well put!!!
  6. balky22

    balky22 Junior Member
    Messages: 24

    i agree . thank you for a dieffrent look at an age old story. and as a society we don't like change. but it will happen with us or with out us . thanks procut
  7. buckwheat_la

    buckwheat_la 2000 Club Member
    Messages: 2,254

    i love this point of view, I agree with two things 1) the nationals are here to stay 2) walmart well not come slinking back due to poor performance
  8. csi.northcoast

    csi.northcoast Senior Member
    Messages: 320


    my 2 cents

    In most cases if you told your insurance company or agent you signed that contract (which youy will hold harmless and defend) 9 times out of 10 you would be dropped... not to mention if you did have a silip & fall, not only will you be sued , but most sum bag attorneys will find any sub you had plowing/salting and they will be named in the suit, truxt me it happened to me many years ago when i was a sub, 2 years later they settled,,not to mention my 5 hour deposition. ( i was only on that property twice and it was 2 weeks before and 10 days after the slip and fall incident. (belive it or not the scum bag attorney actually want to hire me as an expert witness 6 weeks later (guess what my answer was)
  9. buckwheat_la

    buckwheat_la 2000 Club Member
    Messages: 2,254

    BUT this additude that says we just need to adjust, that those corporations are too big, i could draw so many parallels throughout history. Does anyone think that by hiding your head and hoping things well be ok is going to solve anything. Snowman 5313 had a great idea, and i definetly think it bares exploration. I well let you in on one other little secret, where the nationals are weak is in the small markets. What would a company like USM do if a small market of snow removal contractors refused to work under the conditions USM what exactly is USM going to do? pay another company to drive 100 miles to do one property?!?! I don't think so. I am not even in a market where USM has a efffect......yet. Their name is starting to get thrown around though and Level 1 maintenance made a apperance this spring
  10. LoneCowboy

    LoneCowboy PlowSite.com Addict
    Messages: 1,760

    Great post
    I swear I write that post once a year and get hammered for it.
    Great post

    And anyone stupid enough to sign a contract like that, well...............

    BTW, i do think it will cycle back.
    Might take 5 to 10 years, but after a while, all those little companies who borrow (big problem) to go big on unprofitable accounts and get sued into oblivioun, well, they won't exist anymore

    And then WalMart (s) will decide, "hey, we can cut out the middle man and contract directly and save tons of money"

    then, it will back

    You watch, everything in business goes in cycles.
    there are no new ideas.
  11. procut1

    procut1 Senior Member
    Messages: 380

    There are guys in big and small markets.

    I think there are only 2 things contractors can do.

    1. Figure out how to gear your business to work at the "going rates" AND PROFIT.
    2. No longer consider these types your market. Pursue other work that you can charge a better rate on.

    As far as changing the minds of the corporations. Thats not going to happen.

    ESPECIALLY in this economy. With unemployment as high as it is, and only going to keep going higher, there will be more and more lawn and snow guys out there.

    Since the qualifications to work for companies like USM are much less than working direct for the store, they have an endless supply of guys to work.

    A few reputable contractors refusing to work for them wont even make them blink.

    USM has 20+ people that all they do is process applications for contractors wanting to work for them. And they cant keep up.

    Its a sucky reality check.

    Im usually the guy on lawnsite pizzing on the parade like this, but I hate to say it. As long as we're in an industry that is relatively easy to enter, its going to attract a lot of people.

    Just like in the lawn business. There will always be "high end" accounts.
    But those are dwindling in numbers.

    Walmart was a zero tolerance high end account at one time. Until they realized that being zero tolerance high end did nothing but cost them a ton extra money with no benefit to the bottom line.
  12. procut1

    procut1 Senior Member
    Messages: 380

    Youre right.

    But what do you think about this?

    If it does cycle back and they go back to direct with contractors.
    They are going to look to save money from the $25,000 that the store is going for then.

    Theyre not going to go back to the $60,000 it was before the nationals.

    So either way, its still a lousy deal for the contractor.
  13. lilweeds

    lilweeds PlowSite.com Addict
    Messages: 1,178

    While most of you are commending procut, the real truth is he is full of crap. Yes the clause is in there, but in the real world if someone falls on Walmart's lot they are liable in MOST states. It's funny our local Walmarts are still, yes that is still being serviced by local companies. Why might you ask? It's simple math my friends.

    Procuts thoughts on all these sites is "guys I couldn't make it in this business, neither can you". While he may think that, he's wrong. Now I know of a few people whom work for USM. They have done it for years, and get paid on a regular basis with little or no problems. I also live about 45 mins for their headquarters, so maybe that makes a difference.

    The real issue with the big box stores is convenience. Most expect the stores to look good. Walmart spends millions refurbishing stores every year. Hell the local Spanish Walmart here in Reading just went through a major refurb. And they also did it six years ago when I moved in. The company care about appearance. Appearance sells product.

    So that leaves the question why did contractors that were doing a great job get let go? First is for sure price. You might not having been charging more then USM, but it's another company to write a check to and frankly someone small where if something did happen on your watch, you might be hard to track down. Second is the one contact. Think if you had 500 stores, wouldn't be nice if you could give all your managers one number to call?

    Guys, IMO SIMA is a joke. We as the people in the business need to come together and do away with them. Start and new group, not designed to take our money and tell us about a few new products and a whole bunch of crap we already know, but help us market to these big box stores. As a co op, we can bid large groups of stores, shifting most of the money to the end user. Sure we would need staff to handle paper work, answer calls, and such, but most of the cash could go to the men behind the wheels.

    Think about it. If we had a site, well hell we already do in Plowsite, where we could openly ask good standing member, whom staff have prequalified with insurance, maybe even had a large insurance buy for it's members, and talked openly about numbers. Where can we cut costs, what can we do to put more cash in our pockets while providing better service, don't you think a Walmart would look at that?

    Again guys I saw it this year with Kindercare. They don't want to spend more, and USM, Dentco, Lipinski, and the other nationals that bid it must have been to high, because the companies that were doing the work are still doing the work. So if that is the case how can they be cheaper on Walmart? They aren't. They are charging our rates keeping anywhere from 10%-50% and screwing the little guy. If the little guy can do the same work at the same or better price and have on contact for all their stores, they'll bite in a heartbeat.
  14. Brian Young

    Brian Young PlowSite Veteran
    Messages: 3,394

    Nicely said Procut! Another insightful thought just like your other post about "how to loose your business" on Lawn Site. In short this is where you need to know your costs, expenses, profit margin's etc. I bid a couple large lots this year and it really opened my eyes to actual numbers and what they mean. I agree 100% that it used to be the well established companies who got the "honor" of doing these large places like WalMart, Targets etc. They didn't get that big and experience buy just throwing a number out there and hope for the best! Now its usually lowest bid wins. I'm going to play devil's advocate for a second, first off, we are without a doubt our own worst enemy and I honestly think until "we" start taking ourselves serious know one else will. I'm not acting on behalf or promoting SIMA, but a friend of mine let me take a look as to what they offer and taught him and again, it opened my eyes a ton. Picture this, if we all were members, we all knew what the hell we need to make to make a living doing this, 85% of these posts would be non-existant. There is so much more to running a successful business than just throwing a number out there and hope it sticks. There, I'm done. :D
  15. procut1

    procut1 Senior Member
    Messages: 380

    Even though I paid a lawyer a lot of money to explain USMs contract to me. Ill make it simple for you since apparently my lawyer is full of it.

    Punch "hold harmless and defend" into the googles and read what it means.

    If you think im FOS on here or any site im on....By all means please, call me out on it. Prove me wrong.

    "I didnt make it and neither can you"

    I find that pretty insulting if that is what you gathered from my posts.
    I think you should rephrase that to "Here is where I went wrong, dont make this mistake"

    Ive written extensively about things that I did wrong, and learned from. Areas that I failed and learned the right way after it was too late.

    And yes. It pisses on a lot of parades. Someone new and starry eyed is not going to want to read what I write about. Just as I didnt listen to people who told me the same thing.

    Im doing just fine in the snow business. Im not on here crying about lowballers and nationals taking my work. I cant work for their rates so I dont even consider them my potential customers.

    Others can work at those prices and will. More power to them.
    A lot of others are holding their hands on their ass waiting for these jobs to come crawling back.
    I dont think its going to happen.

    If there is one thing ANYONE who reads my threads will agree......I have no problem admitting when Im wrong......As a matter of fact, almost everything I write about is where I was wrong.

    So ill say again in summary.

    IN MY OPINION.......

    Nationals are not going away and will continue to grow. The deal is working out great for the big corporations. The days of getting big money working direct for your local store are over. And a few or a group or even a big group of contractors are not going to make the big guys blink an eye.
  16. buckwheat_la

    buckwheat_la 2000 Club Member
    Messages: 2,254

    LMAO, i tell you what, you get enough contractors together, and made it all but impossible for USM to service even 5% of the Walmarts there would be a change
  17. procut1

    procut1 Senior Member
    Messages: 380

    Thanks Brian.

    I used to be active in Sima but havent been involved in a few years. This is exactly something that should be a big topic for sima to use with their members.

    Companies are not going to change from a system that makes sense and works great.
    There is no demand or reason to.

    Years ago a computer was $2000
    Now theyre $299

    Everyone who wanted a computer years ago paid the $2000.
    Now you get one that works just fine for 99% of people for $299

    Go ahead and build a $2000 computer thats a little better than the one for $299 and see how many you sell.

    The snow gets done simply and easily for $25,000 with one company, one contact, one invoice, one check.

    Or it can get done a little bit better for $60,000 with thousands of companies, thousands of contacts, thousands of "I broke down call someone else, thousands of RFPs, thousands of contractor interviews, thousands of insurance certs, thousands of invoices, thousands of calls, thousands of checks.

    Hmm.....$25,000 smooth and easy
    $60,000 migraine

    Those of you who believe they are going to go back to the $60,000 migraine.......Instead of saying Im full of BS.....State why you think they will do that.
  18. procut1

    procut1 Senior Member
    Messages: 380

    Youre absolutely right. I do agree 100%.

    But its not a reality thats going to happen.

    Their model will make sense for someone.

    I cant work for their prices. I also have a big ass overhead, salary employees, and debt to cover.
    Thats my business. Someone with a couple trucks working out of their house and have nothing to do but sit and plow walmart the whole storm. That $25,000 is a nice chunk of change for him.

    I can tell him "Dont work for them, its too cheap"
    He's gonna say "Forget you buddy. Thats good money for me"

    Yes. If they run out of contractors, they will have to raise their rates. Theyre not stupid business people.

    In my opinion, theyre not going to run out of contractors.

    Maybe we wont work for them. But for every one of us, there are hundreds or thousands with a pickup and a dream.
  19. buckwheat_la

    buckwheat_la 2000 Club Member
    Messages: 2,254

    again i well say it, you are thinking big centers, do you think that every little town that Walmart is in has a bunch of contractors lined up willing or able to do those lots? of course not, but the contractors in small markets are kept happy by USM so what do they care, do you really think that they have ever heard of Plowsite? i wonder if they even get the same BS contract? Do you think they are held to that contract?
  20. lilweeds

    lilweeds PlowSite.com Addict
    Messages: 1,178

    Procut, I am not saying that you are wrong on this. I just have a more positive outlook.

    Buckwheat, you don't think you could get enough contractors together to cover all the walmarts that receive snow?

    I got enough contractor together to cover all the Kindercares in PA. Now that is just one state, but PA isn't a small state and there is a lot of Kindercares in the state, now nowhere near what Walmart is, but it could be done. The idea is you can compete.

    And I will say again the nationals are NOT doing the work cheaper. The only savings is in writing on check to one company.
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