As was the case with many sectors in the economy, the tree care industry suffered a significant blow in 2020. Due to economic fallout of COVID-19, experts anticipated that annual revenue in the industry would fall 5.4% to approximately $25.9 billion, compared to $27.3 billion in 2019. This decrease can be attributed to a reduction in demand for both residential and nonresidential construction, as well as limited disposable income and lower corporate profits.
Analysts expect the industry to slowly recover in the following five years, while not achieving the same level of growth observed over the previous five years, which was an impressive, annualized growth rate of 7.7%. By contrast, between now and 2025, as construction rates are expected to resume their trajectory, forecasters anticipate more modest investment from state and local government, resulting in a projected annual growth rate of 2.5%. In addition, changes to the minimum wage could affect revenue and profitability.
Additionally, NIP Group’s internal data from 2020 provides insights that can help tree service companies avoid costly damages that could impact their overall profit margins during the upcoming period of reduced growth. Specifically, as demand spikes due to seasonal concerns like spring and summer storms, tree service companies have to be prepared to meet the increased demand safely or risk being negatively impacted by preventable losses.
In addition, while on-the-job safety is paramount for completing potentially hazardous tree work, we’ve seen that auto-related accidents have critically impacted tree service companies. We urge tree service enterprises to preserve their safe standing and profitability by working proactively to prevent auto accidents.