[State of the Industry] Hot Markets in a Cold Economy

Earlier this year, Bizjournals (the online media division of American City Business Journals, the nation¡¦s largest publisher of metropolitan business newspapers) released results of a study designed to identify the nation¡¦s wealth centers, which are defined as places with high incomes, expensive homes, strong educational levels and widespread ownership of stocks, rental properties and motor vehicles.

The company created a 10-part formula to analyze the relative affluence of 2,065 cities, towns and unincorporated urban areas with populations of 15,000 or more. Bizjournals obtained raw data from the U.S. Census Bureau¡¦s 2005-07 American Community Survey, the most recent source for federal statistics at the local level.

While these statistics are an interesting read, they often don¡¦t hit home unless you know a company or colleague from the area. PCT has tried to bring these ¡§dots on a map¡¨ to your front door so that you know how today¡¦s economy is impacting your fellow pest management professionals around the country. „H

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Top 5. The following are the top five American wealth centers, according to the Bizjournals report:

1. McLean, Va.
   According to Bizjournals, no other U.S. city enjoys a wider range of affluence: Typical household income is $156, 292 and the typical home is worth $863,700. The economy hasn¡¦t been an issue for Ward Pest Control, said Office Manager Donna Ward. Rated tops on both Angie¡¦s List and Washington Consumer Checkbook, the company typically has 200 new customers calling each week. The firm performs a lot of one-time service work and, unlike competitors, doesn¡¦t push annual contracts, she said. Customers ¡§do come back,¡¨ said Ward.
2. Lake Forest, Ill.
   Five percent of households in this North Shore Chicago suburb have annual incomes in excess of $1.15 million with a median income of $150,670, reported Bizjournals. Customers are ¡§highly demanding¡¨ and understand the value of preventive control, but are ¡§looking at where they¡¦re spending their dollars,¡¨ said Rose Pest Solutions President Bob Dold Jr. In general, he said his firm has more customers cutting back, skipping service or waiting until they have a problem to call than in years past.
3. Saratoga, Calif.
   An interesting fact: One-seventh of all households in this San Jose suburb have four or more vehicles, said Bizjournals. Company presidents, doctors and professionals head these households and live here long term, said S.O.S. Pest Control Owner Carol Williams. Those laid off usually have generous severance packages so they¡¦re continuing service but scaling back on frequency. Pest tolerance is low so clients come back, she said. The company¡¦s tree service remains popular with clients who want to maintain home values.
4. Potomac, Md.
   Of the country¡¦s top 10 most affluent cities, Potomac has the biggest share of large homes: Fifty-five percent have nine-plus rooms, according to Bizjournals. American Pest Control Service Manager Becky Wade isn¡¦t surprised this city made the list, but her ¡§demanding clientele¡¨ is feeling the economic pinch. Normally, customers pay quarterly service contracts in advance to get a discount, but now some are paying service-by-service, or dropping service and coming back when problems arise, she said.
5.  Darien, Conn.
   Bizjournals reported this city leads the nation in per capita income at $97,047 ¡Xnearly four times the national average of $26,178. John Torre, president of Northeast Exterminating in Stamford, is surrounded by wealthy communities, including Darien. He can ¡§definitely see the difference¡¨ between pre-recession and current spending habits. Before clients said, ¡§Come and do it,¡¨ recalled Torre. Now, they¡¦re getting multiple quotes and ¡§looking at everything.¡¨

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Bottom 5. The following are the bottom five American wealth centers, according to the Bizjournals report:

1. Camden, N.J.
   This city sits last in Bizjournals¡¦ study of 2,065 cities. The median household income of $23,154 is 85 percent below top-ranked McLean¡¦s $156, 292. When TNT Pest Control Owner Tom McFadden in nearby Merchantville heads to Camden, it¡¦s usually for commercial work or general pest control at Section 8 housing. He¡¦ll go there ¡§any time for anybody,¡¨ but most of his business comes from surrounding communities.
2. East St. Louis, Ill.
   Not a single one of its 10,691 households has an annual income above $200,000, with the local median just $22,139, reported Bizjournals. Commercial accounts are the bulk of HomeTeam Pest Defense¡¦s business in this city. Even so, times are tough. When the state of Illinois cut funding, a major account cancelled its pest maintenance program and instead opted for as-needed service, said HomeTeam Pest Defense General Manager John Flores in Chesterfield, Mo.
3. Chester, Pa.
   Real estate prices are steep in many Philadelphia suburbs, but Bizjournals said this one has a median home value of $58,900. Joe Sullivan, president of Royal Termite Control in nearby Parkside, Pa., performs services at a lot of rental properties in Chester. ¡§When people have a problem they don¡¦t have a problem paying¡¨ for service, he said. He has seen termite inspections drop off as more people opt to rent than buy homes.
4. San Juan, Texas
   Per capita income ¡X the average amount earned by an individual in a year ¡X is just $9,543 or $795 per month, said Bizjournals. Mario Trevino, co-owner of Affordable Pest Control, said most customers are sticking with their pest prevention program. Those who cancelled cited back-to-school expenses but said they plan to come onboard again in January. It¡¦s important to keep the customers you have, said Trevino, citing fierce competition.
5. Opelousas, La.
   This city struggles with the lowest income levels of any community in Bizjournals¡¦ bottom 10, with median household income a mere $18,142. Yet, ¡§we still have a strong economy as far as people spending dollars,¡¨ said Ardoin¡¦s Exterminating Company President Wayne Ardoin. Few customers are cancelling and he¡¦s actively selling new pest control and post-construction termite accounts. ¡§People want to hold on to what they have.¡¨ Pretreats are down 60 percent, but that¡¦s not unique to Opelousas, he said.