[Pest Perspectives] Termite Business Is Down But Definitely Not Out

Greg BaumannIf it were up to the mainstream news media, the casual observer would think that bed bugs account for 95 percent of our industry’s business. But that’s simply not the case. According to an MSNBC interview last fall, bed bugs account for about 5 percent of our industry’s business. Meanwhile, termites, specifically subterranean termites, account for up to 40 percent in recent years. While bed bugs have helped make up for a loss of termite work due to the recession, we cannot ignore the importance of termite work.

Our industry had already been hurt by the erosion of business stemming from lenders no longer requiring termite inspections for real estate transactions. Piggyback that with the deepest recession in modern history, and wood destroying insect inspections and resulting treatments are nowhere near what they once tallied for our industry. But don’t put the termite rig or bait auger on eBay just yet.
 

SIGNS OF RECOVERY.
The National Association of Realtors recently rated the current real estate market, through its Pending Home Sales Index, as just below 90 on a scale where 100 is the baseline from the year 2001. It appears that the market is recovering in the real estate sector, but it isn’t breaking any speed records. January of this year was not exactly ideal weather for selling a house in many parts of the country; however, sales were up to an adjusted 5.36 million units, from 5.09 million units a year ago. This year NAR is expecting a whopping 8 percent increase in unit sales from a year ago. We are on the verge of a possible resurgence in termite work, but most of the transactions will come from the existing construction segment.

The National Association of Home Builders somberly reports that single family housing starts for January 2011 show a projected annual rate for 2011 at 413,000 with multi-family starts projected at 171,000 or 584,000 total. This compares to more than 1.5 million in 2006 so construction is still in the doldrums. If you were dependent on pretreats to a large extent, your business isn’t going to flourish in the near future. New construction just is not on the verge of a recovery.

The big question is whether we’ll be ready as an industry when the demand for termite inspection and control services returns to pre-Great Recession levels. Some economists cautiously suggest that there will be slow but deliberate growth creating more of a slow launch than skyrocketing growth. Certainly, the heyday of real estate prosperity will take some time to duplicate, or at the very least, approximate. Tomorrow’s economy, no matter how weak or robust, will create opportunity nonetheless. With a healthy and yet measured recovery, we will see demand for termite work. As an industry, we can’t afford to give up the dependable termite market.
 

TAKE STOCK.
Now is the time to work with real estate agents to let them know about the services that you provide. Just as in most parts of the country our industry takes stock of its businesses and formulates plans during the dead of winter, realtors do the same in the dead of recession. Only the strong realtors will survive in tough times, so there is a good chance that today’s veteran realtor will be around to enjoy the fruits of an upswing economy. Those who got into real estate to make a quick buck won’t be around for long and are probably already gone. In this economic climate, only focused and determined realtors with good business savvy will survive.

This is also a good time to work with banks to advise them of your capabilities. With the banks having a much stronger role in real estate transactions, business might be waiting for you even today. Bankers also have the dubious role of administering foreclosures, including making sure that the properties are pest-free. This can lead to new-found business opportunities in your own town.

This is not the time to pull in our industry’s wings on termite programs. This is the time to renew relationships, resupply your service offerings related to termites and get ready for the uptick in the economy. It is bound to happen.

Let’s not dismiss the value of the bed bug which has helped fill the void created by the drop in termite work. When things get better, and they always do, we’ll not only have termite but also bed bug proficiency which will boost our industry. Now that is a stimulus program without government funding.

Winston Churchill, the widely revered prime minister of Great Britain, once said “A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.” Just when you think it is time to sell the termite tools and get out of the business, think positively and look not to today but to a bright future as a vital service provider. Make it happen.

Greg Baumann is a technical services director with Orkin and has more than 30 years of varied pest management experience. Learn more via Facebook at www.facebook.com/OrkinPestControl or join the conversation at www.twitter.com/AskTheOrkinMan. You can also email Baumann at gbaumann@giemedia.com.