[Market Update] Perimeter Treatments: The Changing Face of Termite Control

For 50 years liquid termiticide treatments remained virtually unchanged – as if trapped in a time warp – as the rest of the industry continued to evolve in response to the burgeoning environmental movement, the rapid expansion of two-income households, and the introduction of new technology that changed the face of the pest control industry forever.

Products came and went – chlordane, Pryfon,® Dursban® TC – but termiticide label language remained remarkably consistent, seemingly immune to the winds of change, a timeless tribute to chlordane’s often praised and aggressively marketed 30-year residual life. Like an old blanket, PCOs found the label language comfortable, familiar, uncomplicated … a document that harkened back to the "golden age" of termite control when hundreds of pest management professionals in the country’s "termite belt" made a small fortune drilling and treating homes with chlordane, aldrin, and other long-lasting cyclodiene termiticides, ultimately funding their retirements while creating some of the largest, most profitable pest control businesses in the South.

In the mid-1990s, however, termite baits changed the competitive landscape, taking significant market share from liquid termiticides and creating a demand for an entirely new form of non-invasive treatment. Yet despite this affront to its market standing liquid termiticide label language remained virtually unchanged. That is, until the introduction of the non-repellents, first Premise® from Bayer Environmental Science in 1996, and then Termidor® from BASF Professional Pest Control in 2000, and Phantom® – also from BASF – in 2002.

Initially, non-repellents – like the classes of chemistry that preceded them (e.g. chlorinated hydrocarbons, organo-phosphates, pyrethroids) – were applied in a fashion consistent with the old chlordane labels. But as manufacturers, university researchers and the regulatory community quickly learned, the unique modes of action of these new chemistries offered additional benefits that for the first time made so-called "perimeter" applications a viable possibility. Specifically, termites encountering non-repellent termiticides readily tunnel through treated soil, absorbing a deadly dose of the toxicant, yet the chemistries are slow acting enough that lethal effects are transferred to unexposed nest mates, impacting colonies on a wider scale.

As a result, the industry began to look at liquid termiticide labels differently, opening the door – if ever so slightly – to the first significant change in termiticide label language in a generation. After years of spirited negotiation, and despite opposition from some in the regulatory community, in October of 2004 EPA approved amended usage directions for Termidor® SC and Termidor® 80 WG for use as an exterior perimeter/localized interior treatment when used for post construction control of subterranean termites within a structure. The new directions-for-use amendment is marketed by BASF as PerimeterPLUS. Bayer, first to market with a non-repellent termiticide, has also submitted a perimeter label to EPA for Premise, and several other manufacturers are likely to follow suit as new non-repellent technology is introduced in the years ahead. Syngenta Professional Products, for instance, has a promising non-repellent, thiamethoxam, currently undergoing field trials throughout the country. FMC Corporation and DuPont Professional Products also have non-repellents in their product pipelines.

WHY NOW? A growing reticence among consumers regarding the use of pesticides in and around the home, when combined with an evolving regulatory climate, made the dawn of a new century a good time for so-called "perimeter" termite treatments to be introduced. "There are a number of benefits to using PerimeterPLUS," according to Karl Kisner, senior marketing manager for BASF Professional Pest Control, Research Triangle Park, N.C. "The treatment method is less invasive, which homeowners find attractive, and less chemical is applied in and around the home, while still protecting the structure. The result is a significant reduction in time and labor for the PMP, and the ability to perform multiple termite jobs on any given day. Those are all positives for the industry."

While customer convenience and enhanced productivity appeal to the PCO, federal regulators like the fact less pesticide is applied inside the home, a longtime mandate of the EPA. In fact, shortly after the PerimeterPLUS label amendment was announced, the Registration Division of the EPA’s Office of Pesticide Programs told Pesticide.Net, a publication based in Woodbridge, Va., that it made the decision because: "This type of application will result in half the usual amount of termiticide being applied to a home while effectively controlling termite infestations." The payoff for both EPA and consumers "is less invasive treatments and lower levels of pesticide exposure."

Interestingly, when it comes to pesticide exposure, the Association of Structural Pest Control Regulatory Officials (ASPCRO) and EPA exhibit differing sensitivities, according to Bob Rosenberg, vice president of government affairs, National Pest Management Association, which speaks to the vastly different cultures of the two organizations. "The driving force in EPA decision-making is human residential exposure to pesticides. Whereas, the driving force in ASPCRO decision-making is ensuring that adequate chemical is used to provide an effi-cacious termite treatment. While they deal with many of the same issues, they often approach them differently," he said, which sometimes results in conflict and misunderstanding.

A CONTROVERSIAL DECISION. The EPA’s decision to move forward with a "perimeter" label, while applauded by BASF and others, was not met with universal praise. Some members of ASPCRO questioned the Agency’s decision to drop the limited interior-treatment requirement if no live termites are found within the structure, particularly interior treatments in areas where pipes penetrate slabs.

"The greatest concern held by most regulatory programs revolves around two issues: the lack of clear requirements for pre- and post-application inspections and the fact that slab penetrations will only be drilled if there are active termites," said ASPCRO member Carl Falco, director, North Carolina Department of Agriculture, Structural Pest Control Division. "Clearly, the label implies, and proper use demands, that a thorough inspection be performed before starting the treatment. Good practice dictates that an inspection be performed after the treatment to en-sure all points of infestation were treated. Yet there are no such requirements on the label."

"Post-treatment inspections (e.g. annually) are a prudent practice with any liquid termiticide treatment, conventional or otherwise," reiterated Dr. Michael Potter, professor of entomology, University of Kentucky. "Nonetheless, while two wrongs don’t make a right, some manufacturers and PCOs think it inappropriate to mandate such inspections for non-repellent perimeter applications without requiring the same of other forms of treatment that may be less effective."

"Pillars and pipes must be trenched and treated in crawlspace construction regardless of the presence or absence of activity; but interior penetrations in slab construction do not have to be treated unless there is activity," Falco added. "This inconsistency is unjustified in the opinion of several regulators and researchers. From a regulatory standpoint, the label will be difficult to enforce. Regulatory inspectors have no way of knowing or proving if an infestation present when they inspect a structure was present at the time it was treated."

John McCauley, former president of ASPCRO who currently serves as a regulatory specialist for BASF, attributes the difference of opinion to "growing pains," an inevitable by-product of negotiations between regulators and product registrants. "It’s a major change in label language, so not everyone is going to agree," he said. "The important factor is matching the rules in the state with the available chemistry and the best application techniques. When I was a regulator in Kentucky I felt our state minimum standards didn’t match the chemistry, so it’s exciting for me to see this type of chemistry come forward and see the overwhelming response from the states." At press time, the PerimeterPLUS label had been approved in all but four states – California, Louisiana, Mississippi and Georgia. (Editor’s note: Termidor is not available in New York state.)

In commenting on the negotiation process, Kisner said, "We tried to help craft a label that served all the parties involved. We didn’t get everything we wanted on the label and neither did ASPCRO. In the end, the process worked the way it was supposed to work. What we didn’t want is a lot of different states having a lot of different requirements," a theme echoed by Steve Burt, managing director of Bayer’s Professional Pest Management Business. "We believe one clear set of regulations is needed to ensure that this radical new method of controlling termites is used consistently by PMPs," he said.

"Speaking as a member of ASPCRO, I see the development of perimeter labels as an opportunity to re-energize the dialogue between the states and USEPA on label language," added Steve Dwinell, ASPCRO board member and assistant director, Division of Agricultural Environmental Services for the state of Florida. "The label language established in PR 96-7 has become standardized, and the perception seems to have developed that routine approval of this language could occur without states review. I am hoping that we can work with USEPA to review the new proposed language on a case-by-case basis."

Yet NPMA’s Bob Rosenberg said it’s a debate "that didn’t need to occur" if a process for determining uniform application standards and product performance guidelines would have been in place. "That’s the key ingredient that’s been missing," he said, "a process for creating product performance guidelines for new technology before it is introduced. The same thing occurred with bait technology a number of years ago. It’s an important issue that the pest control industry and the regulatory community needs to address."

MARKET IMPACT. There appears to be two schools of thought regarding the long-term impact of so-called "perimeter" labels on the termite market. While some say the new directions-for-use will damage profitability and encourage shoddy termite practices, others say the impact will be negligible. "I believe ultimately this will hurt pricing and allow for the bottom percent of the industry to perform less than industry-practice termite control treatments," said George Saxton, compliance officer, Office of Indiana State Chemist, West Lafayette, Ind.

"I think it’s going to have a major impact on the termite market," added David Boose, owner of PestMasters Termite & Pest Control, Richmond, Va. "There’s concern that there’s going to be a lot of downward price pressure as a result of the perimeter label. Somebody will always try to do less and there’s got to be a point where it doesn’t work anymore. I have a lot of faith in Termidor, but you’ve got to apply it. The label for the PerimeterPLUS label still calls for a full label treatment around the perimeter of a structure and I don’t think that’s happening in every case. It’s going to be more price competitive in the future, no question about it."

"My ultimate fear is the small, low-ball guys will reduce their pricing because they’re going to be using less product," added James Nase, pest control manager, Moyer Better Homes Pest Control, Souderton, Pa. "We haven’t seen that yet in our market, but I think it’s a possibility."

While BASF and others readily acknowledge the industry’s growing concern about pricing and profitability, it contends history proves those concerns are largely unfounded. "There is concern that termite pricing is going to crash, but people have been doing it (perimeter treatments) a number of years and we haven’t seen significant price erosion," Kisner observed. "We know in some states, like Florida for instance, that the bulk of the treatments are already perimeter treatments and termite pricing has held up. Price cutters have been around forever. This label alone does not bring out a price gouger," a sentiment shared by Dr. Phil Koehler of the University of Florida. "Termite treatments have always been a cutthroat business at the low end," he said, but one must remember that "companies are also paid on the quality of their service. Companies that treat their customers right will be paid properly." However, Koehler does admit that with less pesticide being used and less time spent drilling and treating at the job site, "the public should be able to receive a lower priced treatment."

Not necessarily, according to Greg Clendenin, president and CEO of Middleton Pest Control, Orlando, Fla. "We look at this type of treatment as a way to increase the quality and value of the service we’re offering the homeowner," he said. "The treatment is less invasive, yet it’s every bit as effective. Yes, it enables us to deliver the service at a higher gross profit margin, but we’re going to send that down to our bottom line as opposed to cutting our prices. PCOs have concerns (about perimeter treatments) because they are accustomed to a lot of people in our industry trying to differentiate themselves on price instead of service. We choose to differentiate ourselves on the quality of our service."

"I think in the main it won’t impact the termite market a whole lot because everybody’s been doing it for the last three or four years anyway," added Steve Burt of Bayer. "We’ve got research on 7,500 homes. At the time we conducted the research we didn’t know anybody was doing perimeter treatments using Premise. We thought everybody followed the label. Then we did the research and we found about 3,000 of those homes – particularly in the later years – were all doing perimeter treatments."

PCT market research appears to bear this out. According to an e-mail survey of several hundred PCOs in late December, 60% of companies surveyed said their technicians had performed "perimeter" termite treatments, with a whopping 35% performing such treatments for five years or more (see charts).

While acknowledging that PCOs in his state "jumped on the perimeter concept early," Dr. Michael Potter of the University of Kentucky still contends that the impact of the new label and others that follow will be huge. "Some will say that many are already doing perimeter-mostly treatments and the label won’t change much, but there are many companies out there that were waiting for the label amendment to allay their concerns and to make things ‘legal,’" he said.

He’s less convinced the new directions-for-use will negatively impact the so-called "quality" of a termite job. "All this talk about losing the craft in termite work by not having to drill as many holes is missing the point that most folks don’t want their floors drilled, carpets pulled back, hoses hauled through the house, pesticide pumped into living spaces if they don’t have to. The data suggest that such treatments work most of the time. Will there be failures? Of course. No termite treatment method is 100 percent effective. As in modern medicine, we have to weigh the risk vs. benefit of any procedure." he said. "Baits will still be used, but a perimeter liquid treatment gives consumers another minimally invasive option to control their termites."

"I think you will see people move away from baiting, but I don’t think it will be quite as rapid as a lot of people believe," added Burt. "Obviously, from our perspective we’d love it to be a rapid shift … but I see it as being a general evolution rather than a revolution."

Still, bait manufacturers aren’t going to give up the termite market without a fight. In fact, they welcome the competition, confident in the benefits of their technology. "We still believe that using a termite baiting system is the future of termite control," said Dave Morris, commercial leader, U.S. Pest Management, Dow AgroSciences. "Eliminating the colonies via targeted use of the product when and where termites are present and active is the best way to protect the structure as well as minimize impact on the surrounding environment via the limited use of chemical."

PCOs, for their part, seem to like having a variety of treatment options at their disposal, including baits. "We believe that bait will continue to play an important role in the future of termite control," observed Steve Good, vice president, chief marketing officer, Terminix International, Memphis, Tenn. "From our perspective, the customer plays the leading role in the technologies we offer. There is a distinct market for bait technology. Many customers desire solutions that don’t involve trenching, rodding and liquid applications. It has been our experience that by offering our customers a choice of technologies, by educating them about the features and benefits of both solutions, and highlighting the fact that our goal is to provide them with a long-term solution and ongoing protection from termites, they are able to make a decision based upon their needs, their likes and dislikes, and their economic situation."

Concern also has been expressed that the less complex application techniques used in perimeter treatments could result in home-owners one day performing these treatments should an over-the-counter product become available. "I don’t want to trench and treat," said one longtime industry observer, "but I could. That’s not the case with drilling and treating, which is much more labor intensive."

"I suspect that it won’t be long before someone develops a homeowner do-it-yourself trench and drench product with a non-repellent," added George Saxton of the Office of Indiana State Chemist. If so, "pest control operators may be putting themselves out of the termite control business," he said.

"We believe very strongly that a termite treatment must always be conducted by a trained professional because what differentiates that professional goes way beyond trenching and drenching to his knowledge of termite biology and behavior, construction types and inspection techniques – among other things," said Bill Baxter, business manager, BASF Professional Pest Control. "It’s a professional’s expertise, experience and the service he provides that adds value for the homeowner."

THE FUTURE. It’s difficult to predict market dynamics, but as was the case a decade ago with baits, clearly the industry finds itself on the threshold of a new era in termite control, an era characterized by a wide range of high-quality termite control options, including repellent and non-repellent chemistry, borates, fumigants, baits, and barrier treatments, just to name a few.

Clearly, perimeter treatments have gotten the attention of the industry. Fifty-eight percent of PCOs responding to a recent e-mail survey indicated that perimeter termite treatments with targeted liquid applications to infested or high-risk interior areas is the future of termite control. An additional 48% percent of respondents viewed perimeter treatments "very favorably" or "somewhat favorably."

"Everything is in place for the termite industry to enter a period of change," observed Dr. Phil Koehler, one of the country’s leading termite experts. "Of course, there will be some lessons learned along the way. Not everyone will be able to find termite entry points and treat them. But with education, the industry should improve (inspection and treatment) techniques."

The key is not to abuse any of the available technologies, including non-repellent termiticides. "I think everybody knows that perimeter treatments work if they’re used responsibly," according to Burt. "The only negative impact you may see … is up until now the PMPs who have been making perimeter treatments have been pretty smart. They understand what they’re doing. Perhaps what will happen now is the market will broaden and people who are less careful will cause the industry some problems."

Chris Maher, executive vice president of Truly Nolen of America, Inc., Port Charlotte, Fla., agrees. "Will there be some people who use it (perimeter treatments) as a standalone and walk away," he asked? The answer is inevitably yes, but if so, Maher warns, the consumer will be "the loser." That’s why Truly Nolen offers a comprehensive perimeter treatment program. "With perimeter treatments, we also put out monitoring devices," he said. "We don’t do it as a standalone. We’re back there on a quarterly basis and if there’s an active infestation we’re also treating that area and 10 feet on either side, as well as critical areas, including plumbing and anything coming up through the slab."

"I just hope that the people in the field make sure that interior treatments are being done," Burt added. "We know in field trials we’ve done in the past that if you don’t do an interior treatment, you add a risk. It doesn’t mean it doesn’t work. You just add a risk. And if the termites are already infesting the property, then I think that’s where it gets dangerous. It’s not that it takes a lot of time to perform these interior treatments; it just takes a bit of care. You know and I know, the best pest control companies in the world are not those that are the fastest, it’s those that take a little bit of extra care in their treatments."

"We want the PMP to do what’s right," said Manny Martinez, Premise business manager, Bayer. "Don’t just do a ‘fly-by’ treatment. There’s a good chance you’ll control termites on the inside with a perimeter application, but are you willing to put your company’s reputation on the line based on that assumption?"

BASF’s Bill Baxter is confident PCOs won’t abuse the benefits offered by the new PerimeterPLUS label and others that may follow. "These guys (PCOs) have a huge investment in the satisfaction of their customers," he said. "The smart ones aren’t going to do anything to put that in jeopardy."

PCOs interviewed by PCT magazine appear to agree, expressing an even more pragmatic view of this controversial subject. "As long as you solve the customer’s termite problem I don’t think the public cares if it’s a perimeter treatment, baits or a conventional termite treatment," said PCO Larry Weinberg, a 40+ year veteran of the pest control industry. "I’ve seen a lot of changes in the termite market over the years and it all comes down to one thing: Are you successful in solving the customer’s problem or not? The companies that do are successful. The companies that don’t aren’t in the business very long."