Barcelo: 'Industry Is Lost Now'
As part of our State Of The Industry report, we asked industry leaders to answer questions about the state of all things greenhouse floriculture. Tony Barcelo, vice president at Barcelo Enterprises in Salinas, Calif., shares his take on consolidation,
January 15, 2010
As part of our State Of The Industry report, we asked industry leaders to answer questions about the state of all things greenhouse floriculture. Tony Barcelo, vice president at Barcelo Enterprises in Salinas, Calif., shares his take on shares his take on the state of the industry this week.
How would you describe the state of the greenhouse floriculture industry today?
I think the biggest problem in our industry is the industry has consolidated. As a larger grower on the West Coast, our outlets have shrunk to five or six customers. The economic situation, especially in California with the housing crash, has really devastated the market. California, Nevada and Arizona have extended markets. It's not the same as in the Northeast, where a season is a season. You plant or you don't. It's hard to spend money on plants if you don't know if you'll be living in your house. If consumer confidence doesn't turn around, I don't know how long Home Depot and Lowe's can withstand this downturn.
We have big conglomerates using Wall Street money who don't have the same rules as the rest of a mom-and-pop industry. The tragedy is so many good nurseries like El Modeno (Gardens) have to leave the industry. The bankruptcies filed by Hines (Nurseries) and Bordier's (Nursery) are indicative of the state of the industry.
Nurseries ramped up, expanded, over-capitalized and had a surplus of inventory, which drives prices down. We have a recipe for disaster with what has been going on. My biggest concern is deflationary pricing. Will it come back? Once buyers and consumers are trained on price, will the consumer buy again at the normal cost?
Has there been a changing of the guard in industry leadership?
I think the industry is lost now. I don't think there is leadership. I don't think there's an area of the industry that's solid. Everything is in limbo.
My father, who is 69, was in the industry for 40 years. Old guys like him were mentors to me. When they sit back and see how the industry has evolved, you'd like to think they'd be proud of where the industry is at and they really are not.
What are the greatest challenges growers are facing today?
For growers, it's not even about plants anymore but merchandising, rebates and in-store service. Retailers want to take their hands off and don't want to incur any shrink. The boxes want every store to look alike and be perfect. I don't believe one grower entity can do it, all under one management system.
The industry is too specialized. It takes a lifetime to become an expert growing certain crops. Yes, there can be contract growing, but the expertise in growing has to stay. The Bell Nursery model sounds good, but how can you be competitive from a price point if you're buying in from others? It opens the door to competition. A lot of big retailers want the lowest price and they want to pass the costs of shrink on to the end consumer.
When I became a grower, I didn't know I'd be doing marketing and logistics in addition to growing. You better know what you're doing or you'll learn a lot the hard way. I'm gonna survive this no matter what, but it's hard when you work like an animal for countless hours and you are so subjected to forces beyond your control - people making decisions who have never visited your facility. You did nothing wrong, yet, they're going to penalize you. We're so ramped up to do business with the large retailers. We have the trucks, drivers, staff and infrastructure needed to process hundreds of orders a day. It takes a lot to get that done and it costs money.