Can We Survive Another Recession?

Can We Survive Another Recession?

If the Great Recession can be likened to a massive coronary for the United States and world economies, then I guess we can say we are still in intensive care and in the process of undergoing extensive rehab. Recent indicators do indeed point to an economy that isn’t responding as quickly as we’d hoped to the medication and rehab we’re in the process of administering. On top of our economic recovery, our national debt and Congress’s reluctance to make tough decisions has put us in a non-enviable position heading into 2012.

I guess that is what Standard & Poor was hinting at in its downgrade of U.S. treasuries earlier in the year, given that a big part of its rating model is a reflection of the current political environment. However, S&P’s unprecedented action hit the markets hard with its conclusion that our government is incapable of making any rational decisions regarding our debt situation. While all of us are frustrated, the decision by S&P couldn’t have come at a worse time.

What Happened

What irks me about S&P’s downgrade and the subsequent market malaise is that once again we let this firm’s actions influence us unduly. Remember this is the same firm that missed the entire mortgage-backed securities problem right under its nose and gave Lehman Brothers a triple-A rating right before it tanked. Yet we let one company with a track record like this once again ignite disruption in the markets? Someone please explain to me the logic in that.

The Federal Reserve and other regulators immediately pointed out the $2 trillion mistake in S&P’s math and warned folks not to take this downgrade seriously, but to no avail–the roller coaster in the stock market had already begun to take shape. The G-7 also stepped up and said that regardless of the rating, it was willing to do what it takes to keep liquidity flowing in financial markets worldwide.

What’s Next

So what does this mean for the economy in general? First, most economic forecasters (with fairly accurate track records) are projecting modest GDP growth during the remainder of 2011 and into 2012. Consumer spending is expected to show modest signs of life after a disappointing showing the first half of the year. There are even modest projected gains in employment, if you can believe it.

Housing activity is still expected to rise only slightly, particularly in the construction sector. The widening spread between rents and costs of home ownership are creating opportunities in the rental market, which may be a good thing since we need a more mobile work force in order for folks to move to areas of the country where jobs are available.

Business investment in new equipment and commercial real estate is expected to increase slightly in 2012–a good thing since government spending is likely to scale back considerably, not only at the national level, but at the state and local levels as well. Commodity price fluctuations should lessen over the next year, easing inflationary pressures.

The Federal Open Market Committee has elected to keep the fed funds rate at near zero through mid-2013, an extension of its earlier policy. It has removed the quarter-percent interest rate it pays on the reserves banks hold at the Fed. Banks will likely be more willing to lend if they are not getting a risk-free, though negligible, return from socking away money at the Fed. This is good news for businesses looking to make strategic investments as we head into 2012.

The Bottom Line

The health of the economy is extremely fragile, with some of our leading indicators continuing to be negative. Fortunately, some are trending positively. Mixed performance in the economy coupled with extreme weather conditions makes for a terribly challenging environment. I remain optimistic about the recovery, but then again, as you know, I find the silver lining in most economic storms.

But what if my optimism does not pan out and things do not continue to improve, even modestly? What if Europe’s financial market unravels and propels the rest of the world into Great Recession: Part 2? What if the gloom and doom economists are the ones who are right and this is only the beginning of financial Armageddon in this country? Can we as an industry make it through another recession like this one?

If I can elaborate on a couple of my comments a few months back, I still have reason to believe the firms that are well positioned with their customers in the marketplace, not overleveraged and clearly articulating their value proposition, will be OK. However, those that aren’t probably won’t be around much longer.

We will likely see continued structural changes across the industry supply chain as we morph into the more compact and efficient industry of the next decade. This will not only mean fewer key players in the industry but deeper, more strategic relationships among those left from the transition. We are not going to look the same; not even close.

Yes, we (as an industry) will still be around (if we maintain our value, relevance and authenticity to our end consumers), but the factors that will guarantee success in the future are going to change. Better brand management, more detailed SKU movement and replenishment analysis, greater efficiency in distribution and logistics, closer integration of genetic innovations and supply levels with consumer demand, and the assimilation of innovative marketing technologies (social media and otherwise) are the new key success factors of the future.

Notice that growing a quality plant isn’t listed. That’s because it’s a given. You’ve got to have quality to even play in the game. Master these key success factors and you’ll not only be positioned better for the potential double dip in the short run (if it does occur), but you’ll lay the groundwork for solid performance during any future economic downturn.

Leave a Reply

More From Finance/Operations...
Coleus 'Colorblaze Velveteen' (2015 University of Tennessee Field Trials)

November 28, 2015

2015 University of Tennessee Gardens (Knoxville and Jackson, Tenn.) Field Trials Results

See the 2015 field trials results (includes photo gallery) for University of Tennessee Gardens in Knoxville and Jackson, Tenn.

Read More
Feature Image Cob 700 (NewLux)

November 28, 2015

16 LED Lighting Solutions For Your Greenhouse

Narrowing in on the right LED lighting product often comes down to considering your specific crop needs and growing requirements to see what works best for your application. Here are 15 LED products to take into account when choosing the right fit for your greenhouse.

Read More
Begonia 'BabyWing Red' (2015 Louisiana State University Field Trials)

November 27, 2015

2015 Louisiana State University (Hammond, La.) Field Trials Results

See the 2015 field trials results (includes photo gallery) for Louisiana State University in Hammond, La.

Read More
Latest Stories

November 25, 2015

Everything You Need To Know About the New England GROWS…

Held In Boston December 2-4, New England GROWS includes a comprehensive conference program, a trade show, and with six special programs that teach new skills and provide opportunities to network with colleagues.

Read More

November 20, 2015

Lessons Learned From The California Drought

For those of us who live in the areas of the country that experienced harsh winters and significant rain over the past three seasons, water has become a nuisance in some cases, rather than a blessing. I can’t count the number of times I have wished to be able to send the snow or the rain to the West Coast, tied up with a big red bow. But think about how we’d feel if we didn’t have the snow and the rain, and we were experiencing the same dry conditions that the residents of California, Oregon and Washington have. With fresh water supplies dwindling in regions of the world, and the resistance of residents in states like Michigan to share water from the Great Lakes, it’s likely that the next civil or world war could be fought over our most precious resource. California’s epic drought should cause everyone to look […]

Read More
Jill Calabro

November 3, 2015

AmericanHort Names New Research And Science Programs Di…

Jill Calabro will bring strategic direction and oversight to research funding by the Horticultural Research Institute, the research affiliate of AmericanHort.

Read More
SBI’s ANY Device Application allows growers to quickly determine availability-featuer

November 2, 2015

SBI Software’s Solutions Help Simplify Logistics For G…

The company focuses on helping growers improve their existing processes with solutions for site fulfillment, replenishment, inventory management and more.

Read More
Griffin Expo15 seminar

October 28, 2015

Griffin’s Hits Record Attendance With 2015 Expos,…

Griffin Greenhouse Supplies set new attendance records with its 2015 Expos. Its 2016 Expos are set for August 31 and September 1, 2016, in West Springfield, Mass., and September 21-22, 2016, in Lancaster, Penn.

Read More

October 28, 2015

Possum Run Greenhouses Taken Over By New Owners

Justin and Lynn Marotta have placed Possum Run Greenhouse and Gifts into the hands of new owners. John and Caroline Bletner, a newly married couple, took over the Bellville, Ohio, property October 2, according to an October 24 article in the Mansfield News Journal. The Marotta family has run Possum Run Greenhouse and Gifts for 41 years. When the Marottas announced in April the greenhouse operation was for sale, they said they were looking for an energetic couple to take the business to the next level, which is what they found in the Bletners, the article reports. The Bletners have hinted they’ll be “opening to a larger market” and that the retail side will “look different.” They’ll hold a grand re-opening the week of April 22, 2016. Staff are staying on board and the Bletners are maintaining many of the suppliers. The 200-plus varieties of fuchsias Justin brought to the greenhouse […]

Read More

October 25, 2015

We Could Be Growing More Green Infrastructure Plants Th…

At her Cultivate’15 presentation in July, Shannon Currey of Hoffman Nursery challenged the horticulture industry to get involved while green infrastructure is still developing, saying that a good start is to offer more plants that fit the unique needs of this market.

Read More
Integration Key To Compliance For Specialized Crops

October 22, 2015

Integration Key To Regulation Compliance For Specializ…

Growers considering supplementing ornamental crops with cannabis will enter into a new world of governmental regulations where key business systems will be indispensable for successful crop management.

Read More
Kate Santos Operations Director Dummen Orange

October 21, 2015

Kate Santos Explains What The Sale Of Dümmen Orange To …

Over the weekend, Dümmen Orange announced that the Dümmen family has sold its majority stake in the Dutch flower breeding company Dümmen Orange to European private equity firm BC Partners. The deal is valued at more than $560 million, around 11 times its core earnings, according to a Reuters press release. The company, owned by the Dümmen family and investment firm H2 Equity partners, has locations all over the world, including farms in Central America and East Africa. This is BC Partners’ first foray into the flower business. We caught up with Kate Santos, operations director for Dümmen Orange, to find out how the company’s sale to BC Partners affects Dümmen Orange customers, if at all. Here’s what she told us: Why did the Dümmen family decide to sell their shares? Why to a private equity investment company? Similar to the reason that H2 sold its shares to BC Partners, all […]

Read More
The tradeshow at the Cannabis Business Summit & Expo — outside of the occasional 1960s vibe, perhaps — would feel familiar to most growers

October 19, 2015

Have Cannabis Growing Expertise, Seek ‘Golden Ticket’

Many horticultural growers might start cultivating cannabis tomorrow if they could secure a license, the equivalent of a “golden ticket.” But these are hard to come by, and the number and criteria vary greatly by state

Read More
Lurie Garden Millennium Park

October 16, 2015

Green Infrastructure An Opportunity To Redefine How We …

Green infrastructure is an emerging market that has important ramifications for the horticulture industry. That is, if growers, designers and other industry players take a proactive approach to grasp the opportunities that come their way.

Read More

October 5, 2015

Smart Business Sense At Tidal Creek Growers Yields Succ…

Tidal Creek Growers stays competitive by focusing on what really turns a profit. It helps the large operation successfully balance contract growing with growing for retail garden centers.

Read More

October 4, 2015

ePlantSource Adds 5 New Partner Companies

ePlantSource has announced an additional five companies that have been added to its partner distribution list. Not only do the additional partners offer more supplier options to ePlantSource customers, but the website now also provides a more diverse product list with the addition of bulbs, clematis and many new varieties. New partners added for the 2015 – 2016 season: A.D.R. Bulbs Lennon Farm Greenhouses Micandy Gardens Pacific Growers Roseville Farms “We make it a priority to respond to our customers, and we have had many requests for additional options and a more diverse product line, so we are continually evaluating suppliers that work well with our non-traditional approach to the sale of live goods,” says Gary Falkenstein, President and CEO of ePlantSource. “We feel that it is good for our company, our customers and the industry as a whole to keep looking forward and seeing how we can improve and expand how […]

Read More
Cannabis marijuana

September 8, 2015

Supplemental Lighting Benefits For Growing Cannabis In …

The cannabis industry has moved out of the basement and into the light, and with this shift in politics and regulation occurring worldwide there is a need for growers to change the way they think about lighting and energy consumption.

Read More

September 2, 2015

Delegation Is Key To A Successful Greenhouse Operation

In a packed room at Cultivate’15, speaker Bernie Erven presented key steps growers need to take to improve their delegation skills, the benefits of delegating and the dangers of not learning how to delegate. This is a skill, he says, that everyone needs to learn. “For all of you who are part of a family business, you are choosing not to do things the easy way,” Erven laughed, as he presented a list of ways to know whether or not you’re an effective delegator. The owner of Erven HR Services, LLC, Erven has been working with and observing family businesses for many years. In his presentation, he said, he didn’t share anything that he hasn’t seen first-hand. You might not be a good delegator if you: Tend to be a perfectionist Work more hours than anyone else Lack time to explain clearly and concisely Are often interrupted Enjoy what you used to […]

Read More
AmericanHort logo

August 20, 2015

David Savoia To Serve As AmericanHort’s Interim P…

Following Michael Geary’s announcement that he has resigned as president and CEO of AmericanHort, the association has announced that CFO and Senior Vice President for Operations David Savoia will serve as interim president and CEO while the board conducts a search for a new staff executive. Craig Regelbrugge, the senior vice president for advocacy and research, will support Savoia with the association’s external affairs. Geary announced August 12  that he will be leaving his position after September 30 to serve as CEO of the Society for Marketing Professional Services, an organization dedicated to creating business opportunities in the architecture, engineering and construction industries. “As some of you know, I grew up connected to the horticulture industry so this was not an easy decision for me,” Geary said in an eMail. “I have loved working with our organizations and our talented members, staff and partners. However, my choice to return full time to Washington, D.C. will allow me […]

Read More

August 18, 2015

Michael Geary Is Leaving AmericanHort

AmericanHort president and CEO Michael Geary announced last Wednesday that he will be leaving his position at the end of September to serve as CEO of the Society for Marketing Professional Services. “I am writing to share with you that on October 8 I will begin a new professional chapter as CEO of the Society for Marketing Professional Services, an organization dedicated to creating business opportunities in the architecture, engineering and construction industries,” Geary said in an email. His last day with AmericanHort will be Sept. 30, 2015. “As some of you know, I grew up connected to the horticulture industry so this was not an easy decision for me,” he said. “I have loved working with our organizations and our talented members, staff and partners. However, my choice to return full time to Washington, D.C. will allow me to be closer to my family and aging parents and to re-engage with another industry […]

Read More

August 15, 2015

Ball Horticultural Co. Buys Conard-Pyle/Star Roses And …

Ball Horticultural Co. plans to add Conard-Pyle/Star Roses and Plants to its family of breeding and distribution companies, according to a press release dated August 14, which announced the company’s recent acquisition of the famous introducer of Knock Out Roses and other perennials and woody plants to the market. Ball plans to capitalize on the expertise of its Ball Ornamentals woody ornamentals division, as well as Conard-Pyle’s market-leading position as a top rose breeder to strengthen its product line. The sale is scheduled to close by the end of September 2015. Conard-Pyle’s in-house breeding division NovaFlora, along with its intellectual properties and the distribution, production and administration facilities of its wholesale division are also part of the acquisition. NovaFlora is the driving force behind the Star Roses and Plants brand. “Conard-Pyle has been the leader in roses in its market and has been actively diversifying its offering with other woody […]

Read More
[gravityform id="35" title="false" description="false"]