Perspective: Barry Sturdivant, Bank Of The West

Perspective: Barry Sturdivant, Bank Of The West

What’s the best way to describe the financial health of the commercial greenhouse industry these days? According to Bank of the West’s Barry Sturdivant, our industry’s financial health as a whole is “very good.”

At Bank of the West, the country’s third-largest bank for agricultural production, Sturdivant has seen just about every agricultural commodity encounter stress over the last two years. But the commercial greenhouse industry, perhaps to your surprise, has been a bright spot–at least for the bank. In fact, Bank of the West has identified greenhouse operations as a key area for expected growth this year.

Recently, we caught up with Sturdivant to get his perspective on how greenhouse growers are faring compared to nursery producers, what he expects for our industry in 2011 and more.

GG: How does the greenhouse industry’s financial health compare to the state of the nursery industry’s?

BS: For the past few years, commercial greenhouse growers and commercial nursery growers have gone in two different directions. Nurseries have a much higher dependence upon new housing and commercial real estate development. In fact, many historically sold only to landscapers and developers–two sectors obviously experiencing difficulty. There was a tremendous oversupply of shrub and tree inventory the past two years, which depressed prices and accelerated the downward spiral for an industry already hurting. Most of the survivors are trying to “right size” and find new customers. Any grower of long-cycle material has experienced some degree of stress related to the economy. That has not been true of the greenhouse industry.

As I walk greenhouses around the country, I am seeing more and more gallon-sized perennials, roses, hydrangeas, flowering vines and small woody ornamentals. This can’t be helpful to the shrub growers who have historically supplied similar material.

GG: Because of the industry picture you just painted, what do you envision developing in 2011 on the financial front?

BS: In 2011, I expect to see more consolidation in the greenhouse industry. This will be mainly in response to the big box stores continuing to limit the number of their vendors and asking more of their primary suppliers. We expect to see the larger greenhouse growers continue expanding. Some will do this through acquisitions, but for the most part we expect the growth to come from on-site expansions. As an alternative to consolidation, some operations will seek more contract growers to supply the needed plant material. Of course, this means some operations will have to convert from direct suppliers to contract growing for the growers that still have the relationships with their customers. However, we expect to see very few greenhouse operators close their doors in the coming year.

Many nurseries will have another mediocre year in 2011. While we believe it will be much better than the prior two years, they need a good year to get back on track. Some will probably have to liquidate in the coming year. It is still unclear whether there is an oversupply or undersupply of material in several size categories. Many in the industry believe a perceived shortage will bring prices back to historic levels. Others believe there continues to be an oversupply and prices will continue to be low, hurting profits and cash flow. They will continue to seek new markets for their plant material and to find ways to cut costs.

GG: In 2011, do you envision growers having more access, less access or about the same amount of access to credit as last year?

BS: Growers will have more access to credit in 2011. After two years of timidity, banks are once again seeking to build loan volume. They have already recognized their loan losses and are ready to get back to business. Bank of the West, which has the only office dedicated to this industry on a national basis, is very interested in extending credit to greenhouse growers.

GG: Any thoughts on the U.S. economy in 2011? Do you expect improvement, more of the same or something else to take place?

BS: I believe the economy will be mixed. People who have retained their jobs will start spending more, but unemployment will remain high and that will limit the recovery. Housing starts, while improved from the trough of the past two years, will remain at historically low levels not perceived before 2008. Greenhouses should continue to do well in spite of the economy, but nurseries will have to continue to find new markets and keep costs under tight control.

GG: From your point of view, what should greenhouse and nursery growers be doing to put themselves in better states financially?

BS: They need to build working capital and watch their cash. One of the surprising, but very positive, things about the good spring in 2009 was the fact that most greenhouse growers were determined to hang onto their money. The temptation was strong to add greenhouse acres and invest in automation, but most realized that given the current economy and banking environment it was important to have more of a cash cushion to ensure they got through the next spring. Running out of cash during the shipping season is a bigger concern for nurseries and greenhouses than sustaining an operating loss.

Inventory control is also a huge factor for both nurseries and greenhouses. In fact, in our experience this is often the reason both nurseries and greenhouses get into serious financial difficulty. Greenhouse growers have to be careful not to overinvest in speculative inventory late in the spring shipping season.

Shrub and tree nursery operators have their own set of inventory challenges. Excess supply has reduced their selling prices and they are still finding themselves with excess material that continues to absorb cultural costs. It can be difficult to decide whether to destroy the inventory or hold it for next spring’s sales. There have also been several incidents where nursery operators couldn’t resist the urge to buy in long-cycle plant material at a low cost without being able to move it when expected. The bargain they thought they had created critical cash shortages, which threatened the existence of their company.

Leave a Reply

More From Finance/Operations...
Smith Gardens Marysville outdoor field production

November 30, 2015

Why Smith Gardens’ Marysville, WA, Facility Is A Great Place To Work

Labor rates in Washington State are some of the highest in the nation, making competition for labor fierce. This is why Smith Gardens in Marysville, WA, wants to strengthen its reputation as a great place to work.

Read More
Feature - Agave ‘Blue Waves’ (Rancho Tissue Technologies)

November 30, 2015

Spice Up The Garden With 12 New Succulent And Miniature Plant Varieties

New succulents and miniature plants for 2016 offer a variety of colors and foliage textures that add interest and visual appeal to any size garden — indoors or out.

Read More
Iridescent green sweat bee

November 30, 2015

Nine Native Bees You Should Know About

There are at least 17,000 other species of bees globally, and 4,000 native bee species in North America. Although honeybees get all the attention, native bees can be efficient and sometimes superior pollinators compared to honeybees. Here's a quick run down on what you should know about native pollinators.

Read More
Latest Stories
Smith Gardens Marysville outdoor field production

November 30, 2015

Why Smith Gardens’ Marysville, WA, Facility Is A Great …

Labor rates in Washington State are some of the highest in the nation, making competition for labor fierce. This is why Smith Gardens in Marysville, WA, wants to strengthen its reputation as a great place to work.

Read More
Great Lakes Expo

November 30, 2015

6 Reasons You Should Attend The Michigan Greenhouse Gro…

The Michigan Greenhouse Growers Expo, held Dec. 8-10 in conjunction with the Great Lakes Fruit, Vegetable and Farm Market Expo, will feature an expansive trade show and several educational sessions aimed at greenhouse growers.

Read More

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