State Of The Industry: Leaders Sound Off

So many questions, so many different answers. Determining whether the state of our industry is good, bad or something else is a mighty challenge when you take into account the fact that growers, retailers and others have vastly different opinions on the issues pressing us most. Business may be booming for some yet hard to come by for others, and a challenge to one grower may be the least of another’s worries.

To give you an idea where people in the industry stand, we approached growers and others with five questions about the state of greenhouse floriculture in 2010. Most of those we approached expressed concerns about the state of things. But here’s what they said − in their own words.

How would you describe the state of the greenhouse floriculture industry today?

 

Fran Hopkins
President, Under A Foot Plant Company

In complete disarray and total pandemonium. I must say this is the most disturbing place I have ever been as a grower, as an owner and as a marketer. Instead of a unified front, forging forward in this horrible economy, we are regressing into civil war–box store versus independent, generic versus brand, paper versus plastic. You name it, our industry has pushed itself into every corner it can with a fight or flight mentality.

I used to love this industry, but going to meetings now is a dreadful undertaking. It’s vigilante time for many I think. Instead of pulling together and finding a common cause to whip this bad economy, my friends and colleagues are yelling at each other and pulling the industry I love so much apart.

Denise Godfrey
Olive Hill Greenhouses

Like the rest of the economic sectors, we are suffering from decreased demand and we hope to maintain during this uncertainty by looking at old and new ideas and technology; by relying more on relationships and working together with fellow growers, suppliers and customers to better define and react to what is happening; to take advantage of opportunities; and to maintain a positive outlook in order to overcome adversity and persevere.

Tony Barcelo
Vice President, Barcelo Enterprises

I think the biggest problem 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.

Chad Underwood
General Manager, Kalamazoo Flower Group

The state of the industry is good but could certainly be better. I think collectively we have an opportunity today to capitalize on the new attitude Americans have as a result of the economic downturn. Our products match the shift in values and priorities we’ve seen as a country.

Anthony Van Hoven
Battlefield Farms

I think the greenhouse floriculture industry is still strong, but there’s been a shift brought on by the economy, forcing a domino effect of decisions. Big boxes want to be more efficient, knocking down the number of suppliers to manage. They want the big guys to take more control and to hold them accountable. Ten years ago, growers could get away with sloppiness. The motivation now is to develop new products to keep buyers happy and to stay ahead of the industry with state-of-the-art facilities. Those who don’t are losing market share to those modern facilities.

Has our industry entered a new era or paradigm shift? Please explain why or why not.

 

Art Van Wingerden
President, Metrolina Greenhouses

We have hit a shift. If you told growers a few years back they would be contract growing, they would have told you no way. The number of people who contract grow for others is increasing every year. We are currently at 25 percent of our sales are grown by others.

Dominik Neisser
EuroAmerican Propagators

Yes, we are in a different era right now. The last years have been beneficial for the floriculture industry. People beefed up their front yards to raise the house evaluation. Many apartment renters became homeowners and invested in their property (well sponsored by the bank). Overall, there was more spending than earning, and flowers have been part of that wild party.The price was a secondary criteria when customers shopped in the garden centers.

It’s been more than a year now since we returned to “reality,” and consumers realize their flower budget is lower than the years before. Cheaper varieties will be accepted more often and the price is a more watched criteria. But greenhouse operations invested and built up production space based on the better times before. Investments have been done and credits need to be paid back to the bank. That’s why the overproduction of flowers will not be adjusted in short time. Everybody is trying to keep their share of the market and competition will be much harder and rougher.

Andy Ambrosio
Wenke Greenhouses

It’s all about the weather. The best-laid plans, along with great product quality and packaging, are laid to waste if it rains every weekend. The opposite is not true, but to the same degree: Great weather will make it somewhat easier to sell “C” grade product, but only after the “All-Stars” are done shipping.

Fran Hopkins
I believe it has. We have seen these shifts before over the last 20 some years, but never this dramatic. We are all working for pennies now instead of dimes. What used to be an easy sale is getting harder and harder. Many, many people are sitting on the sidelines and complaining about how hard it is, complaining about the “other” side making their life harder, instead of rolling up their sleeves and accepting that things have changed.

I hope (for the independent retailer’s sake) we have seen the last of the double plus 10 pricing structure. Shoppers are smarter than that now–they have to be. Every dollar counts now. Pricing products to grab all the money from one customer instead of a little bit from many is a mentality that has sent many retailers to the big dark retailer in the sky.

Tony Barcelo
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.

Chad Underwood
With regard to retail, I think it has. We no longer ship as much as possible into a store and leave the retailer to worry about it. Today, we are actively engaged with our customers’ retail success. In fact, in some ways I think the roles have been reversed.

Has there been a changing of the guard in industry leadership


Dave Doolittle
Terra Nova Nurseries

Not yet, and in many ways that can be a very scary thing. When I attend industry events, I’m often jokingly–I hope–referred to as a kid or a member of “the other generation.” The truth is, there is a huge generation gap between the current industry leadership and the future leaders of horticulture.

Fran Hopkins
What industry leadership? We have factions around the country that are more intent on getting “their” viewpoint heard rather than a communal message. Until this industry steps away from the Dark Ages and comes into the light of the new millennium, I am afraid our industry will continue to deteriorate.

If there are “leaders” of this industry, lead! Bring this industry together rather than pull it apart for your own sector’s interest. We are “the” green industry, all of us: trees, shrubs, grasses, perennials, annuals, independents, boxes, landscapers and growers. Everyone is in this industry and our products help the world breathe. No one else in the world can state that equivocally.

Denise Godfrey
I am thinking it is not exactly a changing of the guard, but rather more reinforcements to fight individual challenges to our multi-front battle.

In order to be successful in the future, the industry must have all types of leaders employing different techniques and strategies to engage with environmental groups, legislators, the general public and young students. Leaders need to communicate our accomplishments, goals and aspirations to get them excited about the floriculture community and to help them recognize the importance of our industry. Our success is more tightly tied to their perceptions and their willingness to help us thrive.

What are the greatest challenges growers are facing today?


Ed Overdevest
President, Overdevest Nurseries

The downturn in the economy has spawned an expectation of lower prices at every level of business. Consumers expect it, retailers expect it and growers expect it. While it’s helpful lower prices can be offset somewhat by lowered input costs, the threat of volatility remains with key inputs such as energy. All of this puts businesses in uncharted waters as to gauging future costs and prices. No doubt things will return to more stable patterns, but the question is how soon?

Denise Godfrey
We are fighting a multi-front battle. On the sales front, growers are working to identify how the demands of their customer bases are changing. They are looking for assistance from their suppliers to optimize the quantities and number of varieties grown to meet this changing demand, and they are evaluating new and old ideas to better interface with their customers to help them sell more plants and be more successful.

Anthony Van Hoven
It’s a challenge to keep up with or stay ahead of the large retailers. Every year they want new things to draw in the consumer. Now there’s so much at stake. Where’s your performance? What are you going to do? Don’t come to them with the exact same program as the year before.

For the growers, it requires strong research and development and motivation. Those are the companies who are expanding and staying in the game. They have a desire to impress, not just maintain. There also has to be a willingness to take risks and even lose money. With high risk come high rewards. You’re not going to win on everything. Some products are great. Some bomb out. You can’t let that discourage you.

Dominik Neisser
Competition. Desperate sellers will extend their sales territories and try to convince established markets to buy their products. With that, wholesalers will have more offers on their desk and pick the best product and the best price. This can raise the quality standard and lower sales prices.

Nurseries also have to create very careful business relationships. Missed calls or skipped visits could lead to fewer orders because there are more competitors out there knocking on customer doors. Marketing investments need to be higher to still be visible on the market.

With all the extra effort and higher quality standards, growers need to be very good in math. Besides fulfilling the high demands of the market, they have to still overlook costs and compare them constantly with the income. They have to know their costs and give the best prognoses of the income. To do the math before was important to maximize the profit. Today it is essential to survive the business year. Who did not watch costs before just lost money that year. Nowadays, there will be a call from the bank and trouble is on the way.

What are the greatest opportunities for growers to build their business?


John Bonner
Eagle Creek Growers

The current economy is challenging. But it has created great opportunity in that those who have positioned themselves by reinvesting in their business now stand to reap huge rewards.

It seemed like just a couple years ago there was some concern that there was just too much capacity out there serving the market. The mentality that “more is better” then shifted to “reduce the shrink, control variable costs and sell through.”

Today, there are businesses falling by the wayside that have not been able to weather the economic stress we are all facing. That puts those who have reinvested in their businesses in a very unique position–if only in the short term.

On the macro level, this economic environment is forcing people out of business and therefore aggregate supply is contracting. The good news is that same business environment is only marginally reducing the aggregate demand in the market. I see evidence of this, as last season galvanized my understanding that our industry has a low “beta,” meaning we are only moderately affected by changes in the economic business environment.

Andy Ambrosio
Focus on the ultimate consumer and what they are looking for with our product. Convenient and eye catching packaging and tagging; easy-to-understand product applications; consistently excellent product quality; healthy and vibrant plants.

At the same time, we should focus on the retail chain by utilizing technology to reduce transaction costs, minimize delivery surprises and improve product flow from the production greenhouse to the retail floor.

Dave Doolittle
Encouraging their strongest employees and promoting an environment that makes these employees never want to leave their source of income: your nursery. A lot of people might answer this question by saying “investing in cutting edge improvements in technology that decrease labor,” but no machine has a heart. In my opinion, a satisfied employee that truly believes in the better good of your nursery operation is the strongest investment a company can make.

The freshest and most profitable ideas often develop within an organization from employees that have had the opportunity to witness the evolution and growth of the nurseries they work for.

Chad Underwood
I think growers’ single biggest challenge today is finding truly effective and efficient shipping solutions. We are going to see more and more folks working together to consolidate shipping. Over time, the cost of oil is only going to increase. This fact, combined with retailer costing pressures, will force growers to innovate in this area.

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