Money-Back Guarantees?
June 17, 2008 Maybe the old adage is true – they just don’t make things the way they used to. But a lot of times, they make them better. Greenhouse equipment, like transplanters, continue to grow in their flexibility and options, while innovations like heat retention curtains and plug tray fillers solve problems in new ways.
It all sounds great, but who has the capital for it all? Return on investment is an elusive calculation with all the moving parts of a greenhouse, but how do suppliers suggest growers approach equipment purchases?
Why Automate?
As owner of a greenhouse and (presumably) the highest paid staff member, your time is valuable.
“A lot of growers don’t consider their time being worth enough, or don’t consider their time at all,” says David Steiner, vice president of the Blackmore Co. Whether it’s your own time or the time of employees, labor is a tricky equation for growers. Labor shortages have spelled trouble in several ways. Steiner describes the labor situation as a double-edged sword – automate too much early in production and you’ll certainly save on labor costs, but there may not be enough warm bodies at the end of production to move racks and load trucks. On the other hand, automation can make up for high labor turnover.
“Increased turnover in the work force affects operating efficiency and ultimately product quality,” says Mike Kanczak of AgriNomix. “Growers find themselves in a struggle to keep pace in production when they have to continually train new employees.”
Finding the right balance for what to automate with a short return on investment is difficult with tighter margins and growers are looking for advice from suppliers.
“In the past, when margins were a little better and growers had more money, they bought a piece of equipment because the guy down the road had one,” Kanczak says. Things are a little different today. So how should growers look at investing in equipment?
Heavy Equipment
Transplanter sales were booming back in 1999. BFG Supply Co.’s John Urbanowicz says the distributor sold 25 of the machines that year, but in the last five or six years sales are down.
“Many of the transplanters are reaching a time where they’ve paid for themselves, by far, and growers should be looking at replacing them,” he says. “We compare them to cars. Even though we think the vehicles we drive are going to last 20 years, the chances of that happening, without replacing them or finding something better, are slim.” Payback on a machine like a transplanter includes factors such as how many weeks a year it is used and how many varieties can run through it.
Some growers have found their old transplanters have become obsolete if they don’t accommodate all the types of pots and trays customers demand. The payback on a transplanter results from a wider product offering.
“In the late ‘90s, we sold transplanters that maximized bedding plant flat production from 512s and 288s because that’s what everyone did,” Kanczak says. “Now growers want one machine that can plant into flats, shuttles, gallons, hanging baskets and patio planters from a range of four or five different plug sizes. The difference in our new Urbinati RW transplanters is the flexibility compared to the previous generations of technology.”
The larger the input, of course, the less time it spends in the greenhouse. The ROI calculation on a seeder, therefore, includes the cost of heating.
“It used to be that if you were producing a million or two million plugs per year, you could do it cheaper internally, but the price of plugs has come down and the price of gas is up, so I don’t know what they figure now,” Steiner says. “Depending on what you pay for plugs and gas, and how good a grower you are, that’s what the ROI is.”
Now that growers are finishing larger mixed containers, an investment in a Blackmore Ellepot machine is seeing payback in a cost savings kind of way.
“Growers can produce more large-sized containers without having to build greenhouses,” Steiner says. “That’s what growers did with plugs in the old days. They’d increase production by 20 or 30 percent and not have to add any square footage. That’s huge.”
Flat And Pot Fillers
According to Urbanowicz, the pieces of equipment with the fastest ROI are filling machines. A machine like a flat filler frees time and saves effort and backache.
“The machine’s going to do a better job than you can,” Steiner says. “It’s going to allow you to do other things while it’s doing the work.” A recent development in filling is a specialized plug tray filler, which grower C. Raker & Sons pushed Blackmore to develop. Instead of sending a plug tray through a flat filler two or three times for an even fill, trays go through this machine once and are good to go. Reruns or touch ups done by hand cost time.
“Granted, a smaller grower can’t justify $20,000 for a tray filler, but you have to wonder how many corner edge or other cells in a tray you have to miss to have non-viable transplants before you pay for a tray filler?” Steiner asks. “If a plug costs 3 cents, 3 cents goes a long way divided into $20,000. That’s the kind of calculations grower should be making, let alone the efficiencies realized by not having to worry about checking for properly filled trays.”
Watering
Installing watering booms or conveyors/tunnels can be a straight labor-saving return on investment, as well as delivering a healthy, quality product through uniform care for plants.
“The machine doesn’t forget,” Steiner says. “A grower can plant in the morning, lay the plants down in the greenhouse, go out to lunch, forget to water when they come back and a whole block of plants is dead. The machine would have been paid for by saving one morning’s production.”
Structures
Along with greenhouse equipment, structures have advanced in efficiency.
“There are much more efficient structures to look at, as far as moving, handling and growing product,” Urbanowicz says. “There are numerous ways we can help, but growers have to be willing to invest in their facility. We’re seeing a lot of mid-range growers who are having trouble making that decision.”
Heating and cooling structures is another ROI equation itself. While some growers will see an immediate payback on heat retention curtains, payback for others can vary between two and four years depending on seasonality, crops grown and the price for natural gas or propane. Savings can add up to 20 to 25 percent per year on the heating bill, Urbanowicz says. Bench heating, floor heating and high-efficiency heaters that fire on demand are also all additions to greenhouses with paybacks that look more favorable with rising fuel prices.
Overall, the suppliers seem to hear growers looking for an ROI on a machine between two and three years.
“You have to be able to pay equipment off more quickly because who knows what you’ll be doing three years from now,” Kanczak says. But most important of all, a new piece of equipment has to show a marked improvement in product quality, or show sustained product quality. If a process moves faster, but results in a sub-par product, there’s no advantage.
“There’s nothing so expensive as bad quality,” Steiner says.
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