Barcelo: ‘Industry Is Lost Now’

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 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.

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19 comments on “Barcelo: ‘Industry Is Lost Now’

  1. This is to negative for me. I agree Greenhouse business isnt what it was in the 80s or early 90s. There is more competition and even some overproduction. We have had to adapt and change. Some of the changes we made should have been made sooner we needed to make a transition from expansion to improvement. I have a positive outlook for the future. For me growing is still a good living and a rewarding career.

  2. I feel bad for Tony. Maybe I have my head in the sand but I think there is a ton of opportunity in our industry and that we are in better shape than many others. As for having to expand your understanding of different aspects of business, it is a challenge and an opportunity for personal growth.

  3. If we would not have got into the credit trap, we would not be in the situation we find ourselves nearly as bad.

    The fact we can expand on “someone else’s money” meant it was easier to “expand” capacity and breed new varieties with no thought of whether they would work for the end customer.

    That put us into the treadmill of growing for the “banker” not for the “market”, that which we haven’t killed yet.

    Why do we feel we need “fewer” and “larger” suppliers?

    If everyone did “minimal to no” credit, we all would have enough food to eat and more people would be in the game making a decent living and the cost would be fair.

    Ahh! But the “love of money” comes into play does it not??

    Most of us are “afraid” to “cut back” because we “worry” about some one else gettin “more” of the “pie”.

    So now we are being “cut” back by “economic reality”.

    We have taken the “human” element out of the business and inserted the “bottom line” at all cost, neglecting the “human bottom line”.

    That’s how the big get bigger and the mid to small get squezzed out. (I don’t see that as an accident.)

    People who have jobs in horticulture spend money too, so the more we eliminate to “efficiencey” the less money hort has have to go into the market.

    Efficiency can only go so far and then it gets counter productive by “eliminating” low skill entry level work which give the lower income people a shot at economic success. (The human cost factor.)

    To be fair, a lot of field jobs are “beneath” a lot of native American kids who think the computer and “college” are where it’s at.

    That is why “aliens” can come in and do the work that we “don’t want to do”.

    I don’t see crews of “caucasions” out there in the fields picking our produce and nursery stock much, do you??

    I could say more but to say the least the small guy better have a good niche and do it well.

    He also better be ready to diversify into “edibles”
    again.

    There seems to be a market for “safe” and “tasty” produce.

    In my area, “eating” takes priority over “ornamentals”.

    As a side note, we don’t have nearly 60 million potential customers due to some really bad moral decisions in 1973 which are now legal. (You figure it out.)

    Oh, by the way, I am optimistic about my future.

  4. Can you believe that I actually OPENED a business in ’09? I am small and will grow as I can afford. I rely on small local growers to provide me with quality crops I can not grow in my cold houses. I do grow edibles as well and will expand this market. We strongly believe that we will provide our customers the highest quality product at the most reasonable price we can afford. I took a gamble on myself, and figured that I would earn more on my business than I would at a bank or broker house, so I opted to invest in myself. I do not want “box shoppers”. We can make a decent living and be happy doing so staying small and I mean under 3 acres of production. How much do you really need? Once you remove the ego, you’d be surprised how happy you can become. Best of luck to all for a green 2010.

  5. A crucial part of this current situation is related to his comment …”When I became a grower, I didn’t know I’d be doing marketing.” That has been an ongoing weakness in our industry that I have been warning growers about for many years. We know how to grow plants but few in the industry have taken the time to learn how to market plants. We have been very fortunate in the steady growth our industry has seen for decades (at least here in Oregon). Now, we have to face a situation that many other industries have seen before. Lack of leadership and a lack of marketing. Both are serious detriments to our success.

  6. I can see Tony’s points. But why is nobody mentioning the elephant in the room, the anti-Capitalist, anti-American government in Washington DC? We have a Marxist fascist President that is destroying our capitalist economy as fast as the Democrats in Congress can support him. Want things to get better? Vote for capitalists not Democrats.

  7. In response to Miles, the “industry” has been putting in extra effort to market their businesses. Education is available through the many Associations, Trade Shows, even University Extensions. I see these events well attended with growers attentive and eager to implement this new knowledge. Then reality hits and we growers have to finance the Marketing plan. Television, Radio, Print Ads all equal big bucks. Contact any one of the above without a minimum budget equivalent to an arm and a leg and the warm reception you received at the initiation of the conversation turns icy cold. The advertisers will tell you, “You have to spend money to make money”, what they really mean is “Any money you are making we will be happy to take”. I don’t think lack of marketing is the problem, lack of being able to finance that marketing is.

  8. I’ll add a commment to JBGP. Yes, plenty of marketing is going on but the problem isn’t paying for marketing, it is paying for marketing that doesn’t work. A lot of companies are paying to market a bad product which brings it down even faster, and most of the others are marketing badly – just buying advertising space for a bad message. We need to stop assuming people want the plant at a lower price and begin marketing that attracts the people who haven’t decided they want the plant in the first place.

    The maturity of our industry has caused too many people – including most of the “industry” establishment to focus on low price and high volume and that is undermining the real value of the product. The very people who cater to the volume of the boxes are fighting the low margin they get from it. Okay so they get a bigger house by selling more cheaper but the overall health of the industry is declining.

    I’m not complaining – just observing – and helping my clients market the real value of the product. It’s differentiation and that is what marketing is all about. This is life. Let’s get real or let’s not play.

  9. This is to negative for me. I agree Greenhouse business isnt what it was in the 80s or early 90s. There is more competition and even some overproduction. We have had to adapt and change. Some of the changes we made should have been made sooner we needed to make a transition from expansion to improvement. I have a positive outlook for the future. For me growing is still a good living and a rewarding career.

  10. I feel bad for Tony. Maybe I have my head in the sand but I think there is a ton of opportunity in our industry and that we are in better shape than many others. As for having to expand your understanding of different aspects of business, it is a challenge and an opportunity for personal growth.

  11. If we would not have got into the credit trap, we would not be in the situation we find ourselves nearly as bad.

    The fact we can expand on “someone else’s money” meant it was easier to “expand” capacity and breed new varieties with no thought of whether they would work for the end customer.

    That put us into the treadmill of growing for the “banker” not for the “market”, that which we haven’t killed yet.

    Why do we feel we need “fewer” and “larger” suppliers?

    If everyone did “minimal to no” credit, we all would have enough food to eat and more people would be in the game making a decent living and the cost would be fair.

    Ahh! But the “love of money” comes into play does it not??

    Most of us are “afraid” to “cut back” because we “worry” about some one else gettin “more” of the “pie”.

    So now we are being “cut” back by “economic reality”.

    We have taken the “human” element out of the business and inserted the “bottom line” at all cost, neglecting the “human bottom line”.

    That’s how the big get bigger and the mid to small get squezzed out. (I don’t see that as an accident.)

    People who have jobs in horticulture spend money too, so the more we eliminate to “efficiencey” the less money hort has have to go into the market.

    Efficiency can only go so far and then it gets counter productive by “eliminating” low skill entry level work which give the lower income people a shot at economic success. (The human cost factor.)

    To be fair, a lot of field jobs are “beneath” a lot of native American kids who think the computer and “college” are where it’s at.

    That is why “aliens” can come in and do the work that we “don’t want to do”.

    I don’t see crews of “caucasions” out there in the fields picking our produce and nursery stock much, do you??

    I could say more but to say the least the small guy better have a good niche and do it well.

    He also better be ready to diversify into “edibles”
    again.

    There seems to be a market for “safe” and “tasty” produce.

    In my area, “eating” takes priority over “ornamentals”.

    As a side note, we don’t have nearly 60 million potential customers due to some really bad moral decisions in 1973 which are now legal. (You figure it out.)

    Oh, by the way, I am optimistic about my future.

  12. Can you believe that I actually OPENED a business in ’09? I am small and will grow as I can afford. I rely on small local growers to provide me with quality crops I can not grow in my cold houses. I do grow edibles as well and will expand this market. We strongly believe that we will provide our customers the highest quality product at the most reasonable price we can afford. I took a gamble on myself, and figured that I would earn more on my business than I would at a bank or broker house, so I opted to invest in myself. I do not want “box shoppers”. We can make a decent living and be happy doing so staying small and I mean under 3 acres of production. How much do you really need? Once you remove the ego, you’d be surprised how happy you can become. Best of luck to all for a green 2010.

  13. A crucial part of this current situation is related to his comment …”When I became a grower, I didn’t know I’d be doing marketing.” That has been an ongoing weakness in our industry that I have been warning growers about for many years. We know how to grow plants but few in the industry have taken the time to learn how to market plants. We have been very fortunate in the steady growth our industry has seen for decades (at least here in Oregon). Now, we have to face a situation that many other industries have seen before. Lack of leadership and a lack of marketing. Both are serious detriments to our success.

  14. I can see Tony’s points. But why is nobody mentioning the elephant in the room, the anti-Capitalist, anti-American government in Washington DC? We have a Marxist fascist President that is destroying our capitalist economy as fast as the Democrats in Congress can support him. Want things to get better? Vote for capitalists not Democrats.

  15. In response to Miles, the “industry” has been putting in extra effort to market their businesses. Education is available through the many Associations, Trade Shows, even University Extensions. I see these events well attended with growers attentive and eager to implement this new knowledge. Then reality hits and we growers have to finance the Marketing plan. Television, Radio, Print Ads all equal big bucks. Contact any one of the above without a minimum budget equivalent to an arm and a leg and the warm reception you received at the initiation of the conversation turns icy cold. The advertisers will tell you, “You have to spend money to make money”, what they really mean is “Any money you are making we will be happy to take”. I don’t think lack of marketing is the problem, lack of being able to finance that marketing is.

  16. I’ll add a commment to JBGP. Yes, plenty of marketing is going on but the problem isn’t paying for marketing, it is paying for marketing that doesn’t work. A lot of companies are paying to market a bad product which brings it down even faster, and most of the others are marketing badly – just buying advertising space for a bad message. We need to stop assuming people want the plant at a lower price and begin marketing that attracts the people who haven’t decided they want the plant in the first place.

    The maturity of our industry has caused too many people – including most of the “industry” establishment to focus on low price and high volume and that is undermining the real value of the product. The very people who cater to the volume of the boxes are fighting the low margin they get from it. Okay so they get a bigger house by selling more cheaper but the overall health of the industry is declining.

    I’m not complaining – just observing – and helping my clients market the real value of the product. It’s differentiation and that is what marketing is all about. This is life. Let’s get real or let’s not play.

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