After we learned that Color Spot Nursery bought Powell Plant Farm over the summer, we asked CEO Michael Vukelich and President Jerry Halamuda what the acquisition will mean for its Southwest division and if there would be any rendundancies.
Based in Fallbrook, Calif., Color Spot’s western division has five locations in California and its southwestern division has four Texas locations in addition to the 3 million-square-foot Powell farm in Troup, Texas. With this acquisition, we expect Color Spot to regain its place at No. 1 on our Top 100 Growers next year, totalling nearly 12 million square feet of greenhouse production, not counting outdoor and shade.
Chip Mello is Color Spot’s chief operating officer for the Texas facilities. Doug Macmurdo will continue to be the general manager at the Powell facility. We asked Halamuda if adding a large operation like Powell’s would mean changes for the other facilities in Texas.
"The balance of our facilities will remain unchanged in terms of management," he says. "Our endeavor is to have the management team remain in place and maintain the consistent level of excellence. There will really be no changes other than to address geography and store assignment by facility. Our endeavor is not to take any facilities out of production inasmuch as we are geographically based for efficient replenishment to metro markets by existing facilities."
Both Color Spot and Powell Plant Farm were leaders and rivals in the grower consolidation movement financed by outside investors in the late ’90s. Other key players include Hines Horticulture in Irvine, Calif., and Floral Plant Growers in Denmark, Wis.
While at one point Hines had a strong presence on both costs, Halamuda says Color Spot has found a regional strategy has worked best. "We feel our customers and business model are regionally based," Halamuda says. "We find that when you know your seasonality, production culture, distribution matrix, personnel,etc., and you are ‘touching’ them everyday, then you are focused on success."
Just in the last seven years, the industry has changed dramatically, he adds. While the skill sets and capabilities the growers have gained through outside investors are vital, industry knowledge is extremely important.
"The market place is changing rapidly on both the supply and consumption sides," he says. "We have learned that excellence in people and quality accompanied with lowest cost of production is the winning key. Our industry is very fast paced and the dynamics for building a successful horticulture business are changing. We feel success requires a combination of financial, technical and marketing skills. It is very difficult to operate a nursery business in today’s landscape without industry knowledge."
At the end of the day, the challenges Color Spot faces are the same that all growers face in our industry, just on a larger scale. "We are facing significant pressures in the areas of labor, petroleum-based products, raw materials and insurance," Halamuda says. "These are the key issues based upon cost pressures, availability pressures and legislative pressures. All of these issues impact the ability to produce quality products with acceptable margins."