In this slight twist on a state-of-the-industry report, we present the opinions and perspectives of green industry decision makers. They tell us where we are-and where we’re headed.
An American Nurseryman Report
You’ve seen fact and figures; you’ve scanned charts and graphs. But what’s the mood of the green industry today? Well, if you’re tired of hearing the phrase, “The New Normal,” you just might have to get used to it. There is indeed a “new” normal, and by all indications we’re not going back to the way things used to be.
For this report, we contacted green industry association execs as well as owners and managers of individual companies. Each was asked the same questions, but each offers a unique point of view on where we stand and what’s in store for the foreseeable future. Let’s see what they have to say.
Representing the industry through their respective associations, these executive directors have tough jobs. One of the benefits, though, is the advantage of a broad perspective.
Our respondents include:
- Ben Bolusky, chief executive officer of the Florida Nursery, Growers and Landscape Association (FNGLA; www.fngla.org)
- Bob Dolibois, executive vice president of the American Nursery & Landscape Association (ANLA; www.anla.org)
- Bob Fitch, executive director of the Minnesota Nursery & Landscape Association (MNLA; www.mnla.biz)
- Michael Geary, chief executive officer of OFA – The Association of Horticulture Professionals (OFA; www.ofa.org)
- Jeff Stone, executive director/CEO of the Oregon Association of Nurseries (OAN; www.oan.org)
What do you see as the top three critical issues the industry is facing? The single biggest challenge?
Ben Bolusky: The single biggest challenge is the economic recovery, namely the nation’s general uneasiness and the business community’s uncertainty about the future. The next three critical issues are: water; a legal workforce; and plant pests and diseases. With respect to water, the issue is not so much water shortage as it is water storage. The challenge is finding funds to build the needed infrastructure.
Bob Dolibois: Profitability – The Spring of 2012 has been as good of a season weather-wise nationally as anyone could reasonably expect. Despite that blessing, I continue to hear reports that sales, while strong, have not achieved the expected down payment needed to begin recovery from the recession. In other words, in even the best of times in this new normal, the results are not sufficient over the long haul. That suggests to me that profit margins are not sufficient for sustainability.
Ben Bolusky, chief executive officer of the Florida Nursery, Growers and Landscape Association (FNGLA; www.fngla.org)
Photo courtesy of FNGLA
Financing and credit – Access to financing and short-term credit is an essential element of most seasonal businesses. The upheaval in the nation’s banking and credit industries has, at a minimum, added stress, uncertainty, and restrained our “animal spirits.” At worst, the problem has led to business closures, only some of which would have been warranted in recent years.
Capital investment – This has been a long, multi-year slog. Most businesses have not only reduced staff and scope, but they have delayed replacing aging equipment, postponed building maintenance and other capital improvements. These necessary actions have undercut morale, reduced productivity and may even accelerate closure of businesses prematurely rather than their facing longer-term returns on new investment.
Bob Dolibois, executive vice president of the American Nursery & Landscape Association (ANLA; www.anla.org)
Photo courtesy of ANLA
[The single biggest challenge is] Profitability. Profitability. Profitability. Note: It’s a very rare business that achieves prosperity only by cutting expenses.
Bob Fitch: Recovery in the sales of trees is the biggest challenge. Parts of the green industry have been able to somewhat adapt to the new economy, but it’s a tough road for tree growers when we don’t have a booming housing market.
Michael Geary: The economy continues to keep pressure on the industry. Even with signs of things getting better we are hearing that growers and retailers (and consumers) are still not completely confident about the future, and that’s impacting decision-making about the future. Also, residential and commercial construction continues to limp along and that directly impacts the use of our products. We also have the reality of a shrinking consumer market due to the smaller number of people that make up Generation X.
Bob Fitch, executive director of the Minnesota Nursery & Landscape Association (MNLA; www.mnla.biz)
Photo courtesy of MNLA
Jeff Stone: Identifying a single challenge is a tough thing to do. If you look at issues that can bring a nursery to its knees in a hurry, the greatest challenge is managing a business in the new economic climate and adjusting to the changing demands of customers. This economic downdraft has touched every part of this nation, every size of operation, and continues to be a struggle as the nation and our industry grapple with a new economic normal. Coupled with increased costs of production and a more regulatory stringent atmosphere – how the nursery and greenhouse industry adapts to a changing marketplace will be the seminal moment of how we emerge for the next generation.
Two other issues remain big challenges for the industry: labor and water. The toxic atmosphere over immigration and resolving a guest worker program is near the top of our list. Oregon’s business community came together to create a coalition to be a voice for reason and conducted a third party study of the economic ramifications to the state if labor-dependent industries lost their workforce. The results were sobering. And we’re seeing the scenario played out in states like Alabama, Georgia and Arizona, who now have to deal with shortsighted decisions on immigration. Oregon’s economy would shrink by $17 billion, tax revenues to the state would plummet, and most interesting in the report – the unemployment rate would not drop. In fact, due to the economic calamity, the unemployment rate would increase by 7 percent. Oregon has not gone down this path, which would wreak havoc. However, I fear others will and we will be faced with a 50-front war on immigration.
Michael Geary, chief executive officer of OFA – The Association of Horticulture Professionals (OFA; www.ofa.org)
Photo courtesy of OFAa
Water is another essential for the industry; without it the product mix to grow is severely hampered. The Oregon nursery industry is water-dependent. In fact, almost half of the state’s 1.7 million acres of cropland is irrigated – this ground accounts for 77 percent of the value of all harvested crops. As the population grows and water supply becomes scarce, agriculture is often the loser in public discourse over availability and it will have big economic consequences.
To many in the industry, economic recovery seems longer and slower than that of other industries. What’s the current status of the ornamental horticulture industry? Where do you see us next year? In five years?
Bolusky: The current status of our industry is a soft recovery. A slow, steady, long term recovery will allow the industry to brace against recurring roller coaster rides of peak-boom and valley-bust cycles. Barring a national business-disrupting calamity, the industry next year will be continuing a slow, yet measurable, recovery. The market pie will likely be slightly larger, benefiting the fewer market players who endured the Great Recession. The pace of change is accelerating so fast that no one can any longer responsibly predict five years out.
Dolibois: I believe a good portion of the sustained downturn we (and most consumer-oriented industries) are experiencing is a result of macro demographics in our country; in fact, the world (see: Japan and Europe). The Baby Boomers have bought everything they need from us. The Gen-X successors are now in prime buying years for our stuff, but there are millions and millions fewer of them than Boomers. It’s a function of demand and supply. Demand is down because there are fewer people demanding what we sell. We’ve got at least 5 to 8 more years of this demographic downshift, until the Millennials get old enough to buy houses and want our stuff in the quantities that we have the current capacity to supply.
Fitch: Too much tree inventory is still kicking nursery growers’ teeth in. Hopefully, we’re beginning to see the light at the end of that tunnel. With the massive changes to the economy and how fast things can now change, I think it’s very tough to predict where we’ll be in five years.
Geary: Candidly, I don’t think anyone knows with any great confidence what the industry will look like in three or five years. While we like to think we’re in a protective bubble here in North America, we are hugely impacted by the economic conditions in Europe. Until that settles down we will live with some anxiety, and that keeps people from buying. And most consumers may consider buying our products a luxury. Luxury products, including cars, are just beginning to see an uptick. However, despite anxiety there is greater confidence than a few years ago and we see some businesses willing to take risks. In fact, for the OFA Short Course we expanded the number of exhibitors because of increased demand.
Stone: There is no doubt that the economic recovery is taking longer than expected. The Oregon nursery and greenhouse industry was at its peak with wholesale sales of almost a billion in 2008: Flash forward to today – we are at $652 million. That is quite an economic hit.
It is my firm belief that the nursery and greenhouse industry is resilient. Facing economic forces of the housing collapse, low consumer confidence and fuel prices at a historic high, it would be too much for many to ride this economic downturn out. For many, looking at innovative ways to streamline production and reduce costs is no longer an add-on, it is a necessity. There are several ways that Oregon is attempting to do this. We are looking at using the cumulative knowledge of nursery owners – we use lean manufacturing as a model – to improve a segment of the production cycle. Our industry has been very aggressive to find partnerships to help offset costs to become more energy efficient. This is a true bottom line effort, and the association went as far as to adopt a goal of 25 percent energy reduction in 10 years. These are efforts that will help in the short and long term. We must also find ways to diversify how product gets to market. Seventy-five percent of Oregon’s nursery product leaves the state, and it is imperative that we examine ways to become more multi-modal and work to make a pricing structure of the use of rail a reality.
The next year will continue to be a challenge, but there are signs of light at the end of tunnel. The next five years will be a slow climb as the nation finds its economic footing. We will emerge wiser and leaner to meet the next set of opportunities.
With individual states taking drastic measures to control immigration, pockets of the industry have lost a significant portion of available workers. What’s being done, and what needs to be done, on a national scale?
Bolusky: Common sense and compromise need to return to Congress for meaningful and balanced progress to prevail in the sticky wicket policy arena of immigration and labor. The policy pendulum is always swinging, yet, when it comes to immigration, the pendulum’s returning arc has been far too slow and too long. Nationally, once the borders are perceived to be secured, there will be some light in which to drive needed immigration reforms. Such policy reforms must include guest worker programs needed by both agriculture (nursery) and service (landscape) businesses historically reliant on foreign workers. In the interim, a slow, steady, long-term economic recovery may ease any sudden labor needs, yet the specter of anti-immigrant initiatives are troublesome.
Dolibois: Based on the level of resources the industry is willing to put into this effort (not enough, incidentally), everything that can be done is being done … and more. Most businesses (large and small) have little or no direct need to rely on immigrant labor. It is literally an out-of-sight, out-of-mind condition relative to their business success. It is not, however, such an invisible factor in their communities where these immigrants and their families live. Absent an understanding of their contribution in the workplace, many Americans see immigrants as detracting rather than adding value. Our history confirms that we’re hard-wired to protect our own culture.
The real culprit, however, is a totally broken and dysfunctional set of immigration laws. As was true with laws of slavery, suffrage, prohibition and racial discrimination, these laws need to be fixed, not defended.
Fitch: The Democratic administration has to get real on the problems with the H-2A and H-2B visa programs. Republicans in Congress have to stand up to the xenophobes in their constituencies. If the economy is going to have a chance of long-term recovery, we have to have willing workers where we need them, when we need them. Is there enough political courage out there? I hope so, but I’m not holding my breath.
Geary: What is being done is that we are doing a better job of telling the story of how draconian laws impact our industry and ultimately consumers (increased prices, product scarcity). This discussion extends beyond just “labor.” We need to grow our own food to feed our citizens. Therefore, this is also a national security and economic issue. This is serious and that’s why the national associations are actively lobbying Congress and the Obama Administration on finding a solution on agriculture labor.
Jeff Stone, executive director/CEO of the Oregon Association of Nurseries (OAN; www.oan.org)
Photo courtesy of OAN
Stone: Immigration is an issue that has permeated most kitchen tables around our country. It has joined the pantheon of top tier social issues. There are strong feelings and some harsh rhetoric on both sides: America needs to secure the border; America needs to be a welcoming society; the immigration system is broken; illegal is illegal; we are a nation of immigrants. Both sides are partially right and this is why our Congress needs to end its two-decade avoidance of the issue. The absence of a sensible, comprehensive immigration solution has forced states to take matters into their own hands. This is a very bad trend and will only exacerbate the friction between strong, opinionated citizens.
The Oregon nursery industry has been a long-standing advocate to create a system of immigration that not only accounts for workers entering the United States, humanely treating those who have already come here to work and create a better life for their families, but deals with a future flow of workers so our children and grandchildren are not faced with the same set of circumstances we face now. We did not get in this mess overnight; we won’t get out of it that way either.
The nursery and greenhouse industry must put its political clout on the line – now more than ever – at the state and national level. The ANLA needs states to hold their elected congressional members accountable. In our view, a comprehensive solution must be crafted and passed. It must include border security and greater accountability of who is in the country. Include employer sanctions against bad actors and, moreover, do what the immigration act of 1986 did not do: have a process in place to help a future flow of workers when the economy rebounds.
We cannot afford to allow Congress or the states to enact “enforcement only” bills. We need a president, a congress and an industry to get behind something that solves the problem and not kick the can down the road.
Other than labor, what are the top legislative challenges? What can individuals and their companies do?
Bolusky: “Simplify” is an elegant word. A legislative goal for all businesses should be to simplify government rules and red tape. Business owners in our industry are innovative entrepreneurs. They will figure out ways to adapt. Yet, efforts to decipher often Byzantine and conflicting federal, state and local rules zap businesses of precious resources (financial and staff) that can otherwise be reinvested to make stronger businesses. Aside from labor, rule and regulation simplification is the not-so-secret formula to future success. So, what can individuals and their companies do? For their elected officials, they can begin to highlight and identify rules and regs that are duplicative, counterproductive or overly costly. There is no time like now to start the dialogue.
Dolibois: The biggest challenge is determining how big of a government we need and how to pay for it. Darn near everybody (including me and you) has their snout in the government trough in one place or another. The tax code is too complicated and riddled with loopholes. Those loopholes are supported by well-resourced believers – left and right. It’s time to hit the reset button, as has happened cyclically throughout our history. What we all need to do is be informed (not just entertained) and get involved politically; at a minimum, support the trade associations battling on your behalf.
Fitch: The threat to water use for nursery products and the managed landscape too often gets overlooked by many in our industry, especially some of us in the north. In one respect or another, our water use is threatened at the local, state and national levels of government – a triple threat we shouldn’t ignore. Each and every company or individual is responsible to take a role: reduce your water use at your operation and then tell your customers you did it; show up at a local planning board meeting and push for developments to include the proper plants and landscape features to minimize water use; participate in your state association’s Day on the Hill; or follow through on a request for action from your national association.
Geary: Collectively, several of the national associations are working on issues related to financing for small businesses, ensuring the continued funding for research and plant protection, and macro issues that impact nonprofit associations and our ability to effectively serve our members and the industry.
What individuals and companies can do is pay attention to the political environment and our calls asking them to get involved (for example, writing an email to your Senator or Representative). And, while this may sound self-serving, maintaining your memberships in OFA, ANLA and your state association is incredibly important in order to support our regulatory and legislative initiatives. The more members we have, the greater the impact on our efforts.
Stone: Each state has its unique legislative challenges. For Oregon, we have added our voice to many to help support funding for specialty crops through the Farm Bill. No one entity – let alone individual – can go at this issue alone. Through our shared work, funding for pest and disease, specialty crop grants and research is in play in Congress. How we pass our farms from one generation to the next, regulations on how the nursery industry does business and big unwieldy issues like the Clean Water Act and transportation infrastructure investment to allow product to get to market – all take a deft political touch.
These big issues can be found in any individual state. The association, through involved members, help shape legislative priorities and it is important that they find their voice. One suggestion to make a difference is to host a public policy maker at the nursery or greenhouse operation. Show them what you do and explain the challenges you face every day. Oregon uses this approach and it has a profound impact on our legislative success. Through the strength of our members – we can tackle tough and complex issues such as funding for water quality and storage, seek a friendlier regulatory environment, and make the economic case that for every nursery that succeeds – the state succeeds. Oregon has an aggressive federal and state policy positions – it is solution-oriented, not partisan – and we have members who can tell the story better than any lobbyist or association.
Every few years the concept of a national, generic marketing campaign is suggested. Will this kind of program be implemented? How has social media changed the game?
Bolusky: Our industry remains too dispersed, diverse and independent-minded to launch a truly national marketing campaign. Yet, there are many industry companies that are doing just that on their own (for example, Home Depot, Lowes and Miracle-Gro). And, if you watch network and cable TV, many national corporations use plants and landscapes as beautiful backdrop settings to market their products unrelated to our industry. When economic times are good, no one admits to needing a national marketing campaign. When economic times are not so good, no one admits to having available funds for a national campaign. The advent of social media has not changed the game; rather it has opened up a whole new front in one’s marketing game. To be successful, one must learn to master and sustain social media excitement and, just as importantly, learn how to use and build on the valuable feedback it can generate. In five years, there will likely be entirely new platforms of social media not yet envisioned.
Dolibois: Industry history demonstrates that the clamoring for a marketing campaign occurs every 10 to 12 years. We’re a little overdue, compared to the timing cycle for our last nine campaigns. Most successful marketing campaigns are based on competing against a single, clear and measurable competitor (milk vs. soft drink; pork vs. “red” meat; cotton vs. synthetics). That’s a tough challenge for us. At this point, I believe that social media has changed the way we play the game, but I’m uncertain that it has actually changed the game.
Fitch: Dreams and wishes won’t create a real program – show me the money. Why should the retailers or landscape companies who have put years and real dollars into their own marketing programs want to divert some of their resources into a new “generic” campaign? We might be able to work around the money issue to a point if we could at least all rally around a single message like “Plant Something.”
Geary: I don’t know yet if a full-on national marketing campaign will be implemented in the near future. What I do know is that our members are asking OFA to explore the effectiveness of a campaign, etc. We are doing that right now through our Board of Directors, committees and special task forces. In the meantime, we should remember there are already a variety of regional campaigns, and many businesses themselves are actively promoting the value of plants. Also, for 10 years the industry has had the benefit of America in Bloom, which is managed by OFA. It is successful and can do more with increased support from growers and retailers. That program is directly increasing the consumption of our products.
Stone: When I talk to the dairy industry, I am envious of the “Got Milk” campaign that transcended the public consciousness and became a signature call for use of their product. Those national campaigns are hard to come by, and even more so with the wide mix of products the nursery and greenhouse industry grows and sells. This does not mean we should not try.
The difficultly and challenge we face is that much of how the industry markets itself has a strong regional tie. The closest thing I have seen has come out of the State of Arizona and their “Plant Something” campaign. This idea should be seriously considered due to its outright appeal to communicate the benefits of planting trees, plants, flowers and vegetables. It hits homeowners to improve their home, communities to enhance their quality of life and most important to the nursery industry – promote the buying of our product. The Arizona Nursery Association is a pioneer in hitting a phrase that has a national feel but may customized for a state effort.
The challenge for any state or for a national campaign is funding. The dairy industry was able to amass dollars from its producers for a national public relations drive. During challenging times, are there the dollars to dedicate for such a campaign? It is my view that this type of campaign is well-suited for a ground-up (or grassroots) approach and connects the local retailer or grower to the community. Plant Something is simple and smart and shows our green side – that is a huge step in the right direction.
As for social media, Oregon has put emphasis on this area for our retail and wholesale trade shows. It has great possibility to amplify the word of mouth part of marketing. Is it a difference maker for nursery and greenhouse operators? That remains to be seen.
The green industry is alternately seen as an environmental steward (improving soil and air quality, beautifying properties, restoring compromised sites) and a party to destruction (introducing/selling invasive plants, employing chemicals). Where do we stand on both fronts in 2012? Where are we headed?
Bolusky: As self-proclaimed, yet genuine stewards of land and water, our industry has not aggressively promoted its environmental credentials among our most natural allies: our clients and customers. Given that gardening is our nation’s No. 1 pastime, we should figure out ways to corral gardening consumers to help us battle environmental zealotry. Of course, if this was easy, we would already be doing so. Yet, imagine the potential grassroots help from gardeners who could stand to lose their treasured roses because they are not native to their area. Or how about the untapped grassroots help from gardeners who are told they can no longer spray garden pests or must stop using fertilizers on their home landscapes during the rainy months of the year?
Dolibois: For the first 150 years of our industry, we have thrived on the notion of beautification. A synonym for “ornamental” is “non-essential.” For a product that demands increasingly scarce resources, like water, or fraternizes with scary things like pesticides, the last thing we want to be is “non-essential.”
On the upside, we have a great story yet untold about the true value – beyond pretty – that our products and services render to the community and the environment. The telling of that story (and it is a story, not a label) requires a better understanding of our readers’ (customers) interests and our own biases. Like: Yes, you can prune a native plant so it isn’t just the weedy old thing that the crazy eco-lady down the street has in her messy yard … .
Fitch: Many growers, garden centers, and landscape and irrigation professionals have a long ways to go in cleaning up some aspect of their day-to-day operations. But, overall, we have a great story to tell about the environmental benefits of trees and other plants; how landscape practices can mitigate stormwater runoff; how new irrigation technologies and practices can reduce water usage, and much more. All sectors need to repeat these messages again and again and again.
Geary: Candidly, as an industry we have not been tackling this issue in a broad and collective way. However, there is great work being done on stewardship, product development and certification by several consortiums, universities and companies. We have been involved in a few proposals and [are] monitoring others. Horticulture is a big industry and it’s going to be tough to address everything in a simple way and get buy-in from all stakeholders, just as it is in other industries. Thankfully the independent actions I mentioned earlier will eventually filter out through their own initiative, and I expect our trade associations will, at a minimum, provide guidance on the design of programs and help companies identify the right platform for them. Furthermore, like any market-driven industry, we will respond appropriately when consumers demand more sustainable products. Many companies are already doing so.
Stone: It is my belief that the nursery and greenhouse industries have spent generations as stewards of the state’s natural resources. It is a core value that economic vitality can go hand-in-hand with sustainability and long-term environmental health. The industry over the past 20 years uses fewer pesticides, has become more water and energy efficient, and fosters a resource ethic that should be embraced by the environmental community.
How the industry positions itself in emerging environmental markets and making the case for the use of our plants and trees for restoration and environmental offsets may be the difference. Tapping into municipal and transportation infrastructure will need to go beyond symbolic or infrequent successes at the governmental level – but a full-on marketing effort that extends from coast to coast. We need to monetize sustainable activity and, considering what this industry represents and grows, we risk leaving money on the table if we do not change or embrace it. While the handshake agreement is slowly giving way to real time smartphone images and online purchasing, we cannot lose sight – no matter if it is at the governmental, environmental or customer level – that relationships matter. Through collaboration and relationships, I have unflinching faith that this industry can redefine and promote its environmental stewardship and commitment.