state of the industry reportgiecdn.blob.core.windows.net/.../file/2011_soi... · industry report...

NURSERY MANAGEMENT | 2011 STATE OF THE INDUSTRY 1

2011

ExclusivE rEport:Sales margins and production space drop. Covered production and flowering crops are growing.

state of the industry report

2 2011 STATE OF THE INDUSTRY | NURSERY MANAGEMENT

Jump on thE ‘nEw normal’ train

todd DavisPublisher & Editorial Director

[email protected]

summarY

I hear many nursery growers talking about finding the “New Normal” for our industry.

By the way, there’s a federal law that states you must raise two hands and make air quote marks with your fingers every time you say, “New Normal.” I don’t make the rules, I just fol-low them.

But the gist is this: Don’t expect the boom of the 1990s and early 2000s to return. Ever.

The demographics just don’t back it up. Boomers are retiring and the Gen X following them isn’t large enough to fill the void. That means there are fewer consumers in their prime spending ages. They’re buying fewer plants and fewer new houses that require new landscapes.

Does that mean we’re done for? No.


contEnts/FEaturEs:

But it does mean nursery crops will no longer sell themselves. You’re going to have to work harder, be smarter and market your company and products like never before.

We’re proud to produce this first-ever State of the Industry report for the nursery industry. It gives a beautiful snapshot of where we’re at and where we’re going.

So as we trudge ever closer to that “New Normal,” you can make more intelligent decisions regarding where to take your company.

God speed, nursery folks.

State of the InduStry Sales are down, but growers are adapting

outlook on fertIlIzerS Most see fertilizer management expenses rising in

the future

landSCape purChaSeS Most spend approximately $30,000 annually on

woody plants

10 ContaIner ConSIderatIonS Container production is outpacing field

12 tool trendS Growers reveal which tools they plan to purchase

14 root manIpulatIon Growing in root-pruning products is on the rise

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visit www.nurserymanagementonline.com


statE oF thE inDustrY rEport

aDapting with thE timEs

nursery Management’s 2011 State of the Industry research report is a first-of-its kind project to determine where the nursery business stands and where it’s going.

Data collected from Nursery Management readers show that overall sales are down, but not down nearly as much as industry naysayers would have you believe.

Some predict the overall nursery market is down 40 percent, but the data just doesn’t reflect this. Sales margins are down, but many predict they will rise over the next several years.

The late-August survey shows that growers are adapting with the time. As “no bloom, no room” becomes a mantra for nurs-ery growers, more are growing perennials and flowering shrubs to satisfy retail customers. Growers indicate they are backing away from production of both evergreen shrubs and trees.

And while overall nursery acreage is down, covered produc-tion is on the rise. Readers say they are investing in covered production, which indicates a trend toward growing more high-value crops.

As sales, sales margins and production space drop, growers adapt by increasing flowering crops and covered production and growing more high-value crops.

How many total acres do you have in production?

28%

11%

9%

9%

11%

13%

5%

10%

4%

Less than 10

10-25

26-50

51-100

101-200

201-350

351-500

501-1,000

More than 1,000 Average is approximately 75 acres

How many people does your company employ?

26%

9%

10%

17%

13%

15%11%

Fewer than 5

5-10

More than 200

51-100

101-200

26-5011-25

Average is approximately 38

How many square feet of covered production (sHade House, greenHouse, etc.) does your nursery Have?

10%

25%

14%

7%

9%

11%

9%

9%

7%

Zero

1-10,000

10,001-20,000

20,001-50,000

50,001-100,000

100,001-250,000

250,001-500,000

500,001-1 million

More than 1 millionAverage is approximately 35,000 square feet



How do you see your company’s employment cHanging over tHe next 12 montHs?

are you confident tHe market for nursery products will grow in 2012?

Increase by 10-20 percent

Increase by more than 20 percent

I’m not confident at all

I’m very confident

Decrease by 10-20 percent

Increase by 1-10 percent

Decrease by 1-10 percent

Stay the same

No respondents indicated decreases of more than 20 percent

1%2%

4%13%

16%

65%

33.6%

19.1%

11.8%

12.7%

7.3%

3.6%

5.5%

4.5%

1.8%

Container-grown shrubs

Field-grown trees

Container-grown perennials

Other

Container-grown trees

Field-grown shrubs

Field-grown perennials

Tropical landscape plants

Groundcovers and vines

what is your primary crop? over the past 3 years, which is an accurate statement?

17%

17%

9%

16%

12%

13%

7% 9%

1%

Sales are up more than 40 percent

Sales are up 20-40 percent



Sales are down 1-10 percent

Sales are flat



Sales are down more than 40 percent

Very confident 7%Somewhat confident 49%I’m not confident at all 44%

44% 7%49%SomewhatConfident


wHat will be your company’s approximate gross sales for 2011?

Perennials

Flowering shrubs

Natives

Evergreen shrubs

Flowering trees

Shade trees

Vines/groundcovers

Patio tropicals

Stay the same

Add space

Reduce space

65%

do you plan on adding or subtracting

production space in 2011?

what crops do you plan on producing

more of over the next several years?

are your profit margins better this year than in 2010?

what crops do you plan on producing fewer of in the next several years?


49%

49%

32%

22%

19%

20%

16%

11%

Evergreen shrubs

NO

Shade trees

Flowering trees

Vines/groundcovers

Flowering shrubs

Patio tropicals

Perennials

Natives

35%yES

25%

4%

11%

10%

8%

11%

14%

9%

10%

Less than $250,000

$250,000-$500,000

$500,000-$1 million

$1 million-$2 million


Stay the same

Adding covered production

Subtracting covered production




More than $20 millionAverage is approximately $3 million

Overall average covered production space added was 7,500 square feet per nursery

62%20%

18%

70%

60%

48% 32.4%30%

30%

28%

17%

do you plan on adding or subtracting covered production space in 2011?

67%29%4%

The overall average of production space lost is 1.5 acres per nursery


Most growers expect higher fertil-izer costs for 2012. Higher prices for raw materials and higher

transportation costs are major factors.But most growers are not risking cut-

ting back fertilizer applications to save a buck. The risk is too great, said Dale Pierson, owner of Pierson Nurseries in Biddeford, Maine.

“We grow thousands of varieties,” Pierson said. “It would be far too much of an effort to determine the exact fertilizer needs of each crop. Instead, we apply an amount that we feel is appropriate. You might be able to grow one crop leaner, but if you’re not hurting it, you’re OK.”

Pierson uses two media mixes and two fertilizer regimens – one for crops that generally need more fertilizer and one for crops that perform better with less fertility (such as perennials).

In August, Pierson pre-purchased about three-quarters of the fertilizer he will use in 2012, which will be delivered in fall.

growErs usE FErtilizErs libErallY. bEttEr saFE than sorrY

FErtilizEr

This will help secure lower prices. But his 2012 fertilizer costs were still 2 percent higher than his 2011 costs.

“You don’t want to pre-order all that you need,” Pierson said. “If you save 5

percent, but at the end of the year you still have 10 percent of your fertilizer in your barn, you aren’t saving anything.”

For more: www.piersonnurseries.com

How mucH will you spend on fertilizers in 2011?

30.1%

11.5%

13.3%

10.6%

14.2%

9.7%

10.6%

Less than $5,000

$5,000-$10,000

$10,001-$20,000

$20,001-$50,000

$50,001-$100,000

$100,001-$250,000

More than $250,000

63.9%23.1%

0.9%7.4%

4.6%

Decrease 0-10 percent

Increase 0-10 percent




do you predict your fertilizer expenses will increase or

decrease in 2011?

Average is approximately $20,000

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Controlled-Release Fertilizer

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www.nurserymanagementonline.com/readerservice - #51


lanDscapE

wHat is your total annual budget for woody plants?

43%

12%

5%

8%

3%

6%

2%

21%

Less than $20,000

$20,000-$24,000

$25,000-$29,000

$30,000-$34,000

$35,000-$39,000

$40,000-$44,000

$45,000-$49,000

$50,000 or more

90%

77%

59%

54%

49%

38%

9%

Availability

Price

Location

Product diversity

Knowledge/expertise

Ease of delivery

Other

what factors are most important where you puchase your plant

material?

84%34%

50%

13%13%

1%

14%

Wholesale grower

Garden center/nursery

Landscape distributor

Contract grower

Mass merchant/box store

We grow our own material

Other

where do you typically buy plants?

If the bulk of your customer base is landscape contractors, you’re not surprised to hear that the market is tight. You’re likely competing on price for most jobs. New home building and commercial construction are down, which leads to contrac-

tors clamoring for all available projects.“I see some commercial work going on out there, but it

makes me scratch my head. Who’s moving into these new buildings?” said Larry Smith, general manager at Lurvey Landscape Supply in Volo, Ill. “And of course these jobs are super competitive. Everybody’s just trying to see how low you can go.”

The most lucrative market is high-end residential. “In our region, the lakefront areas and North Shore are

still doing well. These people still want showplace land-scapes,” Smith said. “But there’s still some price resistance

here, too. I’ve seen people build an $8 million house and beat up their contractors over $150,000 or $200,000 landscapes.”

Design/build contractors are doing more landscape maintenance than in years past. They’re converting build crews to maintenance or adding new maintenance crews to increase cash flow. Editor’s note: Survey results on this page were extracted from a poll of 40,000 Lawn & Landscape readers.

For more: http://lurveys.com.

lanDscapE markEt is tight, but still room at high EnD


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nurserymanagementonline.com/readerservice - #24


containErs

Most Nursery Management readers expect their con-tainer expenses to rise in 2012. Many have already received quotes from their suppliers and they’re up

almost universally.The price of raw materials, including resins, are up, and

transportation costs will also add to price increases. And, due to a weakened U.S. dollar, containers imported from Europe and Canada will also be more expensive.

“Prices are going to be up, no doubt,” said Terry Hines, owner of Hale & Hines Nursery in McMinnville, Tenn. “That’s what we’re hearing for all plastics. We just spoke with our vendor about greenhouse poly and we were told it’s go-ing to be up 20-30 percent.

“I don’t see the price for trees in pots going up, but I see the price for pots going up.”

Another factor could be an increased use of specialty pots. Colored and printed promotional pot use is on the rise, and these are typically about 40 percent more expensive than standard containers.

There is also increased demand for degradable and root-manipulating pots, which have higher price points.

For more: www.haleandhines.com

containEr manuFacturErs rEport pricE incrEasEs For 2012

How mucH do you plan to spend on containers in 2011?

31.8%

8.4%

9.3%

11.2%

7.5%

9.3%

22.4%

Less than $5,000

$5,000-$10,000

$10,001-$20,000

$20,001-$50,000

$50,001-$100,000

$100,001-$250,000

More than $250,000

55.8%25%

9.7%2.9%1%

2.9%

2.9%

Decrease 20-30 percentDecrease 10-20 percentDecrease 0-10 percentIncrease 0-10 percentIncrease 10-20 percentIncrease 20-30 percentIncrease 30-40 percent

do you predict your container expenses will increase or

decrease in 2012?


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Ph: 800.814.3496www.summitplastic.com

[email protected]© 2011 Summit Plastic Co.

GMPro Summit Corp 4b:GMPro Summit 4 8/11/11 3:32 PM Page 1

nurserymanagementonline.com/readerservice - #25


hanD tools

For nurseries, there is no escaping hand tool expenses. No mat-ter how careful employees are, tools are going to get worn out and broken on occasion.

According to Nursery Management’s State of the Industry survey, pruners and shovels are the most frequently purchased hand tools for growers.

For Carlton Plants LLC in Dayton, Ore., hand tools are a regu-lar line item in every annual budget.

“We have a separate page where it’s broken out. It includes hand pruners, shovels, hoses. We even have water coolers, wheelbarrows and jumper cables on that page,” said general manager Jon Bartch. “And of course we inventory all these items.”

The tool inventory and purchasing is analyzed monthly. This way the company can gauge how it’s doing regarding tool spend-ing. If certain items are being replaced at a too-frequent pace, then maybe employee re-training is in order.

And regular monitoring of tool inventory and purchasing is also good insurance against employee theft.

“We have a lot of good people that work here, and most have worked here a long, long time. So tool theft has never been an issue,” Bartch said. “But that’s another reason to budget and moni-tor tool inventory. If you did spot a problem, you could correct it fairly quickly.”

For more: www.carltonplants.com.

buDgEting kEEps hanD tool ExpEnsEs in chEck

wHat do you plan to spend on Hand tools in 2011?

38.6%

22.8%

10.5%

7.0%

3.5%

4.4%

13.2%

Less than $500

$501-$1,000

$1,001-$1,500

$1,501-$2,000

$2,001-$2,500

$2,501-$3,000

More than $3,000

90.7%

48.6%65.4%

52.3%

44.9%

22.4%4.7%

13.1%

29%

Pruners/shearsKnives/hatchetsLoppersHand sawsBow saws

Pole prunersShovels/spadesRakesBrooms

what hand tools do you plan to purchase in 2011?


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root manipulation

Root-enhancing containers and bags are by no means new to the in-dustry. But demand for crops grown in these products continues to steadily rise.

This is particularly true for liners. This makes sense, as who is going to understand the benefits of trees grown in these containers and bags more than other growers?

For tree species with coarse root systems, such as oaks, there are big advantages to growing them in products that produce more fibrous roots. Better survivability after transplant, faster establishment and faster growth are potential benefits.

Kuenzi Turf & Nursery in Salem, Ore., began producing tree liners in 2005 with about 5,000 oaks grown in High Caliper Growing Systems’ in-ground fabric bags.

Due to customer demand, this number will likely reach 35,000-40,000 units planted in these bags in 2012, said sales manager Zach Kuenzi.

“We do have some retail customers and rewholesalers around the country that request these trees, but it’s far and away the other growers we sell to that request them.”

Of the crops grown in in-ground bags, the majority remain oaks, but the company is also growing magnolias and beech via this system.

For more: www.kuenziturfnursery.com

DEmanD is growing For root-manipulatED crops, particularlY For linErs

wHat percentage of your crops are produced in root-pruning or root-enHancing containers or bags?

1.8%

0.9%

3.5%

0.9%

26.5%

40.7%

25.7%

90-100 percent

75-90 percent

50-75 percent

25-50 percent

1-25 percent

I am a container grower but do not use root-pruning or root-enhancing containers or bags

I do not grow in any container or bags

62.3%

16%

13.2%

8.5%

I’m growing in more root-enhancing containers or bags

I’m using the same amount of root-enhancing containers or bags

I’m using fewer root-enhancing containers or bags

I have never used these products

How has your production in root-pruning or root-enhancing

containers or bags changed over the past 5 years?

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Celebrating 40 yearsPenn Atlantic Nursery Trade Show

www.PANTSHOW.comFor additional information call 800.898.3411, x 106 or x 107

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Penn Atlantic Nursery Trade Show (PANTS) – An association produced event by PLNA

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Join the Celebration…

JUL 31 – AUG 2, 2012Greater Philadelphia Expo Center

THE TradE sHow for:NUrSEriES, GrEENHOUSE GrOWErS, iNdEPENdENT

GArdEN CENTErS ANd LANdSCAPE CONTrACTOrS…

www.nurserymanagementonline.com/readerservice - #52w

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