According to Charlie Hall, a professor & Ellison Chair in the department of Horticultural Sciences at Texas A&M University, broader economic indicators can show how healthy the horticulture industry is. One example he cites often: the housing market, and how increased home sales historically have meant increased plant sales. Below, Hall discusses some of the major economic storylines and how they could affect the industry.
Greenhouse Management: When you look at something like the May job report, which said 100,000 fewer jobs than expected were created and the jobs created was down from the three-month average, what does that signal to you about the economy?
Charlie Hall: Well, it signals that it’s lies, darn lies, of statistics. I’m not saying the statistics are wrong, but you’ve got to remember when we were creating a lot of jobs a few months ago. A lot of that was government employment because of all of the storms, the flooding in the Midwest, all the destruction that we’ve seen from climate change. We’ve had to hire more people, even in the private sector, and the government sector, in which to handle the claims, in which do some of the cleanup work and to pay for restitution and so forth. And now when things are slowing down in terms of disaster-wise and you look at the month-over-month growth in jobs, of course it’s going to be slowing down. To me, it’s not unexpected. When that gets negative, then I’m going to start worrying.
GM: When you consider the trade disputes with China and Mexico and possible tariffs, how could that affect the economy?
CH: Well, the president finally admitted that it’s the importers that really pay the tariffs. It’s not that China’s paying the tariffs — our importing firms are having to pay the tariffs and then those firms pass on those costs, and then ultimately those costs are passed on through the supply chain to the consumer. In most of those trade wars that have happened in the past, it’s the consumer that’s taken the brunt of it in terms of increased prices, and that’s the fear this time as well. Most economists who study international economics agree that a fair trade system is always better than a system where you have unilateral, or even bilateral tariffs that are going on and you’re trying to affect policies.
GM: When you look at the Millennials and Gen Z and the next generation of consumers, is there an impact on the economy being felt yet?
CH: Right now, the Millennials are coming into their main income earning years, right? The oldest ones are 39 years of age, they’re just a few years away from starting to make the big dollars, because [for] most people between 45 and 55, that’s the prime spot. It’s in that range that they start making a big difference. Gen Z, although smaller than the Millennials group, is still price-insensitive. They’ve shown a willingness to pay for environmental friendliness attributes and quality. But that’s not the only demographic change to monitor. If the U.S. does end up being a snapshot of what Houston is today, then Hispanic and Asian-American preferences are slightly different — are we ready to cater to their preferences?
The backbone of an efficient greenhouse operation is the utilities consisting of the electricity, water and fuel supply systems. As the business grows, these need to be upgraded to handle the additional facilities and growing space.
Usually the first system to be overtaxed is the electrical system. As more equipment is added, more circuits are needed. I have been in greenhouses where some fans had to be shut off so the water pump could be switched on. In other cases, the lights dim down whenever a furnace starts.
Now is a good time to have the system checked by a licensed electrician. In most states, electrical work on facilities used by employees or the general public must be done by a licensed electrician. The electrician takes the responsibility and liability for meeting the necessary codes and is also responsible for getting the necessary permits from the building inspector.
The electrical service must be of adequate size to handle the load. It provides a safe entrance and disconnect for the electrical supply wires entering the building. It can also be the point where distribution and grounding take place. The electrical service may be as small as 60 amps for a single hoophouse to as large as 800 amps or more for a gutter-connected range with a headhouse full of equipment.
To avoid multiple base charges, a single electrical service should be installed to serve all the greenhouses and accessory buildings. The best location is a dry, easily accessible area. The utility room of the headhouse is a good choice. In small operations, it may be placed on an endwall in one of the greenhouses. In operations with many hoophouses, a central electrical distribution pole is the best location. Any overhead wires should be a minimum of 18’ so that equipment and trucks can pass underneath. Underground installation in conduit is better for all weather operation.
As you add more equipment, an existing service may become overloaded. If operating at 80% of its rated load for more than three hours, overheating may occur with the possibility of deterioration of the wire insulation. The electrician can calculate the load. A new supply should be calculated with a 25% buffer for additional equipment or expansion.
All electrical systems used in greenhouse operations must be grounded. Grounding helps to limit high voltage from lightning or a fault in the lines. It also limits the maximum voltage to ground from hot wires. Grounding a system usually involves connecting to a metal water pipe system, a metal building frame or driving copper rods into moist soil.
Electricity is distributed from the service entrance through individual circuits to motors, lights, heaters, etc. Each circuit is protected by a circuit breaker that opens the circuit when an overload, short circuit or ground fault occurs. Each electrical circuit and its associated wiring must be sized to handle the maximum load of the equipment attached to it.
In large, gutter-connected greenhouses or in operations with many individual greenhouses, feeder circuits are installed to reduce the amount of wiring needed. For example, a 200-amp service panel may have several 60-amp feeder circuits connected to it, one for each hoophouse. At the end of each feeder circuit, a distribution panel with branch circuits serves the motors and lights in that greenhouse. Feeder circuit wire size and the circuit breaker must be adequate to handle this load.
The National Electrical Code requires that the wire type have insulation to fit the application: wet, dry, high temperature, etc. Where high moisture and dust are present, such as a greenhouse, the code requires that the wiring be placed in conduit. Electrical Metallic Tubing (EMT) is a good choice as it is galvanized with an organic inside coating and easy to install with many fittings available. The conduit can be sized large enough to contain all the wires needed to serve one area of the greenhouse. Watertight electrical boxes and receptacles should also be included to keep out moisture and dust.
A common question asked is whether ground-fault circuit interrupters (GFCI) are required. They can prevent serious shock to persons under certain conditions by limiting the amount of current that is received. They do not work well in the moist, greenhouse environment and result in frequent nuisance tripping that could affect the operation of vital equipment. A portable GFCI is recommended for persons using power tools in the greenhouse or outside in damp or wet locations.
I’m not sure why but as I travel around, I observe considerable makeshift wiring in greenhouses probably done by the grower or his staff. Circuit panels with the cover off, ungrounded circuits, unsupported wires, taped or untaped wire splices, outlet boxes without covers and outdoor wiring without mechanical protection are common. I think the intent is to complete the work after you are sure that the problem in the circuit is corrected or when you have more time. It frequently doesn’t get done. To provide safety to the workers or public these situations should be corrected quickly.
On any given day at Millcreek Gardens, a plant grower in Ostrander, Ohio, thousands of varieties of plants — from quarts of peonies to trays of trendy succulents — will be leaving the facilities. Of the million units Millcreek sells per year, most of its stock finds its way into the hands of independent garden centers (they don’t sell to chains), landscapers and municipalities.
And for the new generas and old, in the past 15 years, Millcreek has been trying to better what could be an overlooked part of the plant-selling process: How to best design their tags.
“It was getting to the point where we were buying from so many different types of tag vendors that the product was looking kind of — well, let’s just say there wasn’t a lot of consistency,” says Megan Armstrong, assistant general manager. “So, we designed a custom label.”
Rather than ship out stock with tags from a mixture of vendors, Millcreek custom-made a branded tag that would accompany just about every one of their 1,450 products (save for “required company tags” like Proven Winners Shrubs).
The result were sleek, uniform descriptors that contain a plant’s Latin and common name, care how-tos and a unique UPC code that makes for efficient inventory control.
Armstrong says that although current tags have QR codes — linked to online info pages — Millcreek is slowly phasing those out due to evolving trends, limited real estate and an easier shopping experience.
“We decided it would be more valid to have information for people to read as they’re shopping,” she says. “‘Center shade?’, ‘OK for hummingbirds?’ ‘Ah, good.’ We wanted it quick and clean.”
What began 41 years ago by George and Lynda Pealer as a nursery to provide herbs wholesale, Millcreek is now a highly successful greenery supplier that ships stock to five surrounding states, and to independent sellers as far as Chicago. With 25 full-time staff members, including five specialized section growers working on 20 acres, Millcreek’s consistency in its day-to-day process seems to match their high-quality branding efforts.
Fred Higginbotham, Millcreek’s growing operations manager, says this is no coincidence: form follows function. Every single plant line tallying over 100 is added to their tag print and redesign.
As both Millcreek and its product line grow — they’re in the works of adding a growing facility — Higginbotham says that every hanging basket, half-dozen succulent tray or decorative annual will be markers of the latest in the grower’s greenery advertising.
In essence, the tags rep the plant. Consistency with your label should translate to consistency in your product.
“We want to stay abreast with everything new in advertising, what’s being pushed out there,” Higginbotham says. “What we’ve done well over 41 years, I think, is making sure we’re up to speed with the freshest stuff. Why stop now?”
The author is a freelance writer based in Ohio.
Paul Schlegel started working in his father’s greenhouse soon after Louis Schlegel purchased the run-down facility south of Indianapolis in 1972. Paul, like his seven siblings, helped out in the family business throughout high school.
Unlike his other siblings, however, he decided to commit his career to Schlegel Greenhouse. One day, while working alongside his father, Paul mentioned his desire to eventually take over the business.
“It was pretty casual. I said, ‘I think I’d like to buy your shares, and we’ll work something out that’s beneficial to you and me so the business can thrive,’” Paul says.
In family-owned greenhouse businesses, these conversations are more likely to happen over rows of cuttings than in boardrooms with formal documentation. Because succession planning is one of the thorniest challenges facing family businesses, the way you approach this complex process can make or break your company’s future.
In fact, less than one-third of family-owned businesses survive the transition into the second generation, according to the Family Business Institute. These rates dwindle with each succession, as 12% make it to the third generation and only 3% remain viable into the fourth.
Louis Schlegel had seen other family businesses struggle through the generations — in fact, he experienced conflicts in 1948 when he previously partnered with his parents, who owned greenhouses around Cleveland. To avoid those mistakes, Louis wanted to ease Schlegel Greenhouse into the next generation.
“He wanted to ensure that he was not going to hinder the passing on of the business,” says Paul, 61. “It’s a challenge for anyone who’s spent their life nurturing a business to let go. But you need to be planning for this because the day is coming — faster than you think.”
Only 16% of family businesses have documented succession plans in place, according to a PricewaterhouseCoopers survey. Although every family’s situation is unique, there’s a lot to learn from businesses and consultants who have navigated generational transitions before. Here’s their advice for making greenhouse succession planning as smooth as possible.
Formalize your plan
It’s no wonder why family businesses struggle with succession planning.
“Change is hard, and these transitions require change on many different levels,” says Tim Veazey, CFP, an agribusiness-focused estate and succession planning specialist at Sagemark Consulting, part of Lincoln Financial Advisors Corp. “A parent-child relationship may evolve into a manager-subordinate relationship that then needs to evolve into a partnership. It’s very difficult to manage those changes and make those distinctions between family and business issues.”
That’s why it’s important to engage consultants early on who can help facilitate objective family succession planning.
“You’re going to need some professional help to work through this process and facilitate those discussions,” says Veazey, who is also a certified business exit consultant. “There are consultants that specialize in these areas, but you want to make sure that other advisors like your attorney, accountant and lending banker are all plugged into the process as well.”
The Schlegels met with an attorney to formalize the succession plans that began as casual conversations in the greenhouse. The legal document detailed how Paul would purchase his father’s shares of the business over the course of a seven-year buyout.
“Given the fact that I have seven siblings, we wanted to make sure everything was fair and everyone knew what was going on,” says Paul, who now owns Schlegel Greenhouse with his wife, Marsha.
Proper succession planning can mitigate potential sibling rivalry by ensuring that everyone’s aligned around the company’s future. In worst case scenarios, planning helps prevent unfit successors from taking over just because of their last name.
“Historically in family businesses, and particularly in agricultural ones, it’s almost a given that if we have kids who want to work here, we’ll pass it down to them,” Veazey says. “That was fine up to a point, but as businesses have become more complex, it becomes necessary to make some harder decisions about the skillsets and abilities someone needs to be in a key management position.”
To help families focus on the future of their business, Veazey and his team guide clients through a strategic framework process to objectively identify the ingredients required for success.
“The first part of that is to articulate the culture of the business: What are the shared core values, the mission of the company and the vision for what it looks like if it’s successful in the future?” Veazey says. “That tells you what the business needs in order to achieve that vision. The hardest part of this discussion is asking, ‘Does our child have the attributes that are necessary to meet the needs of the business?’ Just because they’re physically working there doesn’t necessarily mean it’s appropriate for them to be owners.”
Through these discussions, family businesses can gain alignment around the expectations for key leadership positions. Understanding the job responsibilities for managers, executives and owners can make these difficult succession decisions easier.
Pass the torch
Paul’s three children grew up working in the greenhouse, like he did. The only third-generation Schlegel still involved in the business is Paul’s middle son, Caleb, 31, who’s in charge of sales and marketing with an active role in customer relations and production planning.
“I’ve been putting more on him every year and we continue to give him a bigger voice in our daily management team meetings,” Paul says.
But he’s not just grooming his son for succession — he’s cultivating a cohesive team culture where everyone has a voice and a responsibility to improve the company.
“You need to be planning for this because the day is coming — faster than you think.” — Paul Schlegel
“In the last couple years, we’ve really worked toward building a committed staff and building a culture where they feel valued, so that infrastructure is in place,” Paul says. “It’s vitally important to any kind of succession that you hand off a business that’s solid and strong, so [your successor’s] not buried trying to fix something that’s broken.”
Whether you plan to transfer your business to the next generation, sell it to a key employee or find an outside buyer, the key to succession planning is passing on the knowledge and passion that made your company successful in the first place.
“The business has to have continuity built into it. It can’t be completely driven by the knowledge inside one person’s head,” Veazey says. “It takes a lot of time and preparation to build a team of people — whether they’re family or not — to carry that business forward, because that’s what gives the business value. It’s got to have a sustainable life of its own, or it’s not worth much to anybody.”
Although Paul plans to stay in the business at least another four years before thinking about retirement, he’s already taking strides to share the knowledge, passion and purpose that have made Schlegel Greenhouse successful for nearly 50 years. Those same ingredients will be key to its success for the next 50 — regardless of the owner’s last name.
The author is a freelance writer based in Cleveland and frequent contributor to Greenhouse Management magazine.