DEPARTMENTS


2014 Looks OK, But Why Settle for OK?

By Ron Hall


I used to wonder which factor - the economy or the weather - has the greater negative effect upon the green industry. In my mind I weighed such things as a severe drought against an unexpected shock to our economy in drying up demand for services. For example, which created the greater havoc to our industry: the multi-year drought that struck north Georgia and much of the Carolinas in 2007-2009 or the dot.com meltdown signaling the end of one millennium and 9/11 barely into another?

Having no way to arrive at a "scientific" answer that would put the matter to rest I answered the question (at least in my own mind) with a single word: Both.

With the caveat that nobody can predict the weather more than a few weeks out or the relative strength of the general economy beyond the next few months, for now at least 2014 seems to lining up as another improving year for the industry. Improving, that is, from the trough of the Great Recession of 2008-2009.

Most of us will likely be satisfied with that, although we probably shouldn't be. The reality is that if we could do a better job of educating the public to the value of our products and services, we all could do a whole lot better.

In mid-January, Dr. Charlie Hall, a professor in the Department of Horticultural Services at Texas A&M University and an economist by training, shared exactly that in a 50-minute webinar titled "The Economic Outlook for 2014".

Originally from the mountains of western North Carolina, Hall likened the nation's recovery from the Great Recession of December 2007 to June 2009 to that of a plow horse: slow but steady. This is in contrast to its "race horse" pace leading into the Recession, he said.

Modest growth is not such a bad thing in Hall's mind, especially given the terrible condition of the economy just a few short years ago. To that point, he didn't cheer the 18 percent increase in housing starts in the United States from 2012 to 2013, or the 12 percent jump in housing prices in 2013. This is in spite of the importance of housing starts to the green industry.

"If we got better too quickly we would not have learned our lesson," said Hall. That lesson, of course, is that unnatural growth is unsustainable.

Likely, both segments of the economy - house starts and house prices - will cool to more sustainable levels in 2014, he said. In fact, housing starts are expected to fall in the 3 percent to 6.3 percent range, depending on the indicator. Meanwhile, double-digit growth in spending is being forecast for home remodeling and improvements.

Adding to this positive picture, by the end of 2014, commercial construction, which generally lags residential construction, should pick up. Hall said that segment of the economy should show even stronger activity in 2015.

In the end, it might be that too much blame (or credit) is given to economic conditions in gauging the year-to-year fortunes of the green industry, he opined. On the flip side, he offered that not enough effort is given by the green industry to changing how American consumers perceive it.

"People are spending more today than they were prior to the Recession. But they're not spending as much on flowers, trees, shrubs or landscape services as they were prior to the Recession," Hall said.

People are hungry for product and services that "enhance their lives," he continued, but generally view the green industry as a luxury that competes with other luxuries for their discretionary spending.

"In 2014, it's not the economy that's going to be the drag on our industry. The only drag on our industry is us dragging our feet and not making our value proposition in a more straightforward fashion so that people view us as more than pretty," said Hall. "We have to sell the economic benefits, the environmental ecosystems services benefits and the health and well-being benefits of what we do."

Curiously, while many of us in the industry may undervalue what we do, savvy investors don't as evidenced by the robust acquisition and merger activity within the industry in 2013.

As is often said, hope - whether for a stronger economy or favorable weather this season - is not a strategy for growing a business or an industry.

Promoting, offering and constantly reminding the buying public of the life and environmental enhancements we provide is the only option that will allow all of us to grow in 2014 and beyond.




Ron Hall
Editor-in-Chief
To comment, contact Ron
at rhall@mooserivermedia.com