on changes in the plug industry

Most growers today couldn't imagine starting their plants from anything but plugs. Speedling Inc. has been producing plugs for more than 30 years. New company president Robert Brown discusses changes in the plug industry and looks at what factors are influencing these changes.

Q. Do you foresee additional consolidation in the plug industry?

A. I believe that consolidation is something we will see for at least the next decade in the bedding plant business. If one sees their market share -- or opportunities for market share -- growing at a faster rate than actual market growth, it makes sense to view expansion by acquisition of existing operations or facilities, rather than building. This way the chances for overproduction and lowering of market prices can be minimized with the added plus that some market share can usually be acquired in the transaction.

Q. How has the increasing breeding and production of vegetative flower varieties impacted what your company is doing?

A. Speedling has not seen any reduction in current flower business due to competition from vegetative lines. We actually see a further expansion of late-spring and other off-season business due to the improved assortment of items available to the grower for off-peak production.

Because most of these [vegetative] items are costlier as starter material, they are primarily used for larger container production than traditional bedding. This is creating a market in which most growers can have greater returns at off-peak times.

We do not yet offer a liner program for vegetatively propagated material, but have several items in research right now. We have created a line of seed specialty products, like pentas and gerbera, that fit in with the Proven Winner types of cultivars. We produce these mostly in larger plug sizes that facilitate grow-off in more difficult times of year. We work with Goldsmith Plants in providing a prefinished zonal geranium for late-spring sales, and are currently evaluating several other products for this line.

There is no doubt that new products are essential for grower assortments. We try to provide items that will keep our customers in the forefront of their markets.

Q. What is the biggest challenge Speedling faces dealing with seed companies?

A. Speedling has a very close working relationship with the major seed producers. We enjoy being able to help them in analyzing both seed technological improvements as well as cultivar promotion into our mutual markets. It also allows us to use them as somewhat of a resource if we see any problems develop or to exchange ideas for future potential in seed enhancement.

Probably our biggest issue with seed companies is availability, and for the most part, seed companies have come a long way in the last few years. There are still shortages, but many of the difficulties come from the fact that variety assortment changes so much from year to year, that it is almost impossible to bulk order seed anymore. We offer over 800 varieties of bedding plants. To predict the sale by cultivar is virtually impossible.

Q. Have there been any major changes in your floral or ag crop product mix recently?

A. Certainly our production and sales of floral crops increased significantly with our acquisition of Natural Beauty's Blairsville, Ga., operation. The acquisition was made necessary due to continuing growth in our floral product line since the early '90s. We have also recently leased a vegetable operation in Bakersfield, Calif. We consider both of these production lines to be our core business. We plan to support growth in each line in the future as it fits our long-term strategy.

Q. What impact has the push to a common-element plug tray had on the tray sizes Speedling produces?

A. We look forward to the eventual use of a common-element tray. It has been a real difficulty being able to service all growers with one tray manufacturer.

At our Blairsville location, for fall pansies we are using trays from three different manufacturers. If all of these trays become standardized, transplanter compatibility will become a non-issue. From what we understand, there will still be a certain amount of variability to allow product differentiation, but it certainly will make quality a major determining factor in growers' purchasing decisions.

The only disadvantage I can foresee is that the use of multiple trays and configurations will need to be produced in the transition years, creating potential tracking problems in the greenhouse.

Q. Now that more growers are going to automatic plug transplanters, what types of production changes has Speedling made to ensure that growers receive as close to 100-percent usable plug trays?

A. Speedling addressed this issue a long time ago -- we have been consolidating all of our plug trays to 100 percent for the last seven years. Because the technology for quality grading at replugging was not available when we first began, our process is all manual to assure that our customers receive prime material. We are currently looking into the automated equipment to assist in this process, but still feel that the human touch is important to assure quality.

Q. Has the Internet had much impact on the way Speedling conducts its business?

A. Because we sell through broker companies, we do not use our Web site for actual booking of orders. We have found the site to be a valuable tool to disseminate information including future availability, both displayed and downloadable, contact information both at Speedling as well as broker sales representatives in growers regions, plus links for product information from the seed producers. As our brokers' individual Web sites come online, order links will be possible.

The main issue is to keep the information on the Web site current, accurate and constantly changing to keep the interest in coming back. We see the Internet as being a valuable part of Speedling's future.

Q. Mass merchandisers and home improvement stores continue to drive the floral industry as the amount of product that passes through their stores continues to increase. Has Speedling felt the same pressure to hold down prices that the wholesale growers receive from these retailers?

A. Pricing is always an issue, and we constantly strive to allow increases in efficiencies to maintain profitability levels in our competitive markets. We feel, though, that we need to maintain a certain level of profitability in order to keep product lines successful, especially with competition for space between our vegetable and flower divisions.

Even in a depressed price market, however, we will increase prices if needed, with the knowledge that it may decrease sales in that particular line. In lines with less competition, if reduced production levels create shortages in the market, possibly the retailers may consider accepting higher prices in the future. If not, we move on with other more profitable lines.

Q. The number of cultivars and species being developed by the breeding companies is expanding yearly by the hundreds. But the chains are focusing their sales on the more common 'cash' crops with a few minor items thrown in. Will it become increasingly more difficult for growers to find the 'minor' crops because plug producers are gearing production to meet the needs of the growers selling to the larger chains?

A. I am not sure that the unique or minor crops are that unimportant to some of the chains. Home Depot and Lowe's carry many of the more specialized crops, and I believe that what a grower can provide in unique items will always be an advantage in their relationships with their purchasers. We find as time progresses that we are doing more, not less, of the minor items. We may not do great numbers, but these help our customers in their marketing.

Q. Do you foresee the recent tobacco settlements between the various states and tobacco companies having much immediate and/or long-term impact on the tobacco plugs that Speedling is producing?

A. We recognized some time ago that the tobacco growers are facing an uncertain future in the production of tobacco for the U.S. market. We expect to continue to provide products to our grower customers as long as it makes economic sense, although tobacco's position in our total production is relatively minor.

© 1999 Branch-Smith Publishing