ANLA and SAF have done a yeoman’s job of keeping green industry firms informed of what is happening in Washington in terms of the effects of mid-term elections and the critical regulatory and legislative issues facing nursery/floral businesses today. Be sure to check out the Washington Impact section (click here) of the ANLA Knowledge Center and the latest SAF analysis of the effects of mid-term elections on your business (click here). As the saying goes, what you don’t know, can hurt you.
Economic news from the week
It certainly has been a week of strong economic news. In true Letterman style, consider the following top 10:
- Economic activity in the manufacturing sector expanded in October for the 15th consecutive month, and the overall economy grew for the 18th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM Report On Business.
- The BEA reported that real personal consumption expenditures reached $9.349 billion in September, the highest level of U.S. consumer spending since the recession started in December 2007, 33 months ago. On a year-over-year basis, September’s 2.3% increase in consumer spending was the largest percentage increase in three years, since September of 2007.
- The National Restaurant Association’s Restaurant Performance Index (RPI) – a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry – stood at 100.3 in September, up a solid 0.8 percent from its August level (see chart above). In addition, the RPI rose above 100 for the first time in five months, which signifies expansion in the index of key industry indicators.
- Based on average real GDP growth (subject to revisions of third quarter GDP) for the five quarters following recession, this expansion is stronger than the 2002 expansion by almost a full percentage point (2.81% vs. 1.87%), and just slightly below the 1991-1992 period (2.96%).
- The BEA reported that real GDP grew at 2.0% in the third quarter, boosted by a 2.6% rise in inflation-adjusted consumer spending, the highest quarterly increase since the 4.1% growth in the fourth quarter of 2006, 15 quarters ago. This healthy growth in consumer spending from July through September is consistent with: a) the many states that have been reporting increases in tax revenues in the third quarter from sales, individual income and corporate income taxes, and b) the stronger-than-expected retail sales report for September (7.2% annual growth).
- Rail traffic continued on an upward trend for the week that ended last Saturday, with both carloads and intermodal traffic registering solid gains versus the same week last year of 9.6% and 13.6% respectively.
- The BEA reported today that real GDP grew at 2.0% in the third quarter, boosted by a 2.6% rise in inflation-adjusted consumer spending, the highest quarterly increase since the 4.1% growth in the fourth quarter of 2006, 15 quarters ago. This healthy growth in consumer spending from July through September is consistent with: a) the many states that have been reporting increases in tax revenues in the third quarter from sales, individual income and corporate income taxes, and b) the stronger-than-expected retail sales report for September (7.2% annual growth).
- Except for the holiday-related July 10 low, last week’s 434,000 seasonally-adjusted weekly claims for unemployment insurance was the lowest since the week of August 23, 2008, more than two years ago.
- New orders for durable manufactured goods in September reached the highest level ($199.1 billion) since September 2008, two years ago (see top chart above). The 12.2% increase in durable goods orders in September compared to the same month last year was the ninth consecutive double-digit increase starting in January of this year.
- The International Air Transport Association (IATA) released international traffic results for September today, reported that international passenger traffic had a 10.5% year-on-year increase which is significantly stronger than the 6.5% rise recorded for August.
Hmmm. Good week considering we are still not performing at our potential. That’s going to take a bit longer I’m afraid.
So you want proof, do you?
You have heard me say it before (and other industry pundits in similar fashion) that firms in the midst of hypercompetition must dig deep in analyzing firm-level resources and capabilities in order to shave every possible cost out of the value chain. But on the demand side of the coin, they must also tweak their value proposition so that the customer understands fully what it is they are getting out of the product/service exchange. You’ve also heard me say that the value proposition for the green industry in the future must focus on the unique ways in which quality of life is improved for its customer base. Much research has validated the economic, environmental, and health/well-being benefits of flowers, plants, and trees. All the green industry has to do now is to use this information to convince consumers of this in a manner that they view their products and services as necessities instead of luxuries. This will, of course, make the industry even more weather and recession resistant in the future. Click below to see more detailed information on the:
- Economic benefits of green industry products (flowers, shrubs, trees, etc.)
- Eco-systems services benefits of green industry products
- Health and well-being benefits of green industry products
Also, if you’d like to see detailed abstracts for all of the literature citied in the benefits sections above, click here.
An all-too-familiar container problem…
Will we ever come to bury the single-use paper cup?
Environmentalists of all stripes feel some combination of guilt, confusion, and even indifference when they stop to think about paper cups. Many times those cups are used for less than a minute before they enter the long cycle of becoming either landfill waste, pulp that’s recycled into a new material or compost.
The question is a particular headache for Starbucks. According to author Anya Kamenetz, “an astonishing 3 billion of the nation’s 200 billion-plus paper cups thrown into dumps each year bear that familiar green logo.” Jim Hanna, Starbucks’ director of environmental impact, tells Kamenetz that, “From our customers’ standpoint, the cup is our No. 1 environmental liability. . .Cups are our icon, our billboard, part of the ethos of the company. Customers have this great experience of interacting with store partners and the beverage. Then, when they’re finished, they say, ‘Now what do I do with my cup?’”
Kamenetz digs into that mass of waste in the November 2010 issue of Fast Company. Subtitled “A story of Starbucks and the limits of corporate sustainability,” her piece, “The Starbucks Cup Dilemma,” explains that the company has enlisted MIT Sloan’s Peter Senge to help it tackle the issue: “With Senge’s help, Starbucks has moved from solo redesign efforts to enlisting paper mills, NGOs, municipal governments, and even competitors such as McDonald’s and Dunkin’ Donuts to help.”
Kamenetz continues: “Starbucks is putting major marketing muscle behind the effort, too, betting that despite the economic downturn customers will be drawn to the green halo of its so-called Shared Planet initiative.”
All good news? Not so fast. “Casting the company as an innovative, dedicated leader in sustainability has its risks,” Kamenetz writes. “Getting more cups out of the waste stream and into places like [composter] Cedar Grove has proven to be a lot more complicated than anyone at Starbucks had expected, and some environmentalists are actively questioning the company’s approach. . . The saga of the Starbucks cup may represent the last stand for the era of the corporate-led sustainability initiative. Think about it: What would it take for you to never throw away another cup?”
“At many annual meetings,” Senge says in the story, “people would stand up and say, ‘What are you going to do about this goddamned cup?’ Howard [Schultz, Starbucks CEO]’s an off-the-cuff kind of guy, so he basically ordered his team, ‘We’ve got to get rid of this disposable cup. Go solve the problem.’” In October 2008, Schultz pledged that 100% of Starbucks cups would be recyclable by 2012.
But what did that mean? Compostable and biodegradable? Collected and then turned into something else? And how do you get customers to not just throw the cup in a trash can, where it will just turn into landfill waste?
Kamenetz’s story details Starbucks’ efforts to try out different materials and different “cup recovery” efforts. It held a “Cup Summit” at the MIT Media Lab on Earth Day, last April (see MIT SMR’s blog post about the event). There, a pilot project was launched to turn used cups into napkins.
Kamenetz’s conclusion? First, “Starbucks’s true strategy might be best stated as doing the most that can be done for the environment both voluntarily and at a profit. ‘Our goal is to prove that there’s a market value for our cup stock, and for the recycling community and paper manufacturers to see monetary value in that,’ says [Starbucks’ director of environmental impact] Hanna. ‘We need to balance business with environmental performance.’ That may be the most we can expect from any corporation.”
Her second conclusion: “Bring your own damn cup.”
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See any green industry implications here?
The effect of the depreciating dollar
Dr. Parr Rosson, international trade economist for Texas AgriLife Extension provides a quick and dirty overview on the effect of the depreciating dollar on U.S. Agriculture (click here). Bill Conerly also offers his thoughts on its impact on small businesses (click here). Lastly, perspective from the WSJ (click here).
Should suppliers be leading sustainability?
Below is a re-post from the Open for Discussion blog hosted by McDonald’s. This example is obviously not from the green industry, but the question and subsequent answer is pertinent to most industries:
“We are a supplier to McDonald’s and are proud of that. We attended the Supplier Sustainability Summit that McDonald’s recently convened. We share your interest in moving along the sustainability agenda. I am curious how you see the customer/supplier relationship. Who should be leading the sustainability agenda? The consumer? The customer? The supplier? Should we as a supplier lead the way on what we think is best for sustainability? Or should we listen and respond to what customers like you want and specifically ask for? ” — Dennis H. Treacy, Senior VP, Corporate Affairs and Chief Sustainability Officer, Smithfield Foods, Inc.
In my opinion, the more suppliers take the lead, the better. At the end of the day, McDonald’s does not actually produce the products we serve. We have a complex and extended web of suppliers whom we rely upon to help us bring food from the farm to the front counter. So, it’s really our suppliers who have the product development and agricultural expertise. As a result, it is very important for them to play a leading role in identifying opportunities for improvement and ensuring that we continuously progress in the right direction.
Another factor is the reality that solutions to tough agricultural sustainability issues – whether they are environmental, social or animal welfare-related – usually require a systemic approach. Sustainable food issues cannot be effectively addressed unless multiple stakeholders are involved and a broad-based view of the issues is incorporated.
This is not to say that I think McDonald’s should be hands off. We’re in this together as partners in pursuit of progress. We have a role to play in influencing change for the better, and there are specific initiatives, policies or programs we implement that are unique or tailored to McDonald’s needs, and this will continue.
In the end, it is a blend. Supplier leadership is expected and needed. Our proactive leadership and involvement is also important. A perfect current example is our support of the WWF Global Conference on Sustainable Beef. Along with McDonald’s, other companies, including our suppliers Cargill and JBS, are involved. Beef sustainability cannot be tackled by one company alone. We need a coalition of like-minded organizations that add up to size and scale that can really make a difference.
Example of good marketing and entertaining as well!
Commissioned by the California Cut Flower Commission, J Schwanke and the JTV crew traveled all over California filming an exclusive documentary on the flower farms in the Golden State. Making his way across the mountains of Southern California – all the way to the Golden Gate Bridge, J toured some of the largest and most prestigious flower farms in California. His interviews with the owners/managers of each farm are fascinating, and the JTV crew did an excellent job filming the indescribable beauty of the thousands of acres of flowers being grown…the sight of which is mind blowing! The video series provides a great overview of how California flowers are grown, picked, processed, packaged, and shipped.
HT: Mike Mellano
It's official.
The Business Cycle Dating Committee of the National Bureau of Economic Research met yesterday by conference call. At its meeting, the committee determined that a trough in business activity occurred in the U.S. economy in June 2009. The trough marks the end of the recession that began in December 2007 and the beginning of an expansion. The recession lasted 18 months, which makes it the longest of any recession since World War II. Previously the longest postwar recessions were those of 1973-75 and 1981-82, both of which lasted 16 months.
In determining that a trough occurred in June 2009, the committee did not conclude that economic conditions since that month have been favorable or that the economy has returned to operating at normal capacity. Rather, the committee determined only that the recession ended and a recovery began in that month. A recession is a period of falling economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales. The trough marks the end of the declining phase and the start of the rising phase of the business cycle. Economic activity is typically below normal in the early stages of an expansion, and it sometimes remains so well into the expansion.
The committee decided that any future downturn of the economy would be a new recession and not a continuation of the recession that began in December 2007
Are face-to-face meetings the new dinosaurs?
With the recent announcement of the cancellation of the Southeast Color Connection (the meeting formerly known as the Southeast Greenhouse Conference), it begs the question of “What is the future of person-to-person meetings in our industry?” We have already seen much consolidation of effort in providing trade show opportunities and educational programs over the last decade. The SCC/SGC was a perfect example of such efforts that were made in order to achieve the economies of scale and scope that occur with synergistic collaboration. But now it seems that the attendance at all green industry meetings is either barely holding steady or declining.
Not that this is an entirely new thing, mind you. Attendance at Extension Service meetings have been declining for two-plus decades now (unless CEU’s were offered of course), particularly at meetings of livestock or traditional row-crop producers. The green industry meetings were typically well attended, but then again we were the only growth sector in agriculture for a long time. Not so any more. We too are a mature market and have suffered from the decline in grower numbers, consolidation at all levels of the supply chain, and various competitive conditions that have lead to tighter margins.
So why is this happening? Is it purely economics and the cost of attending such meetings is simply too high of a hurdle for some firms? Have person-to-person meetings outlived their usefulness in terms of generating sales and/or qualified leads (at trade shows) or disseminating pertinent and useful information (at educational events)? Has information technology (e.g. Google and other search engines; real-time and archived webcasts and webinars; websites, blogs and electronic magazines/newspapers; social media like Facebook & Twitter; etc.) replaced the need to meet face-to-face? Does the fact that firms in the industry now have direct access to university researchers and private consultants at times convenient to them negate their likelihood of sitting though educational sessions?
There are certainly other questions that need to be asked, but I think the answer is “all of the above” and more. The real question is what do we do about it? Or maybe the better question is should we do anything about it? I mean, after all, I myself am guilty. I now publish this blog instead of a newsletter that I used to mail out in order to save costs and, more importantly, provide real-time information that folks can use right now instead of waiting for it to show up in their mailboxes 2 months later. I also relish the fact that webinars have become so popular because they save time and money for all involved. I like doing them and so far evaluations indicate that people like attending. But even webinars are undergoing some structural changes. I have seen that attention spans drop off considerably after 37 minutes (yes the software measures that and isn’t it interesting that it is the same amount of time of a typical TV show). Now that YouTube, Vimeo, etc. are on the scene, we now devour information in 3-5 minute chunks (which is about the same amount of time we spend reading the e-news blasts from industry media moguls as well). This all points to the trend of time becoming more scare and alternative ways of getting information and establishing/maintaining relationships are getting more plentiful.
Which reminds me, this blog post is getting too long and if you have to scroll down more than 2 times, you probably won’t finish reading this, so I’ll close for now…your thoughts on this?
Pawlow to address water management issues
COLLEGE STATION — Jonathan R. “Jon” Pawlow will be the Distinguished Lecturer for the eighth Ellison Chair in International Floriculture Distinguished Lecture Series at Texas A&M University on Oct. 27. His topic will be “Emerging Water Resources Issues — What are the Trends? What are the Policy options?”
Pawlow is counsel for the water resources and environment subcommittee of the House Committee on Transportation and Infrastructure. He is responsible for matters within the subcommittee’s jurisdiction relating to water pollution control and water infrastructure, wetlands, hazardous waste cleanup, and water resources management, conservation, and development.
The event will begin at 2 p.m. on October 27 with a reception in the Horticulture and Forest Science Building atrium, and his address will begin at 3 p.m. in Room 102.
The Distinguished Floriculture Lecture Series is sponsored by the Texas A&M Horticultural Sciences department’s Ellison Chair in International Floriculture, currently held by Dr. Charlie Hall.
“Given the importance of water across all sectors of agriculture, we are extremely excited to have Jon as our next lecturer, given his vast knowledge and experience with water-related issues in the country,” Hall noted.
Pawlow is an attorney and scientist/engineer with expertise in the environmental and intellectual property fields. He has more than 15 years of private law practice experience, and substantial public sector legislative, regulatory, law, policy, and technical experience with the U.S. Environmental Protection Agency and as assistant chief counsel with the Office of Advocacy of the U.S. Small Business Administration prior to joining the House Transportation and Infrastructure Committee.
He earned his law degree from the Georgetown University Law Center, and bachelor’s and master’s degrees in water resources engineering and environmental science from Rutgers University. Pawlow is a member of the District of Columbia and Virginia Bars, and is registered as a patent attorney to practice before the U.S. Patent and Trademark Office.