April 2009 Big Grower

Cream of the Crop By Darhiana Mateo

As the largest single-site greenhouse in the United States, the story of Metrolina Greenhouses is often summed up in staggering numbers: $125 million in sales, 500 acres of land, 136 acres of heated greenhouses (14 more acres in construction), 3.5 million poinsettias, 6.1 million mums, 32,000 rolling carts, 700 employees and 150 trucks. And while these numbers are clearly telling, at the core of the company's evolution from a half-acre family operation to a cutting-edge industry giant is a tale that blends strategic business models with a spirit of innovation; the industry's leading technology with old-fashioned family values; a respect for tradition with an eye toward tomorrow.

Even in today's uncertain economy, the company is in the midst of expansion, highlighting the type of bold resolve that's propelled Metrolina to the top of the game. "One thing our family has been known for is our willingness to try new things — sometimes to a fault," says Abe VanWingerden, co-president and head of sales and marketing for the Huntersville, N.C.Ðbased business. "There's always a risk of being complacent when things go well. We never fall into that trap. Our biggest challenge on a daily basis is to realize that even when we think we're ahead, there are a lot of people chasing us. We have to be constantly looking ahead for that next idea."

The Evolution

In 1972, the VanWingerden family moved from Holland to New York, "doing the whole Ellis Island bit," says Abe. At the time, his father, Metrolina founder Tom, was 23; his mother, Vickie, was 21; his older brother Art, now co-president and head of operation and execution, was 4; and Abe was 2. After a six-month stint with family in Illinois, they settled in Charlotte, N.C., where Tom and Vickie leased a half-acre greenhouse selling annuals to retail stores.

Within two years, the family business was thriving, so much so that it needed a larger space. A 70-acre tract of land in a little town 40 miles north called Huntersville, N.C., fit the bill. Over time, that land morphed into a bustling 500-acre operation with 136 acres of heated greenhouses and counting. (At the time of the interview, Metrolina was working on adding 14 more acres of covered greenhouses.)

Managing Growth

These days, the highly automated company churns out a diverse palate of "consistent, high-quality" product, from poinsettias to spring color to annuals and perennials — to the tune of millions — year round. Their market territory spans 450 miles from Atlanta to Atlantic City, N.J., and venturing into Tennessee. The territory is varied enough that it offers the company some shelter from its biggest and most uncontrollable challenge: Mother Nature. "That gives us a little protection from weather in one market that would shut you down completely," says Abe. "We have an ability now to mitigate that somewhat. It might be nice in Atlanta and snowing in Atlantic City, but at least we'll get some business in."

In addition to constant expansion of its already sprawling operation, Metrolina has also expanded its business through a thriving contract-grower network that currently comprises 20 percent of Metrolina's total products sold and $25 million in sales. Metrolina taps into their network, which consists of 35 growers throughout the East Coast, to grow two different item sets: Crops that grow well in warmer climates, such as ferns (which contract growers in Florida produce), and "spring surge" items to help meet increased demand for base items during their busiest season.

"Our financial model says that the worst strategy is to have enough greenhouses to handle your spring business because you are going to have a lot of closed-down greenhouse space in the fall and winter time," Abe says.

For the sake of efficiency, Metrolina provides the pots, young plants, transportation, tags and carts so contract growers can concentrate on the growing. "We'll send them a load of carts down at the start of the season, they'll load those carts, we'll go down and pick them up when they are ready to ship. That cycle happens all season long: Drop a load, pick up a load."

By building a facility that can handle production throughout the rest of the year but falls a bit short during spring, Metrolina ensures that the facility is full 95 percent of the year. And although the company is expanding its facilities, Abe is careful to point out that they're not replacing contract growers. "We never build a facility large enough to handle our entire spring surge," he explains.

Talking Solutions

Metrolina's hands-on relationship with its big box customers has played a key role in the company's growth and success. The company currently does 68 percent of its business with Lowe's, 30 percent with Wal-Mart and 2 percent with Sam's Club. Abe says the company treats its relationship with the retailers as a partnership instead of a purely transactional relationship. "I'm not trying to get an order or close a sale for this quarter or this month. To me, I'm developing a working relationship with the buyers on a daily basis," Abe says. As such, they focus on providing complete solutions to meet their joint customers' changing needs.

"The retailers aren't looking for a grower to grow one item anymore; they are looking for them to be a solution on a multitude of fronts," he says. "That solution is not just red and white begonias; that solution is around in-store understanding, logistics, packaging and product presentation. It's a much longer-term investment of people and financial resources and time, at a much different level."

Instead of discussing six-pack annuals or price points with their big box customers, Abe and his three-person marketing team elevate the conversation to "what the consumer is buying and how we are going to get her to buy more."

Embracing Automation

The business runs like a well-oiled machine. Amid the buzz and bustle, the 680 employees (750 during spring) and cutting-edge machinery work side-by-side year round, producing crops in staggering quantities. Metrolina's reputation as perhaps the most technologically progressive grower in North America dates back to the 1980s, when founder Tom VanWingerden dedicated a lot of time to walking around his greenhouse and watching people work. The senior VanWingerden, whose specialization lies in machinery and automation, began designing machinery to help eliminate mundane, repetitive tasks. From robotic arms to belts to cranes (which helped them completely eliminate the need for walkways) to transplanters and plug fixers, Metrolina's facilities are a study in high-tech synergy.

Though there seems to be a reluctance to automate in the horticulture industry because of high up-front costs and the fear that automation will eliminate employees, Metrolina sees automation as "a tool to help us get the job done better — it's not there to do our job," says Abe.

Instead of viewing automation as a threat, Metrolina embraces the technology as a way to advance employees into more rewarding roles by eliminating mundane tasks and drive a consistently higher-quality product. Standardization is the main objective. "We're very big on consistency and standardization. We automate the growing process to a point where we design a spec, 4-inches high, 3-inches wide, three blooms on top, and we can do that over and over again across millions of plants," says Abe. "We don't want consumers wasting time picking through a table of geraniums — tall ones, short ones, stocky ones — we want to see 300 of the exact same geranium."

Thanks to its automation, Metrolina has been able to mitigate labor costs by holding its number of employees constant even through dramatic growth. "We've been able to grow 10, 12, 15 percent a year without adding significant staff to make it happen," he says.

Ultimately, it is a numbers game. "We do it because we measure a task that is costing us money and find ways to shorten the time frame while still delivering that standardized high quality product," Abe says.

Although there is plenty of chatter about automation, there hasn't been a whole lot of action yet, says Abe: "Machinery and automation like this can be implemented if you are willing to invest. Once it's implemented, the savings are quick. The payback is very quick."

Art, Abe's brother and co-president, points to Metrolina's willingness to evolve with the times as a key differentiator from the competition. "A lot of greenhouses are set in their ways. They've been doing things the same way since the 1950s. We have changed as time has gone by. We try to stay as up to date as possible," says Art.

The next echelon for Metrolina on the technology front is centered on inventory material handling systems, which help them track everything from Point A to Point Z. By keeping track of inventory at this level, Metrolina is able to figure out quickly what they have and don't have: "All of a sudden, it drives your decision making at a much firmer level." All items are given cost elements, and the activity-based costing model can then be used to evaluate tasks, growing techniques, shipping schedules and item-level profitability. The technology has been in development at Metrolina for the last 18 months, and the final phases of the system are rolling out this fall.

Family Matters

It's easy to forget that behind the multimillion-dollar, fine-tuned corporation lies a family whose sweat and spirit laid the foundation. At 9:30 every morning, in true Dutch family tradition, Abe attends a business meeting he can't cancel: his daily chat with his parents and other siblings in the business where they talk shop over coffee. Balancing the conference room with the coffee table can be a challenge, admits Abe, but the rewards far outweigh the headaches. "We still want that family aspect of the closeness to market and the ability to adapt quickly to changing needs, but then you need the systems and processes and logistics in place so that you don't have to reinvent [the wheel] over and over again. You systemize it and then execute it excellently every day," Abe says.

As the company grew and Tom and Vickie reached a stage in their lives where they felt comfortable "semi-retiring," they passed down control to their six kids. The company is large enough now that all family members were able to find a niche that allowed them to exercise their unique talents. "Each one of these jobs is very fulfilling, very unique and very busy," he says.

The eldest of the bunch, Art, holds the title of co-president and specializes in the operations and execution side. Michael heads the logistics and shipping, and Thomas oversees construction and maintenance. Their sister Helen works in the IT department designing a lot of their systems. Rose is not in the family business on a daily basis, but her husband, Joey, handles the $13 million cart-tracking department.

The family leverages its individual strengths and weaknesses to move the company forward: "We all have different responsibilities, [yet] we have all these common goals in mind. It's fairly easy," says Art.

Tom, former president and chief executive officer, and Vickie, former chief financial officer, are currently "semi-retired", but as is the case in many family businesses, they are still involved on a daily basis on key decisions. The company recently has welcomed "outside professionals" — including a new chief financial officer, chief information officer and a doctor of horticulture — to the family fold to help them reach that next level, says Abe. "As you grow from a $10 million family business to a $100 million corporation, you have to have systems and processes in place to manage that properly."

And the VanWingerdens are known for their willingness not only to embrace change but also drive it. "It's fun," says Abe, comparing the family business' evolution to advances in technology: "[It's like] when you introduce someone from a standard phone to a cell phone to a BlackBerry to an iPhone." One thing his family is known for, says Abe, is their ability to ask, "Why not?"

Lessons from Outside

Abe wasn't always in the family business. After graduating from Emory University in Atlanta with a masters in business in 1993, he went to work for Proctor & Gamble. "I wanted to see if I could do it on my own, honestly," he says. "See if I could make it in another industry."

The eight years he spent at Proctor & Gamble, where he received an incomparable education in consumer product understanding, packaging and marketing, would prove invaluable when he returned to the family business in 2001. Besides learning best practices of a large corporation, Abe also learned what not to do.

Abe describes his last two years at Proctor & Gamble as "serendipitous." He moved to Bentonville, Ark., where he took over the Wal-Mart account for Proctor & Gamble. "The [lessons] from the largest consumer-packaging company and the largest retailer in the world: that's something you can't read in a book," he says. Living in Bentonville and being immersed in that business offered a keen understanding of retailing in general, he says, and how consumers operate.

By the time Abe came home, the family business had blossomed from a respectable $9 million business to a $40-50 million corporation and was poised to reach new heights. "Part of those things I learned from P&G were changes the business was ready for then. If we were still in the $9 million [range], those changes wouldn't have worked," he says.

The Marketing Edge

Abe helped usher Metrolina into a new era for marketing, style and packaging. From replacing traditional terra cotta pots with fashion-forward containers to creating marketing initiatives aimed at changing the consumer perception of gardening from "hard work" to a "function-based mentality" (think plants for decorating or given as gifts), Metrolina has put a lot of effort over the last decade into making their products' style relevant and appealing to diverse consumer bases.

One of the ways they do this is by minimizing "distractions," such as unattractive pots and uninspiring packaging, and narrowing down choices (who really needs 32 shades of pink?!) to make gardening less confusing to consumers. "I'm fighting YouTube, Facebook, my iPod. I want to make sure my gardening activity is fun and easy to execute, and takes away that initial fear that consumers have," Abe says. "My real ploy is to build confidence."

As in the world of fashion, fresh ideas are always en vogue: "I'm always amazed when people grow the same thing every year, and [then] they wonder why their sales are going down," he says.

Nurturing a Legacy

The VanWingerdens' "children" have inherited more than just a multimillion-dollar business and a legacy for automation and innovation from their parents. Abe says the biggest lesson his father has taught him, besides a passion for getting better each day and the VanWingerden tradition of giving back to those in need, is how to pass down a family business successfully.

"My dad is 63 and still has it in him, yet he's already passed down full ownership of the company to his children and passed down this unbelievable business model. It's a legacy we have to pass down to our kids," he says. "It's a VanWingerden tradition."

What direction do the brothers see the forward-thinking company taking five, 10 or 15 years down the road? They are open to many possibilities, but one fact seems certain: "We're going to keep growing. We've got to keep going," says Art. "We'll end up becoming a one-stop shop for Lowe's and Wal-Mart."

SIDEBAR

Working with the Big Boxes

Abe VanWingerden, co-president of Metrolina, offers five key tips for working with the big boxes.

Understand their business. Before you so much as meet with a buyer, walk their stores on a busy Saturday and get an understanding of how they get it in, get it out and sell it to the consumer.

Understand their buying and business process. Find out what reports they look at and mirror your internal reports to look and read the same. It's not as big a deal when business is good, but when business is soft, nothing is more damaging to your credibility than when your numbers don't match theirs.

Get them to your facility. They want to see it, and you need to build their confidence in your ability to grow, ship and manage their product.

Logistics is king. Quality product drives our business, but if it isn't in the stores daily in an organized and efficient manner, you will not be in business for long.

Know the consumer. Walk the stores, read the annual reports, subscribe to news-service alerts on the business, go to seminars on the consumer. Immerse yourself into this consumer. What else do they buy when they buy our product? If you know the big boxes' consumer and meet their needs, you will be successful.

Decade by Decade

Metrolina has achieved quite a bit in its 37-year history. Here's a breakdown of their evolution:

'80s — Focused on making automation work, trying to produce something at the lowest cost with the fastest throughput. That is still very important to them, says Abe.

'90s — Positioned itself at the forefront of current breeding advances, including introduction of Wave petunias and the migration from seed to vegetative propagation.

'00s — Focused on marketing and packaging, pushing for change in the color of pots and becoming more style relevant.

Next decade — Will focus on shipping logistics: how to get product from here to there and into consumers' gardens, at the lowest cost, with the best result.