April 2004

Growth in a Flat Economy By Bridget White

Despite an industry-wide slowdown in the growth rate of live plant production during the past several years, business is just fine — better than ever, in fact — at Dallas Johnson Greenhouses, Council Bluffs, Iowa. Partially, that's because all negative thoughts, whining and hand wringing stop at the front door of this family-owned and operated producer. But the main reason business just keeps looking up is a corporate philosophy of watching the industry, riding its trends and capitalizing on all possible opportunities, which for this year means an extensive greenhouse build.

That's right. While most greenhouses continue to see margins disappear and costs increase, at a time when contract growing is the new industry buzz phrase and owners are desperately trying to figure out how to maximize existing space, Dallas Johnson Greenhouses has added a little over 12 acres of high-end, glass-covered, open-roof greenhouses from Rough Brothers.

Sound like a crazy move? Well, Dallas has never been known for his reserve. This decision, however, actually makes sense, and more importantly, it's a good indication of the industry's economic strength.

A Bit of History

The current Dallas Johnson Greenhouses in Council Bluffs, Iowa, is actually Dallas' third greenhouse company. He started his first greenhouse in 1965 with 11?2 acres before moving to Red Oak, Iowa. There he started a new 1-acre greenhouse that soon grew to 61?2 acres. After selling the business to his brother, he moved to Council Bluffs in 1985 and started the current Dallas Johnson Greenhouses with a 1-acre greenhouse, which has now grown to over 50 acres.

Every member of the Johnson family plays an important role in keeping the sprawling operation moving forward. Dallas' wife Kay handles administration functions, daughter Shawn runs the marketing show and son Todd manages greenhouse operations.

According to Todd, the growth surge at Dallas Johnson's is more accountable to an expanding market than an increase in market share. "Our primary customers include Home Depot, Menard's and Wal-Mart," he said, "and we also sell to Osco Drug, HyVee and other prime retail outlets. As they have added stores, we have increased live plant production. Likewise, much of our expansion into geographic areas where we had not previously been is accountable to new outlets developed by our existing customers."

Regardless of the reason, Dallas Johnson Greenhouses is moving into new territories, servicing more stores and expanding its operation. "We have 40 of our own trucks," explained Dallas, "and can easily ship into the Great Lakes area, Chicago and beyond, from here in Council Bluffs. It's no big deal to ship plants. The big difference is that we used to deliver to a smaller market area using pickup trucks. Now we sell to a multi-state area using big semis."

Why Now?

Believe it or not, there were actually some sound business reasons behind building 12 acres of new greenhouses now, and the biggest of those reasons had to do with maximizing the short spring season. Roughly 80 percent of Dallas Johnson's annual business is done during a 6- to 8-week selling period in early spring, and last year, there was not enough available space. "Last year we had to buy in 20 semi loads of bedding plants to resell in order to meet our customers' spring needs," said Dallas. "And you can't make any money just trading dollars. That's when we decided to put up another 12 acres of structures. Also, our growing capacity will increase by about 20 percent this spring and up to 35 percent next year when all the new houses are functioning at full strength. Despite the growth, we will be at least 90 percent pre-sold before we ship a single flat.

"I've never had a year in which we didn't have at least a 10-percent growth rate, and this year is no exception," continued Dallas. "We are always looking for faster, better ways of running our operation. We're always going to be a work-in-progress. With cheap money [favorable interest rates] available and more business demand than we could produce, it was time for a major expansion, so we added a 12-acre chunk."

According to Todd, growing in a down economy means that you have to be smarter than your competitors, and you have to really embrace change. "That's what has made us what we are. The new structures we are putting up will increase our ç capacity enough to help us meet the market demands without having to buy in additional plants. We will now have a 16-acre block for year-round production. This year we will produce approximately 700,000 bedding plant flats, 600,000 hanging baskets, 1.1 million 1-gal. perennials, .5 million 1-quart perennials, 1 million geraniums and 2 million 4-inch annuals. Next year, the figures will increase significantly, and it will be through internal growth."

Work on the mega-project began last August. The first section, designed to handle plugs and production, was functional by mid-February 2004; the final phase is targeted for completion by April 1. Structure provider Rough Brothers teamed up with Trueleaf to supply flood floors, hot water floor heat, hot water overhead heat, curtain systems, environmental controls, HAF fans and downspouts, with booms, Echo systems, electrical systems and site grading done by the Dallas Johnson maintenance staff. Increasing production capacity by 35 percent in a single season is a major decision, but Todd feels comfortable that they not only made the right choice to do the project but also on their choice of structure. "We didn't necessarily need glass houses instead of less expansive coverings," explained Todd, "but the glass helps us achieve the quality we demand of our production. We made a good choice and have been very impressed. Rough Brothers made a promise to us, and they kept it; and they have worked with us through unavoidable or unanticipated problems, such as 31 inches of snow on the ground. Not many structure manufacturers could even undertake a project of this size, but Rough Brothers has done what they said they would."

The Future

Regarding future growth, Todd points out that the company is land-locked at its present location. "We are in a residential area that has grown up around us, making expansion at this site difficult if not impossible. Plus, we have zoning and other political factors to deal with. Most likely, additional expansion will come in the form of acquisitions or land development at a different site in perhaps an entirely different geographic market."

Whether in Iowa or another state, the company has prepared itself for the future by adding transplanters and other state-of-the-art automation, a modernized shipping area in Council Bluffs and UPC coding on all products. "To give you an idea of how technology can economize physical labor," added Todd, "once we get an area set up for, say, strictly container production, it takes just three people to manage an 8-acre range." And the technical scheme Dallas Johnson's has created can be duplicated over and over at any future location.

"You never know about tomorrow," said Dallas, "but we try to add on something every year. I view our operation as a manufacturing company, not a greenhouse, and that helps us keep a growth perspective. Development and continuing growth is, I suppose, all about marketing, but sometimes it seems everything is a repeat of everything past. I'm a builder, and I function best when I am creating, so we will keep expanding. The motivation is simple: I'm doing this for the family."