Cover Story — Up for the Challenge
As the saying goes, “Change is inevitable.” That doesn’t mean it is good or bad, it just is — inevitable.
Ken Altman faced an inevitable (and major) change this year when Target announced in 2010 that it was getting out of the live goods business. Target’s change meant change for Altman Plants — in a big way.
Altman Plants had been supplying Target with plants pretty much since the day the retailer moved to the West Coast back in the mid-1980s. Over the years, Altman increasingly provided Target with its diverse line of nursery products along with their trademark succulents and cacti up until last year when Target made up nearly one-third of the Vista, Calif.-based grower’s total business.
So what does a good grower do when faced with a challenge like this? If you’re Ken Altman, you grow your business even more — in spite of a challenging economy and a major shift in customers.
Altman said the people at Target “gave us enough advance warning” that the company was able to figure out what new types of business they could develop and what kinds of new products they could grow to replace the disappearing business.
Altman looked at some market niches that he thought were being underserved and he knew they had the capability and capacity to fulfill and went out “pounding on doors” to see who would buy them.
“We became sales driven. Our interest was in preserving as many jobs as possible,“ Altman says.
They took on different plant categories that they hadn’t grown in the past. “We also picked up some grocery business and a couple of chains that we previously hadn’t done business with.” Altman Plants also was able to increase business with existing customers like the Home Depot, Lowe’s and Wal-Mart.
By doing this (and despite losing the Target business), Altman said his company’s sales are up about 15 percent this year over last year’s totals.
Altman was very up front with all of his employees when Target made its decision. “I feel good about how we communicated with everyone. We told [all of the employees] right away what had happened and what a major impact it was going to be,” Altman says.
While it hasn’t been easy, the increase has come through a lot of hard work from everyone at the company Altman says. He is very proud of how people have embraced the change and positioned the company for even bigger growth in the coming years.
From the Backyard to the Big Box
Altman started the company along with his wife Deena in the Los Angeles area in 1975 out of a hobby that literally ran amok. The business began with the mail order of unusual cacti and succulents. They got into the wholesale business when they had excess plant material that they sold to some of the independent garden centers in the region.
Ken and Deena got into the color game in the early 1980s when they moved their business down to the San Diego area. Altman Plants developed their bedding plant business when Target expanded on the West Coast. “It was a different time back then, when a smaller grower could get into a chain,” Altman remarks. Today, that kind of a move is much more difficult.
The company’s current roster of customers reads like a Big Box “Who’s Who.” Altman’s cacti and succulents are sold nationwide at many different retailers while Altman’s flowering plants are focused mostly on the West Coast and southern states regions.
Altman says he enjoys working with the large retailers. “It’s fun to see the different [operating] cultures of each company. Some are really operationally strong, some are entrepreneurial and some are financially driven.”
“Although they are driven to provide the best deal (read pricing) for their customers, our experience is that they also are interested in sharing information to make the supply chain work and they are interested in innovation to keep their programs fresh. We enjoy the innovation and we also are geared to giving value by delivering quality plants,” Altman states.
Altman Plants is set up to meet the individual requirements of each customer. “We have separate account managers for each customer and we put firewalls between them so critical information cannot drift between them. We safeguard the data from one account to the other,” and only senior management knows the nitty gritty details of each account to ensure that all customers are treated fairly.
“We have an honest interest in all of our customers’ success and we work very hard for each one of them,” he shares. “We cultivate the relationships with the different retailers by doing what we say we are going to do. We create products to help them grow their business and perform at a high level in terms of quality and service.”
Avoiding a Crisis NOW!
Altman is very passionate about what is happening to the industry today. One of his major concerns is the state of horticultural research. “I think we are in a crisis situation in our industry when it comes to research,” Altman declares.
“We have incredible people at the universities who are doing great research.” But many of them are getting to a certain age and are retiring or moving to the private sector and the universities aren’t replacing them.
Altman sees this as a “calamity” just waiting to happen. He says growers successfully deal with other catastrophes like hurricanes and fires by investing the time and money to repair the damages, but “this calamity is not so obvious.”
“I don’t know how much the average grower realizes how their businesses are affected by what those researchers are doing,” Altman remarks. “Universities have given us techniques to grow better plants more easily, to achieve higher yields and to time their flowering responses.”
He’s afraid the “big picture stuff” that university researchers are working on will be taken for granted, and eventually lost, if growers don’t do something very soon.
“Growers are doing the right things for their own [individual] businesses but we need to band together to do the right things for the industry as a whole,” Altman says.
He recommends that growers “invest now and invest big” in research, marketing and legislation to help maintain and grow the industry’s health. “Everyone can do more than they think they can.”
When it comes to research, Altman is not only talking the talk he is walking the walk! A couple of years ago he established the Center for Applied Horticultural Research (CfAHR) on the property at the company’s headquarters in Vista (see sidebar).
The Center’s facilities and resources were established for conducting research designed to give answers to practical problems commercial growers and the green industry encounter on a daily basis.
Investing in a Recession
While Altman admits the recent housing slump, the recession and the departure of the Target business have been challenges — they have been challenges that he has learned and grown from.
He tries to capitalize on these challenges and turn them into opportunities. “We hire in a recession. We are using the economy as an opportunity to get more highly qualified people here. People that wouldn’t normally be available.” Then, as the economy continues to recover, his company is well positioned with the right manpower and brainpower.
Altman says he also is taking advantage of the slow economy to invest in land and facilities. “Land is not always available at a reasonable price in California,” Altman says. “We are buying land and we are about to put up about 400,000 to 500,000 square feet of greenhouses.
Investing in people and facilities “is what we have done during every recession and it has always left us stronger.”
Altman Plants at a Glance
Headquarters: Vista, Calif.
Number of Employees: Approximately 1,200
Growing Area: 850-900 acres with 5.5 million square feet of greenhouses
Facilities are located in San Diego and Riverside Counties in California, Salinas, Calif.; Phoenix, Ariz.; and Loxahatchee, Fla.
Meetings That Matter
According to Ken Altman, communication is one of the critical keys to his company’s success.
When Target decided to get out of the lawn and garden business last year, he immediately updated his employees about the situation and kept them up to date with how that would impact Altman Plants.
Another way Altman communicates with key personnel is during a weekly Financial meeting. This meeting usually lasts around an hour-and-a-half and involves Altman’s senior managers including Sales, Operations, and Financial. Based on financial results month-to-date, managers predict the end of month results on a range of metrics that include sales, purchasing, labor costs, distribution costs, sales costs etc. This projection is updated each week and compared to end of month actuals. This exercise keeps surprises from happening and also allows the longest time possible to adjust to any misses on the plan.
“We are very disciplined and rigorous about these meetings. We never skip them.” Altman remarks. “It’s an investment in time and people that pays off in keeping our company on track.”
Research with a Mission
Ken and Deena Altman founded the Center for Applied Horticultural Research (CfAHR) in 2008 because “it was the right thing to do.”
At the time the Center was created, Altman said, “There is no shortage of issues that need to be solved. However, the resources available are limited. The CfAHR is the Altman’s way to contribute to the solution. In the best of worlds, this will serve as a model for other nurseries to help fill the gap in resources so we can support our industry. We can all help to supply more resources.”
That statement rings even more true in 2011.
Altman recognizes, appreciates and is grateful for the research that has been and currently is being done at the university level. He believes many growers don’t understand how much easier their jobs are today thanks to university research.
But as university funding continues to get slashed and researchers retire or move on, Altman fears the industry will lose these extremely valuable resources.
That’s why the Altmans created the not-for-profit Center for Applied Horticultural Research — “with the purpose of addressing, through research, the practical issues the nursery and floriculture industry face.”
The Center’s mission statement says:
The CfAHR will:
Maintain and manage resources and facilities to carry out applied research based on the needs of growers and the horticultural industry in general.
Generate and disseminate information to growers, industry and the public in general regarding current and new techniques of interest to the horticultural industry.
Provide a place for the sharing of ideas and discussion of practices and current issues in the green industry.
Provide facilities for industry events directed to the sharing of new technologies, horticultural practices and plant material.
Altman encourages all growers to invest in research to help preserve the industry’s future. He says no investment is too small or too large. “By no way are we a substitute for a university research program,” Altman states. “But at least we are doing something.”
You can learn more about the CfAHR at its website (www.cfahr.org).