The nursery industry is facing tough times

Like his father, grandfather, and great-grandfather, David Niklas feels the quickening of spring as the season ramps up at his wholesale nursery in a farming community south of Portland, Ore. Mr. Niklas and his workers busily package plants for shipment.

These days, his flowers and vegetable seedlings have fewer places to go, as the housing bubble burst and the state and national economies flatlined.

Just three years after reaching a record high of almost $1 billion in sales, Oregon's nursery industry has plummeted into an historic slump. Nurseries are laying off employees, cutting costs, and foregoing new buildings and equipment.

A few, like Niklas' Clackamas Greenhouses, have gone bankrupt.

"The family has poured money into it as we tried to restructure it and make new markets," says Niklas, who had to file bankruptcy after losing almost half his sales when his primary retailer was bought out. "Commercial lenders aren't talking to me because I'm coming out of bankruptcy. They aren't even talking to GM, so why would they talk to a little nursery?"

Across the country, the nursery and landscaping trades are also facing tough times.

"You have to eat, but you don't have to plant ornamentals," says Terry McElroy, a spokesman at the Florida Department of Agriculture.

Florida, which produces 80 percent of the houseplants grown in the United States, had about $844 million in sales of nursery stock in 2007 — the last year figures were available. California, the largest producer, reported $1.6 billion in nursery stock sales in 2007.

Both states did not have more recent figures, but officials say they had seen a decline in business. They expect the industry to slowly recover — but they also expect the belt-tightening will remain, with fewer purchases, less expansion, and fewer employees.

"We know, just by tracking sales in general, that it's down but we don't know how down," says Jennifer Nelis, spokeswoman for the Florida Nursery Growers Association. "It's the life cycle of home construction. Plants are some of the last to go in, so the industry is the last to bounce back.

"Things are starting to get a little better, but it will always lag."

In Oregon, the downturn was swift and stunning. The rich soil and mild climate of Oregon's Willamette Valley is ideal for growing plants. And for 18 years, starting in 1990, the nursery industry steadily grew, reaching $988 million in sales in 2007. The nursery commodity outpaced cattle, then ranked second, by as much as $500 million that year.

Then the industry slammed into a swarm of trouble: the halt of home and business construction, high transportation costs, financial lending woes and a depressed national economy. Sales plunged 17 percent, to $820 million, in 2008. State leaders expect a similar drop for 2009.

Back in the heady days, Niklas could count on $4 million in annual sales at his nursery in Aurora. Bankruptcy knocked him down and, just as the nursery began to recover under Chapter 12 restructuring, the nation's economic downturn landed a sucker punch.

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