A Conversation About Skagit Horticulture’s Legacy


Skagit Horticulture greenhouse Scott Crownover

Photo: Skagit Horticulture

On Feb. 7, 2024, Skagit Horticulture, a long-time member of Greenhouse Grower’s Top 100 Growers list, announced it would be discontinuing operations as of April 7. In a statement, the company noted, “We have weathered many challenges in the past. However, current economic issues including market pressures, production costs, energy costs, freight costs, and the business climate in the State of Washington have all contributed to this decision.”

Skagit Horticulture CEO Scott Crownover was gracious enough to share more insights in a conversation with Greenhouse Grower Editor Brian Sparks. Keep reading to learn more about the details behind the decision to close Skagit Horticulture, and lessons on what other growers can do when faced with similar market pressures. (Note: while this article focuses on the legacy of Skagit Horticulture, click here to learn about how Smith Gardens as assumed ownership of some of Skagit’s operations).

Brian Sparks: Let’s start with how Skagit Horticulture came to be in this situation.

Scott Crownover: It was really a case of a thousand pin pricks at once. We had an owner who wanted to retire and clean up the many businesses that he owns. So he had to look at the risk and reward for each of those businesses. In the case of Skagit Horticulture, since we did not go the traditional banking method to get a line of credit, we were able to get away with underperforming some years because we did not have to worry about a bank pulling our funding. But we were also being measured against other businesses in this industry, which put us at a higher risk.

Presenting Greenhouse Grower’s 2024 Top 100 Growers: #25-1

Another factor was that this organization was run for many years without a business-minded management team. That’s not a knock against any of those individuals, but they were growers. When you run a business, you tend to promote people because they do well, but sometimes you can promote them into positions they’re not able to handle. I think that happens a lot in our industry.

Another big factor was the business climate here in Washington state. We have the highest minimum wage in the country, and our state also decided that a 40-hour week is the maximum work week without paying overtime. That’s a challenge for staffing, and we had seasonal employees needing to earn a higher wage because they aren’t able to work 12 months a year.

When you add up all of those issues, as well as things that all of us in the industry face such as insurance rates and raw material rates, it meant the risk-reward factor that our ownership was looking at was too much to overcome.

Sparks: Was there a reason you opted to not delay the closure until the spring season was over?

Crownover: When we looked at the cash outlay that it can take to pull off a spring growing season, we also had to balance the costs we were likely to incur to do so. We determined our current inventory was too low. We sell to both independent garden centers (IGCs) and box stores, and the communication with them was very clear about how they would be able to move forward. The IGC business was the bigger of the two, and we had several local growers reach out to help fill that void. But when you look at our geographic area, there’s no way for it all to be made up. We expect there will be some unmet demand in the IGC marketplace and possibly with the box store business, but we did communicate with them as soon as we had made our decision and did our best to cover their needs.

Sparks: Prior to the company making the decision to close, what were the steps you took?

Crownover: When I got here in fall of 2018 and started to look at the finances of the company, it became evident we were too focused on growing a lot of product and hoping the sales team could sell it. The amount of inventory and dump was out of control.

We first started looking at the business units that were so far in the red that there was no way to save it. Those were the first divisions that we cut. Then we looked at the units making the most money but still needing help. For instance, there were too many cases where we were trying to be a full-service vendor to our customers, even if some programs weren’t making any money. That led to decisions such as eliminating our sedum program. We also stopped producing liners for other growers. We were producing hundreds of varieties that we didn’t have in our own mix, and you’d have to buy a thousand cuttings minimum, even though we may have had an order for a hundred. If 70% of the varieties that you’re producing in a liner program you don’t use yourself, they become scrap unless you’re able to sell all of them.

During the ups and downs of the COVID-19 years, we thought our retail-ready business would have been booming. But it was flat, if not down. The box store business also became very conservative. They saw the tremendous amount of dump a couple of years ago and wanted to reduce their garden center footprint by reducing available product in the store.

When the box stores started cutting orders, the amount of product we left sitting on the ground was tremendous. What made things worse was that during the pandemic, we all ordered plastics 12 to 18 months out. We have enough plastic right now to last several years.

Sparks: How have you taken care of your employees during this transition? 

Crownover: That was the most important thing for me. We have a lot of very good, long-tenured people here. We are honest and upfront with our team right off the bat. We immediately enlisted the services of local unemployment agencies. All of our employees were paid in full. This was not a bankruptcy, and we certainly have every intention of paying our vendors in full as well.

I also immediately started getting the word out there to other growers who had roles to fill. We’re fortunate to be located in a major agricultural region, so we had a lot of people reach out and tell us about any openings they had. And for some of our people, we had a personal conversation about whether this industry was really what they wanted to do.

We also had a lot of help from people like Todd Downing at BEST Human Capital & Advisory Group, who reached out immediately to help. There’s a handful of people from our team who are not going to land something right away. But overall, I’m really proud of how we worked hard to find positions for people.

Sparks: Let’s talk about the legacy of Skagit Horticulture and what you’re most proud of as an organization.

Crownover: I think the one thing that I’m most proud of is our team of managers that came together and treated this place like it was their own. We didn’t have an owner that was looking over our shoulder every day telling us what to do. We developed that together as a team, and we were able to plan strategically based on what ownership wanted. This helped our team take accountability. I started here in September 2018, and that following Mother’s Day we missed 15% of our orders. I had customers calling me absolutely livid. That was the beginning of us figuring out how we would never let that happen again. Last year, we were able to give our team days off the Saturday and Sunday before Mother’s Day because we had committed to filling all orders on time. It took every one of us to make it work.

I think the other piece that I’m very proud of is our systems. So many greenhouses buy an enterprise resource planning (ERP) system, and the first thing they do is change it. When we launched our ERP system, we committed to using it how it came out of the box. We molded our business to the system, and it has made our life so much easier.

Sparks: Is there anything your team could have done differently?

Crownover: We are a nice industry, and we generally get along with our competitors. But sometimes this makes us too complacent and reluctant to make tough decisions, especially when it comes to staffing. I read an article recently that asked a group of retired CEOs what they regretted the most. Many of them said they wished they would have moved people out of the company sooner. It wasn’t about being cruel; it was about doing what’s best for that person and the company. In too many cases, we let people flounder for a long time, when we should just be moving on.

Sparks: Do you have any lessons or insights for other growers that you can share?

Crownover:

  • We have to invest in ourselves because there aren’t enough young people coming out of university horticulture programs. AmericanHort has the HRI Leadership Academy, and that needs to continue to grow. The only way we can improve this industry is to do it ourselves.
  • Once you identify those people on your team that can be successful, you need to invest in them and keep them engaged.
  • Raise your prices until your customer is just about to walk away. Don’t follow the rest of the industry on pricing.
  • We have so much data available to us right now, and we need to use it. When we did our strategic planning here, it was critical that it was backed up by data. It’s not easy, but you should have somebody on your staff that can do it.
  • Make strategic planning a priority. It helps guide you to where you’re going.
  • There is a shortage of growers, but we need to remember that not every job involves working in the greenhouse. We have accountants, supply chain people, etc. Those skills are transferrable from one industry to another. People need to know that our industry is not just about the plants; there are a lot of other jobs that are available to good, qualified people.



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