From surviving to thriving

There’s no denying that the last five years have been devastating to our industry. The recession has affected everyone from growers to retailers to manufacturers, and the past few years have brought multiple closures, buyouts, layoffs and severe losses to businesses large and small.

But amidst the struggles, a number of horticultural companies are finding ways to push through hard times and emerge stronger than before. One of these is Sumner, Wash., manufacturer and distributor McConkey Co.

McConkey, like many businesses, was feeling the impact of the recession on top of a changing industry. The company has had to revamp its entire business model, making sweeping changes in order to survive, and here’s how it’s accomplished that.

A history of innovation
The company has a long history of innovation in the horticultural industry. It began as McLean Bulb Farms in 1932. Jack and Elaine McConkey purchased it in 1964, changed the name to J.M. McConkey & Co. and began putting emphasis on plastic containers instead of bulbs, adding a second manufacturing facility in Garden Grove, Calif., in 1969.

A true innovator, Jack introduced terra cotta-colored pots to get growers to switch from clay, developed wire hanger machines to address the hanging basket craze that began in the early ’70s and found automation equipment to help growers. In 1975, his son, Ed, joined the company, overseeing manufacturing. Continuing the innovation of leading the industry, McConkey was the first in the world to pressure form polypropylene and introduced the first plastic color bowl and other innovative containers.

In 1992 after Elaine passed away and Jack retired, Ed concentrated on sourcing products for growers all over the west and expanded to four warehouses. The company became a full-line distributor of products to the horticultural industry, with in-house manufacturing being only 40 percent of sales by 2010.

But as big-box stores became the dominant seller of plants, big growers got bigger, and many small to medium growers struggled. McConkey was finding that its customers were buying in larger quantities at lower prices and didn’t value small deliveries of local inventory.

“The business model we had been working on was no longer working, and we needed to change,” Ed says.

Success with succession
One of the initial changes Ed made was to seek outside talent. As the company struggled to find its feet, Ed convinced his daughter, Stina, to join the company. At the time, Stina was working as an engineering consultant, and Ed could see that her experience would be extremely valuable to the company moving forward. So began the third generation of managing family-owned McConkey Co., and Stina’s background in lean management was put to the test. “It was clear that we needed to do something different; the real challenge was determining what and how,” Stina says. Stina became McConkey’s chief operating officer in late 2010 and brought with her Derek Moeller, now company president. Together, they are leading the company to its recovery and renaissance.

McConkey brought innovation to the industry early, here with the Gleason port-a-veyor.

“When we joined the company back in 2010, we were wondering — what did we get ourselves into?” says Moeller, who had just sold a company he’d founded in the health care industry.

“The first major step we took was hiring world-class talent to lead the company into success. We analyzed our weaknesses and hired talent to fill the gaps. It sounds easy now, but at the time we were taking chances and breaking the rules,” Moeller says. “Ed must have been going crazy.”

But Ed knew the youthful infusion was just what the company needed.

“As my dad did for me, I wanted to stay out of the way for the next generation to do their thing. To be a source of knowledge and help the new team to learn the industry is what I can do best,” Ed says. “In an industry full of family businesses, we all too often see one generation keep tight reins on the next generation, choking progress.”

Planning strategically
As the company moved forward, it was time to begin planning for the long term.

“Stina and I decided to treat the recovery as a new start-up. We crushed old paradigms and went to the whiteboard for new ideas,” Moeller says.

The company revamped its management team to meet the challenge, through a mix of promotions and recruiting external talent for global manufacturing and sales functions. The new team then began an intense process of deciding what the company needed to become to survive.

Ed McConkey, Derek Moeller and Stina McConkey discuss possibilities over a container prototype (left to right).

“We held intensive strategic planning sessions to sort out our options and build a plan to execute the turnaround,” Moeller says. “For any company looking to reinvent itself, there are a few simple tools we used to decide the company’s forward plan.”

Business expert Michael Porter’s industry competitiveness model helped them analyze the industry, and where they could sustainably fit within it by better understanding their suppliers, customers, competitors and how they all interact. Some strength and weakness discussions helped them determine which of those sustainable business models was most actionable for them to implement as a company, with the skills and resources they had.

“Prior to the planning sessions, the company wasn’t laser focused on solving the larger financial issues. One of our options was to not change — but soon it became painfully clear that if we stayed with the status quo, we would be forced out of business. We needed to fish or cut bait,” Moeller says.

With a clearer understanding of what needed to happen, the team emerged with a unified vision and a sense of urgency. The new business model meant McConkey had to seek out areas of higher margins and learn to say no to lower margin business. Stina sums up the new business model: “We needed to focus on doing less, but doing it with mastery.”

Manufacturing Manager Doug Shelton works on an rEarth 1.6 pint round pot part design in Solidworks, a CAD design program.

The team determined that in order to succeed, McConkey needed to get back to its roots in manufacturing and design. In 2011, the company made a major investment to strengthen its in-house and outsourced capabilities in mold building, product design and manufacturing, by increasing engineering headcount six-fold. The goal was to build cost-effective new products and bring them to market quickly.

“Investing in new product development and hiring during a recession was definitely risky, but we knew that’s what needed to happen. We took a leap of faith, and our whole team came together and delivered in less than a year,” Moeller says. “We’ve had our growing pains, but looking back it was an exciting, and very necessary, process for McConkey.”

Explore new opportunities
McConkey’s existing Garden Grove, Calif., facility is perfectly nested in the plastic recycling mecca of the country. California recycles 82 percent of all the water bottles consumed in the state, and many of those bottles are recycled back into new products.

With increasing demand for high quality, clear rPET, which is made from recycled water bottles, for textiles and packaging, McConkey was able to obtain the remaining darker colored bottles at a lower cost. They use them for its new product line, rEarth.

“At full capacity, we divert over 72 million used water bottles from landfills each year,” Stina says.

The process of launching rEarth has been complicated.

“Running this type of recycled material was not easy, and we spent a year and over $1 million to develop the technology,” says Stina. “Many other manufacturers in our industry said that using rPET was impossible, that they had already tried it, and that it would never work. But our team knew it could be done and pushed through the challenges to make our idea a reality.”

Machines at McConkey’s Garden Grove plant forming rEarth 17-inch inserts.

With the recent acquisition of the horticultural division of Five Boro Plastics, a competing rPET manufacturer, McConkey is now the largest producer of horticultural rPET products in North America. And the company is aggressively expanding the new product line.

“We are on track to build 20 new molds in 24 months,” Stina says. “We have never seen this many new products at one time in the company’s history.”

Another opportunity the company chose to leverage in its recovery was its close proximity to shipping ports in Seattle and Los Angeles. By 2010, McConkey’s West Coast customers were being bombarded with low-cost products, and McConkey was quickly losing market share.

“We were being blown out of the park,” Moeller says. “We needed to adapt to changing market conditions, and fast.”

The team took another leap of faith and set up a new importing team consisting of experienced overseas importers. By leveraging McConkey’s plastics and mold-making experience, the company has been able to anticipate and avoid many of the pitfalls of manufacturing offshore.

This new area has led to many development opportunities for McConkey, enabling the creation and delivery of several new successful products such as KONG, a new line of custom carts with a focus on maximizing freight density to allow growers to fit more carts and plants per truck, and Surain, a new decorative family of hanging baskets and planters named after Ed’s late sister.

So what have the new McConkey leaders learned during this time of transition? “Over the past few years, McConkey has really come together,” Moeller says. “We learned that with a compelling vision and a skilled team, there’s no limit to how much can be achieved.

“Everyone from our shipping team to production to sales has risen to the occasion. We can celebrate great accomplishments in every facet of our business, and we are gaining momentum. Looking back, we can barely see the weakened company we once were. We are getting stronger every day and are excited to add new value for our customers.”

Kerstin P. Ouellet is president of Pen & Petal Inc., a marketing, advertising and public relations firm for the green industry. Reach her at kerstin@penandpetal.com.