Supply chain realities

The global supply chain has been affected, and perhaps changed by the COVID-19 pandemic. The greenhouse industry has not been immune to those changes, particularly on the greenhouse structure side, where many essential raw materials are either rising in prices or needed elsewhere.

To understand how greenhouse operations looking to expand or upgrade their facilities should approach business during these economic conditions, Greenhouse Management spoke to Atlas Manufacturing sales manager Bill Mathis for his insight.

Greenhouse Management: We’ve seen the supply chain affected in other markets and in other industries. Has it been affected in the greenhouse sector as well, at least from your point of view on the structures side?

Bill Mathis: Yes. Absolutely. We have not been exempt from the supply chain problems that have been in other industries. Even though it is getting better it seems, there have been some real challenges over the last year. And it’s been well documented — all of the different reasons and variables that have contributed to these supply chain problems. But there’s definitely a backlog. Lead times have grown tremendously. We’re thankful that we’re seeing some of those lead times brought down to a more tolerable level.

GM: In the greenhouse sector, what has caused some of those issues? Is it shipping concerns or something else?

BM: I think, like in other industries, it’s a combination of things. It’s a combination of some COVID-related backlogs that have still carried over. There’s a lack of help — everybody is struggling to find enough workers, some of that COVID related and some of it not. I think the shipping container issues we’ve seen coming out of Asia and Europe and other places, that’s contributed to it all as well. In the case of say polycarbonate, a lot of the polycarbonate material was diverted away from the ag market into the personal protective [equipment] market back in the peak of COVID with all of the face shields and shields in front of cash registers at stores. A lot of that was polycarbonate material, so material was just diverted away from our industry into more pressing areas. That still contributes to some degree in what we are seeing.

But thankfully, we are seeing lead times get back closer to where they were. What we’ve tried to preach is that there’s no substitute for proper prior planning, a lot of these greenhouse projects take a good bit of time to get off the ground. A lot of preliminary work has to be done. So if work is scheduled properly, these lead times would not play as much of a role if, while the engineering, the site prep, the utilities and all of these other things are being done, these materials can be on order and work their way through the system to the job site so that there are no hold-ups at the end.

GM: What has demand for new greenhouses or greenhouse upgrades been like?

BM: We’ve seen demand sustain and it’s really a head scratcher. The price of steel has gone through the roof, as have some other components. Anything related to steel or aluminum prices has just gone sky high. But the demand has stayed where it was and, if anything, it’s increased. And it’s across all market segments. From what we are seeing, the ornamental horticulture producer is looking to expand square footage. The educational greenhouse market has a lot of interest and a lot of funding available to help that market grow as well. Of course, the cannabis market continues to grow. Hydroponic vegetables are the same way.

GM: For you guys, with lead times being what they are and the other supply chain pressures, what are you advising growers to do if they want to upgrade or build new structures? What does the booking process look like right now?

BM: When these projects first start, it typically starts with a casual conversation and a quote. But once that conversation becomes serious, that’s when the conversation about the logistical issues has to take place and they are made aware of what potential lead times they are looking at. Depending on the structure, that varies. But we have that conversation up front. So if it’s 12-16 weeks up front before we can have columns and greenhouse frames at the job site, then we are up front about that. I think for us, communication has been part of the key for our success so at the end of the project, no one is confused or upset.

GM: Are you expecting things to get back to normal in some way in the relatively near future?

BM: I am not sure what the ‘new normal’ will look like. I would be surprised to see things go back to the way they were before the pandemic as far as pricing and lead time goes. It’s just sort of a different world we live in now. I do expect relief in pricing and lead times from the steel industry. These prices will not stay where they are because it’s not a sustainable model. We’ll see these prices decrease and we’ve already started to see them level off. From December of 2020 up until now, there’s been a pretty significant increase in steel prices monthly. Just every month. Now, we’ve gone a month without an increase and there are rumors out there that the price may even drop a few percent. Those are good signs. And I think with any supply and demand, you can price yourself out of business. There’s also some political things at play, with some of the tariffs being eased off on some of the European imports of steel. I think that’s going to help with the supply.