Bloom or bust: One industry’s struggle with coronavirus
Challenges for florists similar to other small businesses nationwide
The new coronavirus had just barely arrived in Sedgwick County, home to Wichita, the largest city in Kansas. Only one case was reported as of last week. But florist Jennifer Barnard felt its effects all the same.
The lifeblood of the flower industry dried up as event after event evaporated from Barnard’s calendar. State governments shrunk the number of people allowed to congregate. Schools canceled proms. Couples delayed their weddings. Businesses with regular flower orders shuttered.
Supply chain issues plagued Barnard as well. Her flowers come from all over the world, from the Netherlands to Ecuador to California. But breaks in the chain mean flowers are no longer arriving.
The flower industry is only one of many across the country facing daunting prospects as the American and world economies stagnate because of the fallout from the coronavirus pandemic. Even in areas that haven’t seen many cases of COVID-19, measures to curtail the virus taken in other places touch communities of every size and geography.
The floral industry’s obstacles aren’t identical to other struggling sectors such as food service, entertainment and tourism. But small businesses nationwide face similar questions as they grapple with decimated revenue and fixed expenses. Many will look to aid packages and stimulus bills from the federal government as a lifeline to carry them through the economic downturn.
But they are uncertain whether they will get help, whether it will be enough and whether it will arrive in time. White House and Senate leaders agreed on a coronavirus stimulus package Wednesday, but how much it will make a difference — and how quickly — are still question marks.
Half of working Americans own or are employed by small businesses, according to Karen Gordon Mills, a former administrator of the Small Business Administration under President Barack Obama.
She said that on average, small businesses have 26 days of cash on hand. The first round of federal emergency coronavirus funding will allow the SBA to make as much as $7 billion available in loans to small businesses. Since the loans don’t go through banks, they can be granted as quickly as the SBA can scale up.
The current relief package includes over $350 billion in loans via banks, non-bank lenders and potentially fintech companies like Square and PayPal. Here, the challenge is speed.
“If we have a very long approval process that has lots of criteria, then we are not going to get the money out in time for the businesses to be able to retain their employees,” said Mills, now a senior fellow at Harvard Business School. “This is, frankly, where I’m worried.”
Chris Drummond, president of the Society of American Florists, said the flower industry already operates on thin margins.
[Podcast: How a small business in Kansas is affected by the pandemic.]
“It’s not like we have a huge reserve like some of these tech companies or pharmaceuticals,” he said. “It’s not like workers at flower shops can take off for four weeks.”
The pandemic and the accompanying economic woes came at a particularly bad time for the flower industry. Spring is the busiest time of year for florists, and they depend on the revenue coming in from Valentine’s Day, Easter, weddings and especially Mother’s Day to cushion the slower summer months that follow.
With many springtime events canceled or indefinitely postponed, Barnard knew that to keep her business afloat, tough choices were coming.
Feeling the pain
Barnard runs the family-owned Tillie’s Flower Shop with her sister and semi-retired father. The business has been in her family for four generations and is going on its 144th year.
She said that even though the virus hadn’t hit Kansas hard, “we’re dealing with the same drop in sales as our friends in Seattle.”
Their sales were down 50 percent by March 16. Two days later, sales dropped 10 percent more.
Kansas was the first state to close schools for the rest of the year. That meant events like the school fundraiser Tillie’s planned on servicing were canceled.
The Centers for Disease Control and Prevention has recommended that health care and long-term care facilities limit visitors. Tillie’s sits across the street from a hospital that Barnard said was in “semi-lockdown.” The hospital still allowed deliveries as of last week, but Tillie’s drivers were questioned on the way in. And the slightest cough sent them away.
The drop in demand wasn’t Barnard’s only problem. Last Thursday, she learned that shipments of tulips from the Netherlands wouldn’t arrive anymore, and on Friday, that flowers wouldn’t be coming in from California, either.
Tillie’s buys roses directly from Ecuador and Colombia, but the rest of its products —including gerbera daisies, lilies, irises and gladiolas — come from the Golden State. This week, Tillie’s will get its last delivery truck, and what follows is a question mark.
Barnard is struggling to plan for the weeks ahead. Normally, she’ll bring in 40 or 50 Easter lily plants to sell for Easter, just three weeks away.
Her wholesaler wanted her order last week, so she hedged her bets and cut it in half. But she doesn’t even know if Tillie’s will be open by Easter.
Tillie’s sources many of its flowers from a distributor across town. Valley Floral manager Carlos Ramos has noticed a hit in sales, but for now, he’s optimistic.
He said farmers would have made the decision to plant at least eight weeks ago, so those flowers are still in the supply chain.
The floral industry took a big hit during the financial crisis of 2008. Ramos said that made everyone more efficient and cautious, so he believes they’re more prepared to face this downturn. He called Mother’s Day a “cornerstone” of industry and said he is hopeful about potential sales for the holiday.
“Somebody’s going to be thinking about mom, especially in this time of crisis,” he said.
Ramos worries more about the ramifications of flushing the economy with cash and called it “the wrong move.” He pointed to the stock market drop after the Federal Reserve cut interest rates and suggested that stimulus bills may blow up the country’s deficit.
“Once we stabilize this coronavirus, then we can start making economic decisions,” he said. Instead of encouraging businesses to take on more liability in the form of loans, he said the focus should be on supporting the health care system.
“We’re making a lot of changes, but we don’t even know what it looks like yet,” he said.
While Ramos is paying attention to how the government handles the crisis, he isn’t getting wrapped up in politics.
“I love both sides,” he said. “Both sides buy flowers.”
Plenty to sell, no demand
Wholesalers get the greens and foliage that fill out a bouquet from a business like FernTrust, an agricultural cooperative in Volusia County, Florida.
About 80 percent of floral foliage consumed around the world is produced in two counties in central Florida, according to David Register, executive vice president of the cooperative. He said it’s a big part of the local economy.
His business was fairly stable through Friday. Since then, Register said it “fell off a cliff.” Events were canceled and businesses closed, and he went from selling $30,000 of product daily to a tenth of that.
Other industries are cutting back and that could affect his business as well. Typically, most retail florists and wholesalers around the country will receive truck deliveries once or twice a week, but the trucking industry has started reducing its operations, he said, causing a ripple effect.
Cargo planes don’t rely on passengers. But planes that once made up to 10 trips a day to carry flowers from South America to Miami are mostly idle. Christine Boldt, executive vice president of the Association of Floral Importers of Florida, said perhaps one cargo plane is making that trip now because of decreased demand.
“We have plenty of flowers in Miami; the problem is, there is no demand,” Boldt said.
Flowers from Europe typically arrive in the cargo holds of passenger planes. Since the Trump administration’s ban on travel from Europe to the U.S. took effect, imports of European flowers have all but disappeared. Travel bans established by European countries pose the same challenge to American exporters. Register said FernTrust hasn’t shipped anything to Europe since the coronavirus panic took hold.
Register hopes demand shoots back up when postponed events are rescheduled. He said much of the industry has tried to decrease employees’ hours in an effort to keep workers employed so they have at least some money coming in, but layoffs are inevitable.
“We’ve already had to cut way back on hours,” he said. “When your business drops by 70 or 80 percent, you can’t have a hundred people standing around doing nothing.”
Register is hoping for grace periods on payments like taxes and mortgage. He’s nervous about any mandate that small businesses provide paid leave to employees — even with the promise of eventual reimbursement from the government.
“I’m sorry, but I’ve just seen the way the government worked in the past, and I just don’t trust it’s going to happen the way they say,” he said.
This isn’t the first blow to the American flower industry. The Andean Trade Preference Act — enacted in 1991 to reduce the cultivation of drug crops in countries such as Colombia and Ecuador — reduced tariffs on imports of thousands of products, including cut flowers. Cheap South American flowers flooded the American market, and subsequent trade deals mean that today, 80 percent of flowers sold in the U.S. are imported.
F.J. Trzuskowski, vice president of sales at Continental Floral Greens, a U.S. grower with operations in three states, doesn’t begrudge South American farmers their success in the American market. He said cut flowers are a critical part of the Ecuadorian and Colombian economies, and growers in those countries bring the same passion that he does to the industry. But he wants the federal government to also consider local farmers and businesses.
“When you’re helping other countries, which I think is great, how’s it affecting the guys at home?” he said. “If you’re going to do it for them, do something for us. … I just want to get a fair shake.”
The events of the past week have already devastated at least one business that works exclusively with domestically grown flowers. Eufloria Flowers in Central California is a household name in the industry — Barnard said the company is well-known for its uniquely beautiful roses. Eufloria posted to its Facebook page last week that it was going out of business. Barnard, Register and Trzuskowski had all heard the news.
“Here is this little guy, Eufloria, sticking on and growing roses, and they were just gorgeous,” Trzuskowski said. He said their quality made it worth paying double or even triple the price of a Colombian rose.
“It’s very unfortunate,” he said.
Barnard said Eufloria’s closing was a blow to morale.
“When you see a longstanding business that’s been through so many different crises … it’s pretty hard,” she said.
Maritza Spitler, who does marketing for Eufloria, said the roses are cultivated to grow tall stems. If they aren’t cut every day, eventually they won’t bud properly.
When three months’ worth of orders were canceled, Eufloria faced hard decisions.
“If you don’t cut these millions and millions of plants that we have in the greenhouses, there’s nothing that you can do with them three months later,” Spitler said. “We can’t weather paying labor for three months.”
Eufloria’s owner, Andy Koch, comes from a long line of flower cultivators — he is of Danish ancestry, and his family has been in the flower business for 200 years.
Koch said Eufloria had already been making adjustments. He invested $1 million in new technologies and workflow in order to remain profitable after changes to California labor laws required raising the hourly minimum wage from $10 to $15 and shortening the agricultural work week from 60 to 40 hours.
“I just saw how difficult it was going to be to keep this business afloat,” he said.
As of Friday, Eufloria had changed course, announcing that due to the outpouring of encouragement it received from the florist community, it would try to push through this uncertain time. Although it had laid off its whole staff, some had come back and volunteered to help care for the roses.
The business is banking on some form of emergency relief, but next steps are unclear. Spitler said Eufloria might consider applying for a loan from the SBA or taking out a line of credit from the bank, but the unknowns around the demand for high-end flowers after the coronavirus crisis has passed make it difficult to choose a path.
Koch will hold out, for now.
“I looked at my employees and … there’s so much passion for what they do. They’ve invested their lives here,” he said. “I’m going to do whatever I can to dog-paddle backwards up this river that’s coming at me.”
A mountain of bouquets
Last week, Barnard shared pictures on Facebook of the Royal FloraHolland flower auction in the Netherlands, one of the largest in the world and the heart of the Dutch flower industry. A mountain of bouquets are strewn on the pavement between rows of half-empty metal shelves.
The caption reads that while some flowers will be donated to local hospitals, over 8,000 trolleys of plants and flowers had to be discarded.
“It will not be the virus who will destroy our sector but the economic consequences,” the caption read.
The man who posted the photos is Jordi Iglesias, a wholesaler who exports flowers mainly to southern Europe. Demand for flowers, he said, has completely disappeared due to the course of action various European countries implemented to counteract the spread of coronavirus. His business, staffed by himself, his wife, his son and three workers, has been closed since Monday.
“The big problem for us is that we cannot do anything because Italy is closed, Spain is closed, France is locked down last week,” Iglesias said.
He has some colleagues who export flowers to the U.S., but he suspects they won’t be able to get their product out of the country since so many passenger planes are grounded.
The Dutch government has implemented measures to protect its economy from the coronavirus outbreak. Any company that expects to lose at least 20 percent of its revenue can apply for an allowance of up to 90 percent of its payroll bill over three months, on the condition that it doesn’t lay off any employees during that period. Iglesias has sent his employees home but is paying their full salaries with the help of the government assistance.
For all the businesses involved in U.S. horticulture, avoiding layoffs seems much less likely. Decisions about reducing Tillie’s 34-person of staff lay heavily on Barnard’s mind.
But when sales dropped 50 percent, something had to give.
“More than anything, we’re worried about our staff and the jobs. We’re a family,” she said last week.
And by Monday, she knew it was time to take those difficult steps.
“Today, we are determining layoffs, something my father and myself have never had to face during our lifetimes of running this business,” she said in an email.
Tillie’s was still making deliveries on Tuesday, but closed its retail outlets.
It has let go over two-thirds of its staff and reduced the hours of the remaining employees. Many who had other means of support volunteered themselves for the layoff in order to ensure Tillie’s could keep on some of their more vulnerable colleagues, including two single moms who are still working part-time.
Barnard believes the company will survive. But she also wonders whether consumers will learn to do without flowers. She’s hopeful that the surge of postponed events when all of this is over will buoy business. Social distancing also offers new, unforeseen opportunities for everyone stuck at home.
“It’s a great time to become a plant parent,” she said.
Trzuskowski is also facing uncertainty. His European clients all canceled their orders by early March. His business already let go of its part-time employees and asked some of the 138 full-timers to take time off.
“We’re going to have to start laying some people off … unless something radically changes,” he said.
The flower business doesn’t have the horsepower of the automotive or airline industries, but all together, flowers still enable a lot of Americans to make a living.
“We support 138 families,” Trzuskowski said, adding that other growers support even 800. “If you start pulling us all together, it’s not a small industry.”
Trzuskowski believes flowers will survive the coronavirus crisis, but the landscape will be different. In the future, people will be more cautious and hesitant to cut prices, he said. He also called the pandemic a reminder of the weaknesses in our economy.
“We’ve got to watch our dependency on foreign countries. We’re dependent on China for drugs … that’s a little scary,” he said.
Despite the uncertainty, Trzuskowski said he feels lucky to do work that brings people joy.
“Our story’s a good one,” he said. “Flowers do a lot for people’s soul. … We actually do something that’s beautiful.”