Wednesday, June 17, 2009

NAHSA meeting upbeat

Taking a moment to catch my breath before my next flight, I was reflecting on comments made during last week's meeting of the North American Horticultural Suppliers Association, otherwise known as NAHSA. This group of manufacturers and distributors is always a delight to interact with and, as usual, I ended up learning a great deal from networking with the group and the other invited speakers. Here are a few tidbits from the meeting:

  1. Our economy will recover (because it always has) and because Americans work harder than any other developed country in the world.

  2. "It ain't what we know that hurts us; it's what we know that ain't so!"

  3. Humans have a special bond with plants (and animals) that speaks well for the future of our industry.

  4. Over the next six years, the largest transfer of wealth in history will take place as the Great Depression generation will be leaving (literally) a HUGE sum of retirement savings and assets. They were focused on the lowest rung of Maslow's hierarchy of needs -- that is, survival -- and they spend considerable less than other demographic segments. As this transfer of wealth takes place, subsequent generations that are more oriented towards Maslow's higher order of needs (self esteem / self actualization -- often referred to as "dream space") will be depending on our industry to fulfill those needs (see #3 above). "We own the dream space!"

  5. Weather influences us as much -- and sometimes more -- than the economy does, in the short run. For the past 12 years, the correlation between U.S. same-store sales and national temperatures was 81.9 percent. Weather variability has an impact on economic activity in every state (GSP) and in every sector. Aggregated over all sectors and states using 70 years of historical weather data, this is estimated to be approximately 3.6 percent of annual GDP, or $260 billion (in 2000 dollars). Agriculture — which has been the sector most studied for weather impacts on specific production for specific crops — is less able to undertake temporal or geographic substitution within a year and thus is one of the most sensitive sectors at 12.1% sensitivity.

  6. Downturns always create opportunities. Invest in stocks related to pharmaceuticals, energy, banking (yes, banking), construction equipment (Caterpillar), and delivery services (FedEx).

  7. You can create, buy, and change in troughs better than at peaks. It's all about your value proposition -- why should you buy from me? Shout your differentiation from the rooftop!

  8. The long-term credit market is loosening up, albeit slowly. The Fed is expected to hold the fed funds rate in its current 0 to 1/4% range for the next year.

  9. "It is always the adventurers who do great things, not the sovereigns of great empires." Charles de Montesquieu

  10. Fear keeps us average.
See what I mean about it being a great meeting! If you missed it, you really missed a good one. Here's a silver lining though -- you can listen to my recorded sessions by clicking here. Wish you could have heard the other guys though!


Kurt said...

You hit the high points of the meeting on the head....but there was so much more. Thank you for being there!

Anonymous said...

I have some comments:

1. This is only blind optimism until they give some economic fundamentals to back up their assertion. Are they unaware that manipulation abounds with those who create money and credit? How will an information/consumer society recover (Hint: other countries have to be willing to support us)?
4. How is this "Great Depression" generation going to get around the inheritance tax and other grabs by the government? Furthermore, that generation's wealth has been severely eroded by inflation/ dollar devaluation. In addition, this generation would completely squander their inheritance in short order.
6. If we invest in pharmaceuticals we are unwittingly hoping that our society stays sick. If we're healthy our investments will not give us a return. This suggestion is very disingenuous. Also, why invest in banks? Don't people know that banks thrive off of the interest we pay on money that has been created out of nothing!
10. Spoken like a true salesman! Let's keep consuming instead of saving.

jrm said...

Replying to Anon:
1) One person's "blind optimism" is another person's positive attitude. Historical data cannot guarantee future performance, but its the best thing we have until someone starts mass-producing crystal balls. And data is abundant out there showing Americans' hours worked and productivity per hour versus other industrialized nations. Also, the comment was "Our economy will recover...", not that it would come back as an information/consumer society looking identical to what it was 5 or 6 years ago. Things change, cycles happen.
4) Even after taxes and such, we are still talking about a huge amount of wealth being transferred. And if by "squander", you mean spend, then I think you are agreeing with the point made in the original post.
6) Not hoping our society stays sick, but investing in R&D to find cures and preventions. As we saw recently with the H1N1 flu virus, diseases are constantly changing/mutating so there will always be a need to change with them. As for banks, of course one of their streams of income is interest. That's what makes them a bank. If its the money being "created out of nothing" that bothers you (and I admit, it bothers me too), then the banks are no more to blame than the person/company that receives the loan and then passes the money along through purchases or paying employees. The banks aren't the ones running the printing presses.
10) Because of the current economic conditions, there are some opportunities out there. I'm guessing the context of this quote was more about seizing on opportunities to expand markets, develop new products/services, etc., not just to go out and spend, spend, spend.

Anonymous said...

William James:
The greatest discovery of our generation is that human beings can alter their lives by altering their attitudes of mind. As you think, so shall you be.

Anonymous said...

1. Recover: to bring back to normal condition or position. What is this country's normal position? Before last September it was to consume instead of save. After September the public held onto its money and we are now seeing some of that money being spent (I believe on smaller ticket items and DIY). Also, if you're following cyclical history I hope it is on bubbles because our economy is based on manipulation and not fundamentals.
4. I don't believe your assertion that there's a huge amount of wealth being transferred. Are you talking depleted investments? Devalued cash? Businesses? I agree that spending (debt) is what drives our economy and I'm declaring that it isn't right. Debt is slavery.
6. Are you kidding with R&D? Pharmaceuticals originally imitated the healing properties of plants. You can't patent a plant. If it can be synthesized it can be patented and sold. If people aren't sick or choose herbal/natural remedies then the drug makers can't collect any money. It's all about money. As for the banks: they are to blame because what they are doing is fraudulent (ever heard of counterfeitting?). I believe we need a system of credit to run our economy but I believe that banks are inherently unethical (ever heard of fractional reserve banking?). The banks don't run the printing press because they keep accounting entries.

Anonymous said...

As for William James: has he ever read Alice in Wonderland or watched the movies Network or The Matrix? Reality looks strange to many people.

jrm said...

1) I would argue that the "normal position" of the economy is 3-4% annual GDP growth and 4-5% unemployment, amongst other measures. Our type of Economy has evolved several times over the last 200 or so years, Agrarian, Industrial, etc. The most recent was a more service-based economy with less manufacturing and with growth mainly driven by consumer spending. I would not call that normal, just the latest iteration in a series of changing economies.
Yes, the government does try it's best to manipulate the economy. But the cycles still cycle. The intervention may accelerate or extend certain phases of the cycle or may delay another phase from starting. And maybe most of the bubbles and troughs are a direct result of the intervention. Eventually, though, the cycle cycles and we realize there are things we just can't control.
4)Debt is a tool. Agricultural businesses are a prime example of this. How is this type of business expected to get it's crop planted and pay for the inputs and labor needed to produce that crop when it won't see a dime of income for 6, 8 or even 10 months or more? Now, I won't argue with you that consumer and business debt got out of hand in recent years, and too much debt is not sustainable (which has me worried about our current government situation). But there are times when some debt is necessary, both for economic growth to occur and for living standards to increase.
6) First off, you can patent a plant. I've paid royalties on many. But you are right, it is about the money. Even if there were an herbal/natural remedy to every ailment, the sheer magnitude of the growing operation needed to raise that many plants to produce the current volume of pharaceuticals is unimaginable. So synthesized chemical combinations are most likely cheaper, easier to control, as well as easier to patent.
What exactly are banks doing that is fraudulent? Fractional Reserve banking has gone on for hundreds of years. Maybe the level of those reserves a bank must hold should be brought back up, but I don't see what's unethical about it. Interest isn't an entitlement, it's what the bank pays you for the ability to use your money you deposit with them. If they couldn't use your money, banks would be nothing more than big safe deposit boxes and would probably charge you for keeping your money safe.