Existing home sales take off

From the September existing home sales report:

• Existing home sales jumped 9.4% to a seasonally adjusted annual rate of 5.57 million units from 5.09 million in August. That was the highest since July 2007.
• Single-family home sales gained 9.4%, while condo and cooperative sales rose 9.7%. By region, sales climbed across the board. They were up 4.4% in the Northeast, 9% in the South, 9.6% in the Midwest, and 13% in the West.
• The raw number of homes for sale dropped 7.5% to 3.63 million units from 3.924 million in August. Supply was down 15% from a year earlier. The months supply at current sales pace indicator of inventory dropped to 7.8 from 9.3. Single family inventory dropped to 7.6 from 9, while condo inventory fell to 11 from 12.1.
• The median price of an existing home fell 1.4% to $174,900 from $177,300 in August, down 8.5% from $191,400 a year ago.

Of course, there are logical reasons for the increase. Soon the tax credit will expire, and that combined with stabilization in the broader economy and cheap home prices drove sales to the highest level since 2007. The overall supply of used homes for sale is also steadily declining, an encouraging trend considering that new home inventory has already dropped steadily. Of course, there is some concern about the lag effect. Clearly, some buyers purchased a home this summer because of the tax credit. Unless that credit is extended or expanded, we’ll see a slight reversal in the coming couple of months. I don’t think it derails the overall recovery, but it will be noticeable.

Lean flow workshops scheduled

Another topic that I have worked into a number of presentations lately is the need for growers [when looking to reduce costs during the downturn] to implement a lean flow event at their operation. I am sure that you have seen the articles in the trade press citing various nurseries and greenhouse firms who have gone down that path, but I too can vouch for the fact that I have yet to talk to a single operation that has not benefited greatly from a lean flow analysis. In fact, most growers become lean flow disciples (of sorts) after seeing the results.

So a recent email blast by FlowVision caught my attention and I thought I share the learning opportunity with you. If you are interested in learning more about lean flow, check out these November workshop offerings by clicking here. No, I am not receiving a kick-back but I am a believer given all of the success stories I have heard. Here are some of the documented benefits:

Lead time reduction as high as 50%	Creation of working capital dollars	Floor-space reduction Greater than 50%
Productivity improvement From 20% to 50%	Less Stressful Peak Seasons	Shrink and dump reduction as high as 50%
Increased Growing Capacity as high as 25%	Defined and Predictable Processes	Highest ROI in Shortest time (4:1 to as high as 10:1)

Identify Your Employee's Hidden Talents

Today's Management Tip of the Day from Harvard Business was pretty good, so I thought I'd share:

In today's economy, finding external talent to fill your company's needs isn't always possible. Nor is it always necessary. By paying attention and asking the right questions, you will likely discover many hidden talents among your existing employees:

1. Turn a compliment into an interview. When congratulating an employee on a job well done, ask exactly what helped her succeed. By better understanding her process, you may uncover an unseen strength.
2. Ask why employees prefer certain tasks or projects. Preferences can be a view into someone's talents. An employee might enjoy a project because it involves a product she cares about or because it gave her a chance to design surveys. Knowing which will possibly uncover talents.
3. Inquire about dreams. Ask your employees what they would do if they had their career to do over again. Peoples' dreams often include an aspect of themselves they don't regularly share.

Dry for a reason

Those who have heard me speak before may recognize the following statistic from some of my recent talks: 43% of the 920 greenhouse growers in the state of Georgia are no longer in business. Pike's Nursery, who had long defined retail lawn & garden activity in the Atlanta metro market also suffered the same fate. This, of course, came in the wake of [what I thought] was one of the most severe droughts (2005-2007) the Southeast has faced in a while. Knowing all of this made the recent blurb in the newsletter for the newly branded Southeast Color Connection even more interesting:

We might have all thought they were the worst conditions possible, but according to researchers at Columbia University, the drought that gripped the Southeast from 2005 to 2007 was not unprecedented and resulted from random weather events, not global warming.

The published report (click here) examined population trends, data from weather instruments, computer models, and measurements of tree rings, concluding that the drought was “pretty normal and pretty typical by standards of what has happened in the region over the century,” said Richard Seager, a climate expert at the Lamont-Doherty Earth Observatory.

Census figures show that in Georgia alone the population rose to 9.54 million in 2007 from 6.48 million in 1990, and Douglas LeComte, a drought specialist at the Climate Prediction Center of the National Weather Service said the new report “makes sense.” Although Weather Service records suggest the 2005-07 drought was the worst in the region since the 1950s, LeComte said. “We have had worse droughts before. I am not going to criticize any governments for what they did or did not do,” he added. “But if you have more people and the same amount of water storage, you are going to increase the impact of droughts.”

Not good news for those of us hoping this drought was a freak occurrence or something that could be prevented, but it is a good reminder that times are changing…industry professionals alike should be prepared for the next drought with internal water conservation measures, drought-tolerant product offerings, and customer education literature.

"Water is the next oil"most pundits are saying today. Without a doubt, preserving and conserving our most important natural resource is imperative for green industry firms today. That's why we developed the recent webinar series on water quality, conservation, and management. We had a lot of folks join us for that series, but if you happened to miss them, you can listen online at the Ellison Chair website (click here).

90-year supply of natural gas at current consumption rate

From MIT Technology Review (click here):

Experts now believe that the country has far more natural gas at its disposal than anyone thought three or four years ago. The revised estimates are largely due to advanced drilling techniques that make it economically feasible to extract the fuel from shale. And while the Marcellus is the most recently discovered and possibly the largest shale-gas deposit (covers PA, NY, VA and OH), others are scattered throughout the country.

The U.S. consumes about 23 trillion cubic feet (TCF) of natural gas a year, according to the Department of Energy's Energy Information Agency (EIA). The Potential Gas Committee (PGC), an organization headquartered at the Colorado School of Mines, put the country's potential natural-gas resources at 1,836 TCF in a biennial assessment released in June. That's 39% higher than its estimate of two years earlier. Add to that the 238 TCF that the EIA has calculated in "proved reserves" (the gas that can be produced given existing economic conditions) and the PGC pegs the future supply at 2,074 TCF.

In other words, there is enough natural gas to supply the country for 90 years at current consumption rates. Even if we used natural gas to totally replace coal in generating electricity, domestic supplies would last for 50 years.

Natural gas offers advantages over other fossil fuels. It burns cleaner than coal, producing much less carbon dioxide. Since coal-fired power generation is responsible for a third of U.S. carbon dioxide emissions, replacing at least some of that coal with gas could significantly reduce such pollution. And using natural gas to replace gasoline and diesel fuel in vehicles could reduce the country's reliance on foreign oil.

"It doesn't matter what the exact number is," says Mark Zoback, a professor of geophysics at Stanford University. "The numbers are all so big it means we have an extremely large domestic resource that is going to play a significant role in the country's energy future."

The availability of vast natural-gas resources in the Marcellus shale and similar sediments around the United States has changed energy calculations in a fundamental way. The discovery of this large and seemingly economical new source of fossil fuel has surprised even geologists who have spent their careers studying the shale. Little wonder, then, that policy makers and politicians are just beginning to try to figure out what the discoveries mean.

Commentary on last week's market performance

October is known as a month full of market surprises. For example, the Dow fell 508 points on 10/19/87 (22 years ago today), a record drop of 22.6% for the 30-stock index. The day became known as “Black Monday.” The Dow’s previous worst percentage drop was a 12.8% loss on 10/28/29, generally considered to be the start of the Great Depression. But October 2009, brings a recovery in the stock market? Few analysts can substantiate what is causing this “jobless recovery” amidst record government spending.

Last Wednesday’s close over the arbitrary 10,000 benchmark was greeted with enthusiasm by financial markets nationwide. Time will tell how soon the index will slip back below 10,000 -- as it has done 25 times previously. The S&P 500, the more widely-used benchmark of investment managers, finished last week up +22.8% YTD as corporate earnings results from the 3rd quarter continue to impress market watchers. The significance of the mild inflation number for the country reported on Thursday was not lost on investors, showing that earnings growth has occurred without igniting inflation pressures (source: BTN Research). In the first 9 months of 2009, the total market value of all US stocks increased by $2.0 trillion, reaching $12.6 trillion on 9/30/09. Stock values fell by $7.1 trillion during 2008 (source: Wilshire).

The final results for fiscal year 2009 are in and they are not pretty. $2.1 trillion of tax receipts were not nearly enough to cover $3.5 trillion of government spending. The resulting $1.4 trillion of debt for the entire fiscal year was more than 3 times the previous record ($455 billion) set just last year (source: Treasury Department).

Lastly, the Senate hopes to merge together health care bills from 2 different committees this week, leading the way to floor debate by the full Senate on the issue just a week from today. It's going to get interesting folks!

Make sustainability a core part of your business

From today's Management Tip of the Day from the Harvard Business School:

Sustainability is here to stay. Yet too many organizations treat sustainability as a temporary compliance issue. Use these three tips to make sustainability central to your business:

1. Elevate responsibility for sustainability to the C-suite. Everyone at the top of the organization should be focused on sustainability, but ultimately, responsibility should lie with one person. Establish a Chief Sustainability Officer and fill the position with someone who has the expertise and power to make it an influential role.
2. Treat sustainability like a product or service. Incorporate the "triple bottom line" into the company lexicon. Ask people to think about economic, ecological, and social returns.
3. Establish permanent partnerships with the sustainability community. Identify the NGOs who have influence in your field. Treat them like critical customer accounts and cultivate relationships that allow you to identify win-win solutions to problems.

Water webinar series continues

The Ellison Chair in International Floriculture announces the THIRD of a 3-part webinar series that focuses on water quality, conservation, and management on October 20 at 11:00 a.m. CDT.

Dr. Don Wilkerson of Texas AgriLife Extension Service will be our next featured speaker and he will address the topic: Water Management That Makes Cents!

CLICK HERE -- or go to http://ellisonchair.tamu.edu/webinar.htm to register for the SECOND webinar of the series.

In case you missed them, CLICK HERE -- or go to http://ellisonchair.tamu.edu/webinar.htm to view the RECORDING of the first two webinars of the series, which are now available online. Dr. Paul Fisher of the University of Florida was the first speaker and he covered: What's in Your Water? Water Quality and Treatment for Pathogens and Algae. Dr. Peter Ling of Ohio State University was our second featured speaker and he addressed the topic: Knowing Exactly When to Apply Irrigation Water.

IMF World Economic Outlook available

For those who may not know, the International Monetary Fund (IMF) is an organization of 186 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.

The World Economic Outlook presents analysis and projections concerning economic developments at the global level, in major country groups (classified by region, stage of development, etc.), and in many individual countries. It focuses on major economic policy issues as well as on the analysis of economic developments and prospects. It is usually prepared twice a year, as documentation for meetings of the International Monetary and Financial Committee, and forms the main instrument of the IMF's global surveillance activities.

Click here for the executive summary and here for the full document.

Jobless claims continue to fall

WALL STREET JOURNAL -- In a positive sign for the labor market, the number of U.S. workers filing new claims for jobless benefits decreased more than economists expected last week. Initial claims for jobless benefits fell by 33,000 to 521,000 in the week ended Oct. 3, the U.S. Labor Department said in its weekly report. The last time initial claims were this low was on January 3.

The four-week moving average of new claims, which aims to smooth volatility in the data, also fell by 9,000 to 539,750 from the previous week's revised figure of 548,750. The last time the four-week moving average was this low was on January 17.

Economists at JP Morgan Chase & Co. wrote in an economic analysis last week that claims generally appear to be on a downward trend, but the pace at which they are falling is a bit sluggish. "The drop has been somewhat slow relative to other large recessions," the economists wrote last week. "Initial jobless claims have fallen 18% in the 26 weeks since they peaked. In the same time span, jobless claims fell by 23% after the 1975 recession, 33% after the 1980 recession, and 29% after the 1982 recession. Claims are usually a good predictor of employment, and the slowness of their decline could indicate a sluggish recovery in the labor market."

Mark Perry provides commentary regarding his chart below: From the early April peak of 658,750, jobless claims (four-week average) have fallen by 119,000 (-18%), and that measure of jobless claims has fallen in 20 out of the last 26 weeks. It's also interesting that in the WSJ article above, the Chase economists didn't mention the two most recent recessions of 1990-1991 and 2001. During those two recessions, jobless claims fell by a comparable amount, by -15% from the March 1991 peak and by -19% from the October 2001 peak.It’s the pace and strength of the recovery that matter now, particularly whether improvements in gross domestic product translate into increased employment. Until businesses start adding to their payrolls -- probably not until next year -- indicators tracking the consumer (retail sales) and manufacturers (durable goods orders) will likely remain unsteady. Housing sales (another consumer indicator) have been doing well this year, having gotten a boost from Uncle Sam in the form of the $8,000 federal income tax credit for new home buyers.