Inflation, labor shortages, and the elevated production and supply chain costs are some of the key issues the green industry in the US is dealing with, and the year to come is expected to be a bumpy ride too as a recession is forecast. In order to get a better insight into the state of the industry, the association for the green industry, AmericanHort, recently published the "2022 State of The Industry White Paper".
This 17-paged paper provides an economic review of 2022, discussing:
- The likelihood of a recession
- Production and supply chain costs
- The housing market and what it means for our industry
- The political climate and anticipated impact of the mid-term election results—particularly on key issues for the green industry.
The report also includes a glimpse of what's happening with companies like Scotts Miracle Gro, Weber Inc., and Sherwin Williams as indicators business owners might watch for while planning for 2023.
Click here to download the (free) white paper, and below are some takeaways from the report highlighted.
The paper shows that the US is forecast to enter a recession in the coming 12 months. In turn, abundant economic headwinds are expected to create significant risks for the economy and the green industry in the next year. However, the strong consumer spending, low unemployment, improving supply chains, and decent housing starts may mitigate big problems for the industry after next summer.
US consumer inflation - which accelerated to a new four-decade high in September, eased a bit in October, but remained high - is at the core of the industry's supply chain cost issues. Energy cost drive heating, fertilizer, transportation, and plastic costs, among others. "Labor is obviously a key production input across our industry and significantly affects trucking and many other supply-chain services," as stated in the paper. A slowing economy might help labor on the margins, but our growing dependence on seasonal visa workers will keep labor costs relatively high. A resolution of the war in Ukraine would start to help energy prices come down, but damage to critical energy infrastructure in Europe may delay any relief. Backorders for key inputs like containers and media seem to be catching up as we move into 2023. There are few signs of near-term supply chain cost relief but may see significant consumer demand destruction from an economic slowdown. Managing inventory, cash, and debt will be paramount moving through next season.
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