Diversity Leads to Success

When you walk into the reception area at Tagawa Greenhouses in Brighton, Colo., one of the first things you see is the company’s “Shared Vision” statement hanging on the wall. On that poster it says, “Tagawa Greenhouses will grow the highest quality plants and through this excellence become a recognized leader in the national market.”

The Tagawa vision statement also says, “We believe that in order to succeed, we must have controlled growth and be open to change. Change opens many doors, doors to new technology, new markets and new products.”

One of the ways the company fulfills that vision is through diversification. Randy Tagawa, the company’s chief executive officer, believes diversity not only makes the company stable today, but it also will create new business opportunities in the future.

The Tagawa family has diversified the structure of the company and its ownership/management team so Tagawa Greenhouses is positioned to fulfill that vision statement and continue to grow and be successful.

Standing on All Three Legs

Randy Tagawa likens his company to a three-legged stool where each leg is a different division of the company.

The three divisions of Tagawa Greenhouses include :

  • The Retail Ready division that sells products to the big box retailers like Home Depot and Costco.
  • The Grower Ready division that is a partnership arrangement with Ball Horticulture and is one of the largest producers of bedding plant plugs in the United States. This is also their largest division.
  • The CellFor division, a tree seedling program that clones loblolly pine trees and turns them into plugs that are then sold to nurseries in the southeast for full-scale production.

Tagawa said having the three different parts to the business allows the company to balance its business cycles, “makes us more diversified and we are able to utilize our greenhouse space more effectively. They all somewhat overlap, but the peak requirements are all different.” Tagawa says that each “leg” of the company must be a viable and profitable entity on its own, but overall, the company is much stronger when the three are combined.

Growing Forward

Tagawa Greenhouses has been in business for more than 40 years. During those four decades, the business has continually evolved and changed. No longer is the company just a grower of bedding plants for some of the nearby grocery stores. Today, the company is technologically advanced with its CellFor line, it continues to learn the ins and outs of the retail world with pay by scan for its Retail Ready Division, and it has embraced new production techniques like lean flow management.

John Williams is vice president in charge of operations and production. Bill Kluth is vice president in charge of business and technology operations including R&D and legal issues such as patents and trademarks. Both are long-time employees who have been involved in the company’s growth and expansion over the years.

Kluth is the point man for the CellFor division. CellFor “fits into our company philosophy of diversification and products,” Kluth said. CellFor is a Canadian biotech company that clones the tissue of loblolly pine trees. Tagawa Greenhouses receives that germinant, transplants it in the greenhouses and then grows it into plugs. Then they are shipped to nurseries in the southeast for finishing.

Kluth and Tagawa said CellFor allows the company to take advantage of its expertise Ñ”putting roots on product” — but it also is a step into the future where the lab meets the greenhouse. “There are a lot of similarities [with CellFor] to our plug business. It is new and exciting. It really is the forefront of growing technology,” Tagawa said.

“[CellFor] was a good fit because it was counter-cyclical work for us. It help offset some of the seasonality we have with our normal plug production,” Kluth added.

Ready for Retail

Tagawa Greenhouses got involved with pay by scan at Home Depot right from the beginning. “We are really starting to understand pay by scan and what inventory risks we want to take and the amount of margins we need to cover that risk,” Tagawa stated. “You have to work with the regional and national [Home Depot] buyers to develop the right programs” for all parties involved.

Tagawa said the relationship his company has with Depot is very much a two-way street when it comes to communication. Neither company dictates to the other, instead the conversations are about “how do we increase our sales and work together.”

But difficult issues do arise. “Currently, growers are working with Home Depot on challenges like merchandising, customer service, and the amount of inventory risk our margins allow with the expectations of Depot. ” Tagawa said. “We are [continuously] trying to understand their goals and how to make all of us successful.”

Lean and Continuous

To stay competitive in today’s changing marketplace, Tagawa Greenhouses uses lean flow manufacturing methods and continuous improvement techniques to ensure it is operating as efficiently as possible. “We hold ourselves to a higher level of excellence. We have lots of measures that allow us to track things a lot closer than we ever did before,” Williams said.

It is all about maximizing your resources and working as smart as possible. “Lean flow management is all about looking at the supply chain,” Williams remarked. “By looking at it, you begin to focus on things like, ‘Does this process make sense?’ or ‘Can I make this process more efficient?’”

Kluth said, “What is cool about it is that it focuses on individual tasks so you are going up and down the stream improving the whole process. Then it becomes less about fixing and more about improving.”

“Lean flow manufacturing is a constant process — once you start, you never stop,” Williams said. “It is our job to make sure it is going to work. We really need to make sure that we look at every detail.”

The Future

Tagawa, Kluth and Williams all agree that the company’s success is only as good as the relationships it has with its suppliers and customers. “The importance of relationships can be time consuming, but it is time well spent,” Kluth said.

“Our success depends on how we develop our relationships with our suppliers and customers for long term success,” Tagawa declared.

It’s No Longer All in the Family

Not only is Tagawa Greenhouse’s business diversified, but so is the company’s management and ownership. Last November, vice presidents John Williams and Bill Kluth were invited to become the first non-Tagawa family members to have an ownership interest in the company.

“The reason we did it is we wanted to look at bringing in key managers who will effectively help change our business in the future,” Tagawa said. “What it also did was bring a more corporate structure to the company versus a family structure, so now we have to act more according to that corporate structure.” He said this imposes a different mindset on all of the owners and managers to act and react in a more consistent manner than if it were “just your brother” or another family member making a business decision.

Kluth and Williams said they both still have their day jobs but being part of the ownership team, they now look at things from a different perspective. When asked how it felt to be made a part-owner of such a large growing operation, Kluth said, “Nothing changed and everything changed. [John and I] still have our same jobs, but being owners puts a different twist on everything.”

As a 22-year employee of the company, Williams says he has been there so long because everyone in the Tagawa family is “very respectful of the employees.” Much like their plants, the Tagawas “want to see their employees grow. That is what is important to them,” Williams said.

Kluth, who has been with the company for more than 10 years, believes that opening up its ownership to non-family members is just a natural evolution for the company as it reacts to what the market needs. “Over the years, the company has been willing to change,” and this is just one more example.

Setting Sights on Sustainability

Most growers are cognizant of the role sustainability will play in their future. Tagawa Greenhouses has targeted different sustainable product lines and technologies, like the CellFor program, that the company feels it can implement and offer to its customers.

“Technology is scrambling right now. I think there are going to be a whole bunch of great [products] coming out” that growers will be able to use, Kluth stated. The key is “to listen to our customers and work hard to meet their needs.” He adds, “You can’t help but get excited about these new technologies.”

“I think our work with the loblolly pine is a great example of sustainability,” said John Williams. The product grown in the CellFor program develops more harvestable timber without creating additional environmental problems.

Sustainability is coming, Williams declared, “and we better be ready.”