Drought takes toll on southeastern businesses

When Norcross, Ga.-based Pike Nursery filed for Chapter 11 bankruptcy last month, it became the first large retail business to fall victim to the Southeast’s worst drought in 100 years.

Landscape contractors, sod farmer and plant nurseries have been hardest hit by the severe lack of rainfall, which on Sept. 28 led the Georgia Environmental Protection Division (EPD) to declare Level Four drought restrictions across the northern third of the state, prohibiting most types of outdoor residential water use.

More than 14,000 people associated with Georgia’s estimated $8 billion gardening industry have lost their jobs, according to an online survey by the Georgia Urban Agriculture Council. And with forecasters predicting a dry spring, the news promises to get worse in early 2008.

Pike, which opened its first nursery in 1958 and says it’s the nation’s largest privately owned chain of garden centers, announced it had secured $11.75 million in financing to help it operate during the bankruptcy. All but two of the company’s 22 nurseries in Georgia, Alabama and North Carolina are expected to stay open, and the company plans to keep its more than 700 employees on the payroll. Unlike in past years, however, 200 extra helpers were not hired for the fall planting season.

“Pike is the first big one we’ve heard of, but day by day we are hearing of small retail garden centers cutting back and letting people go,” said Mary Kay Woodworth, executive director of the Metro Atlanta Landscape & Turf Association (MALTA). “I think come January and February, we’re going to be hearing of more companies closing their doors.”

Charmar Flowers of Athens, Ga., will become a casualty before then. The third-generation family run garden center is set to shut down operations Dec. 31 after 37 years in business. Owner Chris Butts attributed the closing to a combination of water restrictions imposed by Athens four out of the last five years, coupled with the dim prospects for rainfall over the next few months.

But Georgia isn’t the only state suffering because of the drought. Almost all the farmland in Virginia has insufficient topsoil moisture, while Kentucky’s rainfall is about 11 inches below normal -- a condition not seen in more than 75 years. In North Carolina, some communities have only a three-month water supply, while 16 South Carolina water systems have banned outdoor watering and car washing, and 22 others have asked for voluntary curbs.

The impact of the drought extends beyond the nurseries. For instance, Ron Jarvis, senior vp-pro sales, tool rental and environmental innovations for Home Depot with responsibilities for the retailer’s tool-rental business, points to a drought-induced struggle in some rental categories. “Unfortunately, in the Southeast, lawn aerators have basically stopped being rented,” he told Home Channel News. “So, that’s a big business for us over the past couple of years, and we haven’t been able to enjoy hardly any sales or revenue from that this year.”

For more on the situation in the Southeast, read  Lisa Girard's article on the topic in the Dec. 17 issue of Home Channel News. For subscription information, click here.