Economy dominates conversation in Michigan markets

11/15/2012 04:01:00 PM
Jim Offner

Conversations about produce sales in Michigan begin and end with the economy, according to fruit and vegetable dealers there.

Vendors say it’s tough not to talk about the economy in a state that has dealt with unemployment figures near or above double figures for years.

“We’re just thankful every day there’s an opportunity to make something happen,” said Dominic Russo, a buyer, salesman and manager with Detroit-based wholesaler Rocky’s Produce.

That’s the best way to approach business in such a climate, Russo said.

Michigan’s seasonally adjusted unemployment rate in September was 9.3%, the fifth-highest in the U.S. according to the Bureau of Labor Statistics. Only five states had higher jobless rates.

Detroit’s unemployment rate was 19.6% in August. The rate reached a four-year low of 15.8% in April before ascending again. The jobless rate had reached as high as 27.8% in July 2009.

Grand Rapids’ unemployment rate was 9.4% in August, down from a peak of 16.1% in July 2009. Statewide, the unemployment rate reached its five-year peak at 14.2% in August 2009.

On top of its dearth of jobs, Detroit has been losing population for years. According to the 2010 U.S. Census, the city’s population of 713,777 was down 25% from 10 years ago and 60% lower than 1950.

“Simply put, we’re trying to sell to a shrinking population (of consumers) with fewer disposable dollars,” said Jeff Abrash, owner of Detroit wholesaler Andrews Bros. Inc. “That definitely presents challenges, but we’ve got a great customer base working hard to move more produce.”

It’s important to note, though, that the numbers are only averages, said Nate Stone, chief operating officer of Detroit-based wholesaler Ben B. Schwartz & Sons.

“It has affected the entire Detroit metropolitan area, but it’s not nearly as bad for anyone unless they are in an automobile-related industry,” Stone said.

Hard times have affected some produce marketing strategies, Stone said.

“Some of the highest high-end guys are putting things on sale that they didn’t used to ... using sizes they didn’t used to use, so there has been movement to more mainstream pricing because even people that have great jobs are still looking for value,” he said.

Responsiveness is a key to success in a challenging market, said Dominic Riggio, president of Detroit-based wholesaler Riggio Distribution Co., formerly known as Aunt Mid’s.

“We keep our eyes on the trends, and we’re always looking at new ways of packaging and running our business, but as a family-owned company, we’re pretty nimble that way,” he said.

 

Signs of a turnaround

Foodservice generally has been hit harder than other sectors, according to produce distributors.

Restaurants in Michigan have been resilient, though, said Tom LaGrasso, owner of LaGrasso Bros., a Detroit distributor that deals mainly with foodservice customers.

“On the restaurant side, it seems like it’s trending up the last three years, that we’re seeing restaurant sales increase from a produce standpoint, which is always a good thing,” LaGrasso said.

“At least looking at the last couple of years, we’re seeing an increase in the amount of produce that they’re using,” he said.

LaGrasso said he also has a wide distribution area, so his company has been somewhat insulated from Detroit-specific issues.

Price is a major driver in a tough business environment, and dealers have had to adjust, said Michael Badalament, a salesman with R.A.M. Produce Distributors in Detroit.

He said his company has made the necessary adjustments.

“I think things get to a certain price, it’ll halt, whereas, before, people would be buying,” he said.

Competition is probably keener than before, he said.

“But overall, prices are what prices are; we have to service our shippers, too,” Badalament said.

Another economic calamity was the drought that wrecked 90% of Michigan’s apple crop in 2012, said Jim Heeren, president of Grand Rapids-based Heeren Bros. Inc.

“We didn’t even open up one of our facilities,” he said.

Heeren said, though, there are signs that recovery is starting.

He said his company was able to make the most of a bad situation in one way: The company is building a new office and warehouse complex, to which it is scheduled to move in 2013.

“You can’t build any cheaper than now,” he said.



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