Greenhouse construction market continues to experience a slowdown

The greenhouse construction market continues to experience a slowdown. Dutch, Canadian, Spanish builders – all are experiencing the same. Michael Lee from Planti, producer, and distributor of greenhouse glass, so far sees no uptake in newbuild demands in the upcoming months, as investors are reluctant to support the greenhouse industry. "Typically, projects are signed in winter, which keeps our production going until August. This year we see the lull is noticeable. We're still working on 5 active projects, but that's 50% down from what it was two years ago", he says.

Historical low in market activity
The slowdown can be attributed to several factors. Investors, responsible for a big part of the North American market development, are hesitant to make quick decisions, as the results of their projects have not been satisfying over the last years. And even if they continue to invest in the industry, it takes longer than it would be dealing with a grower itself, many builders have learned. "Unlike growers who traditionally had everything in place—money, location, permits—today's investors take longer, often waiting for necessary infrastructure like gas and water to be ready", Michael explains. "A grower starts an expansion when it's already there, an investor starts with an idea."

Additionally, some governments are reevaluating their support for the greenhouse business, firstly seeing the long-term effects of the industry on a community, nature, and its resources. Ontario officials for example noted that greenhouses are putting pressure on drainage pipelines, prompting discussions about increasing taxes on growers. "Eventually it's often a money business", says Michael "But it for sure became more difficult than several years ago to expand a facility."

As the costs of labour and energy currently put a burden on many existing greenhouse operations, growers chose to invest first in energy-efficient technologies and labour reducing tools. In Europe, for instance, adding extra layers of screens to greenhouses is common to conserve energy.

Shipping costs
So, are we about to shop some cheap greenhouses? Well, unfortunately, no. Even though the price of glass itself is lower than it has been, the greenhouse-building industry continues to deal with rising shipping expenses. Despite a global economic downturn, shipping lines are busy, leading to higher costs and logistical challenges. "It's not like in the past when we dealt with $30,000 per container containers in 2021," Michael says, though current rates have increased to almost $7000 $6,000 per container, up from a typical $4,500, and container booking sometimes being dumped unexpectedly. Still, the market is currently favorable for builders and investors who can secure good deals despite the shipping challenges. "Plus, with commissioned volumes down, we can complete production jobs within 2-3 weeks – which is unique."

Planti invested in their production and office over the last years – and as a relatively young company, they haven't had an easy start – first with the pandemic and the lockdown, then the shipping market madness, and now the market slowdown, which according to Michael even results in the slowest year in the company's history. Yet it resulted in a flexible, innovative and versatile organization, and Michael he has confidence next year will be better, with numerous projects awaiting finalization. "Currently we continue to work on our 5 active projects, mainly in Canada, and our clients are confident next year will be much busier as they see their customers are willing to continue – although they have to get everything into place. As we're ready to sign and produce, we expect winter to be busy again."

While vegetable greenhouses dominate, Planti also supplies glass for flower and strawberry greenhouses, particularly in North America the U.S. and China. Notably, there is a trend towards berry greenhouses, with several large projects completed in China recently, indicating a shift in the market's focus. The company is also focusing on strengthening its presence in the European market. Niki Lee, who joined during the Covid-19 pandemic, is actively engaging with Spanish greenhouse builders to forge new relationships. Her efforts are part of Planti's broader strategy to increase market penetration and adapt to the changing dynamics of the greenhouse construction industry.

"We've seen the value of our direct contacts with the builders, our efficient production chain, and our focus on shipping efficiently. The market is experiencing a slowdown, and so are we, but our way of working remains of great value to our partners, and we're sure it can be to other greenhouse builders as well."