Skagit Valley nursery withers, blames WA business climate in part

This spring will mark the end of one of Skagit County’s largest employers and, possibly, the final chapter in one of the region’s more convoluted business sagas. 

Skagit Horticulture, which supplies hundreds of plant varieties to growers and retailers across North America, said it was closing operations, including in Mount Vernon and Yakima County, and laying off 169 workers, effective April 7.

Reached by The Seattle Times, CEO Scott Crownover politely declined to comment “as we are focused on helping our employees.”

But in a statement, Crownover linked the decision to the combination of rising production costs and “the business climate in the State of Washington.”

The closure appears to have surprised many in Skagit County, where the company was among the larger players in a region famous for flower and plant producers.

“Caught me off guard,” said Michael Garcia, owner of All Season Supply in Mount Vernon, who warned that loss of so many jobs will hurt in a community so reliant on agriculture. “That affects us big time,” he said. 

It was also a shock for nurseries across Western Washington that counted Skagit Horticulture as a major supplier.

“Skagit has always been one of the solid, reliable suppliers for a lot of our products,” said Meagan McManus, with West Seattle Nursery, who described Skagit Horticulture as one of the top suppliers in the area. “It was shocking.”

Skagit Horticulture was born out of adversity. 

It was formed in 2017, after a Mount Vernon-area company called Northwest Horticulture acquired Skagit Gardens, a decades-old nursery, at a bankruptcy auction, according to The Wall Street Journal.

At the time, Skagit Gardens was around 30 acres, with annual revenue of $20 million to $25 million and a seasonal staff of nearly 300, “making it one of Skagit County’s largest employers,” according to The Journal. 

That bankruptcy sale, in turn, capped the bizarre misfortunes that had befallen a beloved player in Skagit County’s nursery sector. 

Jim and Ruth Youngsman had founded Skagit Gardens in 1966, starting with a single greenhouse measuring 20 feet by 150 feet and raising chrysanthemums for Mother’s Day, according to company and media accounts.

Over the next two decades, Skagit Gardens grew to more than 20 acres of heated greenhouses and outdoor operations, and supplied 1,500 to 2,000 varieties of “starts” and finished plants to growers across North America and to independent garden centers in Western states, according to various accounts.

But in 1998, the small business story took a more corporate turn. 

That year, the Youngsmans sold Skagit Gardens to International Garden Products, a national producer and supplier based in Damascus, Ore.

But in 2008, IGP ran into financial difficulties — it would declare bankruptcy two years later — and sold Skagit Gardens to Aequitas Capital Management, a venture capital investment firm based in Lake Oswego, Ore.

Aequitas seemed like a good fit, Chris Colasono, then-president and CEO of Skagit Gardens, said at the time. Aequitas appeared to have experience in agriculture and wasn’t looking to make a quick buck. “They don’t have an exit strategy,” he said. “That gave us great comfort.”

That feeling may not have lasted long. According to court papers, Skagit Gardens struggled to repay roughly $11 million in loans from Aequitas, including around $6 million that Aequitas itself had used to purchase Skagit Gardens.

In 2015, Skagit Gardens began looking for buyers. That process accelerated in 2016, when Aequitas was sued by the U.S. Securities and Exchange Commission for fraud.

According to the SEC, Aequitas Management and four affiliates “defrauded more than 1,500 investors nationwide into believing they were making health care, education, and transportation-related investments when their money was in fact being used primarily to cover operating losses and to pay earlier investors in a Ponzi-like fashion.”

In fact, Aequitas Management was mainly focused on student loan programs at Corinthian Colleges, a for-profit college, according to the SEC. Not only were the loans “predatory,” according to a 2017 complaint by the U.S. Consumer Financial Protection Bureau, but when Corinthian encountered financial difficulties, it worsened Aequitas’ “already severe cash flow problems.” 

After Skagit Gardens filed for bankruptcy, in 2016, it was purchased for $8.6 million by Northwest Horticulture, then known as a supplier of hardy perennials and grasses to “major mass-market retailers” in the Western U.S., according to Digger Magazine.

Northwest Horticulture, it should be said, was itself the product of another Skagit Valley horticultural failure. 

It was formed in part from the remnants of Summersun Nursery & Greenhouse, founded in Mount Vernon by Carl Loeb in the late 1970s, according to Lawn and Landscape Magazine. 

By 2000, Summersun had morphed into a new entity, known as Etera, with nearly 400 employees and a dual mission: wholesaler of innovative plants, such as pre-potted perennials; and provider of “e-commerce storefronts” for some 1,700 independent garden stores, according to the Seattle Post-Intelligencer. 

But in 2001, after missing sales targets, falling into debt and losing investors’ confidence, Etera filed for bankruptcy and was absorbed into the newly formed Northwest Horticulture.

By 2017, the twin sagas seemed to be resolving into a single, upbeat storyline. Northwest Horticulture and Skagit Gardens merged and relaunched as Skagit Horticulture, with facilities in Western and Eastern Washington and in California. 

The new venture appears to have been well-funded: Northwest Horticulture had borrowed $18.5 million in 2016, around the time it bought Skagit Gardens, court records show.

Over the years, Skagit Horticulture expanded and brought on additional executives. In 2018, Crownover was hired as chief operating officer, before moving up to CEO. 

By 2020, Skagit Horticulture was listed as the second largest agricultural employer, and 14th largest employer overall, in Skagit County, with around 200 employees, according to the Center for Economic and Business Research at Western Washington University.

Until the closure was announced, Skagit Horticulture appeared to be doing well. In early 2023, the company rolled out a new e-commerce system, according to an announcement by the vendor.

Jennifer Lennox at Brandywine Wholesale Nursery in Mount Vernon said the first sign of trouble was an email Skagit Horticulture sent to customers.

But in an interview this week with Greenhouse Grower, Crownover appeared to suggest that labor costs were an issue. He said Washington’s high minimum wage and “a state-mandated 40-hour work week followed by overtime” were factors in the closure.

Garcia, owner of All Season Supply, said labor costs in the nursery business are high, due to the labor-intensive nature of much of the work. He wonders whether Skagit Horticulture looked into automating more of its operations, but saw that the necessary investment was simply too large, he said, “unless you have a huge investor coming into it.”

Others worried that the Skagit Horticulture’s failure might signal broader problems for a horticulture industry that has already shown signs of strain, including with the recent closure of Molbak’s Garden + Home in Woodinville.

“I mean, it’s like, ‘okay, what’s going on?'” said Lisa Freed, co-owner of Wells Medina Nursery in Medina, a Skagit Horticulture customer. “Is there something we should know?”