On Top of an Economic Downturn: Gas prices, foreclosures mean big business for some

Some Ozarks companies are enjoying higher-than-normal revenues thanks to skyrocketing fuel prices, widespread home foreclosures and a steady surge of bankruptcy filings clogging the courts.

For them, the much-maligned economic downturn has been good – or, in some cases, great – for business.

Ozark Powersports has been selling seven or eight scooters a week at $2,200 a pop on average, said owner Tim Rosse, who noted that year-to-date sales are up 81 percent. With most models boasting gas mileage of roughly 80 miles a gallon, Rosse said his tried-and-true customer base of scooter enthusiasts has been augmented by walk-ins interested in a more cost-effective mode of transportation.

“I’m really glad that I’m in this business that’s able to help people … alleviate this gas crunch,” Rosse said.

The eye-popping price of fuel also has swamped Springfield-based Golden Fuel Systems with orders for its conversion kits, which allow diesel vehicles to run on vegetable oil. President and founder Charles Anderson said a fourfold year-to-date increase in sales has his small business scrambling to meet the unyielding demand.

“Have you ever tried to drink from a fire hose?” Anderson said of his company’s sudden prosperity. “That’s about what we’re trying to deal with. It’s overwhelming. Your eyes are shut, and you’re just taking whatever hits you and hoping you don’t drown. It’s pretty insane.”

The flip side of foreclosures

On the housing front, the upswing in foreclosures has been good for Midwest Metro Foreclosures Inc., a Springfield-based company that secures and maintains properties repossessed by lenders when borrowers default on loans. Foreclosures in Missouri – and Springfield, in particular – are driving much of the business, said Bryan Cates, president and founder of Midwest Metro.

“I can say this has been our highest year for the Springfield area, by far,” he said. “Compared to last year, I would say it’s about quadrupled.”

The number of foreclosures in Greene County has continued to climb this year, with 411 logged through the end of May, according to online records maintained by the Recorder of Deeds office. During the same period in 2007, there were 302 foreclosures in Greene County.

Midwest Metro, which covers all of Missouri, Arkansas and Oklahoma as well as parts of Illinois and Kansas, has grown at a healthy clip since opening in 2001. Gross revenues last year were $2.4 million, and foreclosure activity this year promises to push that figure even higher. Cates said his company primarily works with three or four large national mortgage lenders, including Wells Fargo and Countrywide.

“Their inventories are growing,” he said. “That’s no news to anyone. … We haven’t had to go out and find any work.”

Midwest Metro’s services range from winterizing a plumbing system for about $100 to re-roofing a home for $10,000, Cates said. Midwest Metro also keeps lawns mowed and seals properties to deter squatters, vandals and thieves from further debasing a home’s value.

Opportunities for expansion exist, Cates said, but doing so would mean a larger coverage area and adding more employees to handle the growing demand. With business to boot in the five-state area, Cates said he’s inclined to maintain the status quo.

“We’ve been contacted by a lot of national companies wanting us to go up to Chicago and other areas, but I don’t want to be stretched too thin – and I’m pretty tired,” he said.

Banking on petroleum backlash

Like Cates, Anderson at Golden Fuel Systems would be exhausted if he weren’t so excited about his company’s rosy revenue projections.

With pickup owners ordering his $2,500 diesel conversion kits at an astonishing rate, Anderson said Golden Fuel is in position to do $4 million in sales in the next 12 months. But adapting to the increased demand has been challenging, he added.

“When it’s that much that quick, it brings on a whole other set of problems,” Anderson said, noting that suppliers are now trying to fill orders several times larger than just a few months ago. “And, of course, while you’re getting up to speed, it just keeps piling on top of you. … But it’s a good problem to have.”

Golden Fuel recently switched to an automated phone system after Anderson decided to enlist office staff to help process incoming supply shipments and outgoing orders. He only expects the pace to become more frantic as national diesel fuel prices careen toward $6 a gallon.

“I don’t try to clap my hands when the price of oil goes up, but I’m heartened my business is doing so good, because it lets people know that what we’ve been doing isn’t working,” he said.

Rosse at Ozark Powersports said he’s also running into supply-side issues as scooters continue to sell at record levels throughout the country. He said his major suppliers are working with scooter manufacturers to arrange for additional imports later this year.

“At the current rate, I very well could be out of scooters by mid-August,” Rosse said.

Bucking industry trends

Bars and restaurants typically take one of the first – and hardest – hits when the economy starts to slow, so pardon Patton Alley Pub owner Eric Zackrison for gloating.

Sales at the downtown Springfield bar have been up by 30 percent to 40 percent each month through May compared to last year, Zackrison said. The trend started in January, but Zackrison said he figured the numbers were skewed by the January 2007 ice storm.

“Then February hit, and it was the same,” he said. “I was like, ‘Whoa!’”

Zackrison, who closed Agrario and Bodega Bar last year due to declining business and impending foreclosure, attributed the growth to a triple threat: happy hour liquor sales, Sunday trivia nights and quality live music.

“I think it’s a conglomeration of everything,” he said. “When economic times get hard, people still find time to go out and relax a little bit.”