|
Gas hike hurts small businesses
By Rachel Pleasant
Staff Writer
Under normal circumstances, a dog washer and a landscaper, a courier and a shrimper would have little in common.
In the wake of Hurricane Katrina and the frenzied climb of gas prices that followed, however, businesses of all sorts are united by their concern and frustration.
They are worried about how they will cover the increased cost of running equipment and making deliveries.
They are watching their bottom lines suffer.
They admit, albeit reluctantly, that the customers will ultimately pay the price.
Gas prices work groomer into lather
As the owner of Outback Dogwash, Darius Martin drives between 60 and 100 miles a day, between Labradors who need baths and golden retrievers who need clipping.
All that driving would put a strain on even those with the most economical cars, but for Martin, who operates a 2001 Ford E350 van equipped with a generator, it means paying $200 or more a week for fuel. The truck gets seven miles to the gallon. Martin has resorted to driving without his air conditioning on to maximize the number of miles per gallon he gets.
“It hurts so bad,” said Martin, who came to Mount Pleasant from Perth, Australia, four years ago. “It defeats the purpose of even working some times.”
In addition to the prices for the gas he burns in his truck, Martin is paying increased prices for his shampoos, imposed by companies also dealing with the fuel pinch.
The price to have a pair of scissors or a razor blade sharpened is also on the rise. Martin will be paying an extra $1 to help offset the sharpening service’s gas costs. That increase will cost Martin another $20 a month. An extra $20 a month may not seem like much, but it is only the beginning of this small business owner’s added expenses.
“Everything is going to go up. My tires are going to go up. This is going to affect everything,” Martin said, adding that while he has always concentrated on Mount Pleasant he now strictly limits his business to that area to save gas.
All the hits on Martin’s wallet are taking its toll on his profits. Soon enough, he will have no choice but to pass those costs on to his customers.
Martin said customers currently pay $40 for a wash; $35 if they commit to a monthly agreement; $30 if they have their dogs washed weekly.
Those prices will soon increase by as much as $5, if not more.
Right now, Martin is struggling with how much to increase his prices. He wants to do it once, not every time the gas station signs change.
“You have to go up realistically,” he said.
One thing is certain Once prices go up, they stay there, he said.
Fuel costs cutting into lawn services profits
Al Walters is afraid to look at his calculator.
Walters, owner of North Charleston-based We Care-Lawn Care, said when it comes to figuring out how much money he is losing thanks to the recent gas price hikes, “ignorance is bliss.”
Pressed for an estimate, Walters said he is likely losing about $1,000 a week.
“Right now, we’re just paying the high prices. Naturally, we’re going to have to come up in our prices,” Walters said.
Between his three flat-bed equipment trucks, three tanker trucks, irrigation truck, personal truck and six lawn mowers—not to mention weed trimmers and leaf blowers—Walters’ business uses about 600 gallons of gas and diesel fuel every week.
In the last year, Walters said, the cost to power his vehicles and equipment has doubled, and that is just one aspect of the impact fuel prices are having on his business.
“Everything is tied to fuel. Fertilizer is petroleum-based,” he said. “I expect a big price increase in a lot of my chemicals, but right now, nobody knows how much.”
Walters will have to delay recouping the increased costs of fuel and chemicals until the beginning of the year, when contracts on maintenance and fertilization services come up for renewal.
Walters estimates the cost for a single fertilizer treatment will go up as much as $8—or $48 during the course of a yearlong contract.
“Prices are going up probably at least 10 percent,” he said. “But between now and the first of the year, we just eat the cost.”
In future contracts, which are typically for a year but are sometimes for three years, Walters said a good idea may be to include a clause that would enable him to raise prices if fuel costs jump again.
“That probably wouldn’t be a bad idea if the market is as volatile as it is,” he said.
Until the first of the year, all Walters can do to make up for the $1,000 a week he is losing is “work smarter.”
“Me, I used to go whenever I felt like it to check up on jobs. A couple months ago, I wouldn’t have thought about driving 15 or 20 miles to check one little thing. Now, I won’t do it unless it’s very important,” he said. “If we have a fertilization survey to do in Mount Pleasant, we wait to do it until we’re in that area, even if it’s three or four days.”
Fuel increases could sink Lowcountry shrimpers
From aboard his boat, the Winds of Fortune, Wayne Magwood worries he is watching South Carolina’s shrimp industry slowly die.
“We’re not really doing good,” said Magwood, whose family owns C.A. Magwood & Sons Fresh Seafood in Mount Pleasant and who comes from several generations of fishermen.
Every day Magwood burns 150 gallons of diesel fuel to operate his 68-foot boat. Since Hurricane Katrina, he has seen his fuel costs increase from $1,700 a week to $2,300.
“We’re not making much, just barely enough to pay the bills,” Magwood said.
The local shrimp industry has suffered for years, seeing prices drop as the market has become flooded with imported shrimp.
“The prices are down, and the imports are the causes of the low prices. Anyone who sells shrimp is getting $1.25 a pound. They need to be getting $3 (a pound). Shrimp sells for $7 or $8 in the grocery store. The imports are setting the prices,” said Clay Cable, vice president of the South Carolina Shrimpers Association.
Tariffs on imported shrimp that went into effect earlier this month will give money back to local shrimpers to pay for things such as repairs to their boats, Cable said, a measure taken to help keep people such as Magwood in business. Shrimpers won’t start seeing any money generated by the tariffs until next year when funds collected in 2005 are distributed.
Every day, Magwood watches as his fellow shrimp boat captains succumb to the pressures of added expenses combined with low returns.
“Yesterday, there were three boats that went out from Shem Creek,” Magwood said. “Today there was two. There used to be 100 boats in the harbor.”
As more shrimpers are tying their boats up and looking for work on land, Magwood, of course, contemplates his future.
“What am I going to go do? Bag groceries?” Magwood said.
So he presses on. Taking his boat out every day, bringing back all he can.
Unless something changes soon, Magwood said, shrimping is “history” in the Lowcountry.
Courier service delivers surcharge to customers
Gas price increases have been felt hard by Charleston’s Bullet Deliveries.
Every day 22 compact pickup trucks make runs for the company, owned by B.F. McLaughlin.
In two months’ time, McLaughlin said, he has seen his fuel bill increase by $4,500, leaving him with no choice but to pass on a 5% surcharge to his customers, a charge he implemented in August.
It was only the second time McLaughlin has implemented such a charge, the first being in the early 1990s when the first Iraqi war began.
Even with an extra 5% tacked onto his bills, McLaughlin said it “will not nearly offset the amount of the increase.”
To totally pay for the added cost, McLaughlin said, he would have to charge an extra 11%, which he refuses to do, opting instead to pay for part of the increase out of his net profit.
“I hope to keep it at 5%, but if gas went up to $5, we’d have to go up even more,” he said, adding he does not anticipate any upset customers over the current increase.
While McLaughlin’s gas woes may seem to echo those of other businesses, he is able to point out a bright side.
With gas prices as high as they are—and possibly going even higher—businesses prefer to have someone else do the driving.
“It’s probably helped our business,” he said. “For the average small businessman, he’s better off paying us to deliver something than he is to send an employee with a vehicle to do it.”
Rachel Pleasant is a staff writer for the Business Journal. E-mail her at rpleasant@charlestonbusiness.com.
|
E-Mail This Article
Printer-Friendly Version