Unlike some, who feel that Neosho is safely enclosed in a bubble of sorts and largely unaffected by what many economists are defining as a recession, local restaurant owner Randy Collins testifies to the damage being done to his bottom line.

Higher than average costs for everything from fuel to food is causing a chain-reaction of hardship on business owners throughout the country, according to nationwide reports.

Unlike some, who feel that Neosho is safely enclosed in a bubble of sorts and largely unaffected by what many economists are defining as a recession, local restaurant owner Randy Collins testifies to the damage being done to his bottom line.

And he isn’t optimistic.

Collins, who owns Café Angelica on Neosho’s downtown square, said he has seen at least a 15 percent profit loss in just the past couple of months.

He said food prices have “skyrocketed” for him lately, as projected global food shortages and lower production trickles down and he has to pay more now for the provisions he uses to cook with.

“I’ve held off doing any kind of price increase in the hopes that (costs) would come down, but speaking with my food vendors, they’re saying that is not going to happen,” Collins said. “Shortages are going to continue and fuel prices are going to continue to drive food costs up. So yeah, my business is down.”

In fact, Collins directly linked higher fuel costs to his loss of revenue.

“As gas prices have increased, my business has pulled down,” he said. “I don’t know what one can do except just try and sit and weather it and try to keep your prices down as much as you can.”

But if crude oil, which hit a record $123.56 a barrel Wednesday, continues to jump in cost, Collins said he doesn’t know what he’ll do.

It doesn’t look good. Goldman Sachs analysists predicted Tuesday that oil could jump to $200 a barrel in the next six months to two years, and the U.S Department of Energy recently stated that gasoline will average around $3.52 a gallon this year alone.

“I’m not looking terribly optimistic,” Collins said. “I’m just very disgruntled with our government right now.”

Gary Fausett, owner of Fausett Greenhouses on Baxter Street in Neosho, estimated higher fuel costs have cut into his business by about 20 percent from as far back as October.

For most of 2007, Fausett said, he had a good year. And then things began to go sour.

Not only does his business do a lot of deliveries — burning up expensive gasoline with every run — but Fausett also has most of his business supplies shipped in by truck.
These include tools, topsoil, plants, seedlings and pots, among other items necessary for his business. Each delivery carries a fuel surcharge — charges that continue to get higher.

A bag of peat moss, for example, now costs $7 more, Fausett said, than it did two years ago, because of the tacked on fuel charge. Other supplies now cost at least $2-3 extra.

Meanwhile, Fausett has not raised his own delivery rates.

“Fuel prices are affecting everything we do right now,” he said. “Not to mention we heat the whole place with natural gas, too.”

To help offset the added expenses, Fausett Greenhouses is now doing several things in-house, such as rooting plants and trees themselves to save money. Fausett said he’s hoping he won’t have to raise his delivery charge, but if things continue to get bad he may have to.

Fausett has been in the business a long time and has survived through hard times before, including recessions. From his perspective, he said they never seem to last longer than a year and a half.

“I’ve probably seen it as bad, but I think this one may go a little deeper as we go into it further — especially if gas continues to spike on up,” Fausett added, however.

But if Café Angelica and Fausett Greenhouses are indicators of a  local economy stuck in the dull-drums, Neosho’s K&S Wire is a refreshing breeze.

According to company president Gene Schwartz, profits are actually up by 18-20 percent from this time last year.

This is spite of spiked freight delivery charges and steel prices that have more than doubled.

No employees have had to be laid off, either. In fact, another dozen or so have been hired in the past several months, bringing the number of jobs at the plant up to around 110, according to Schwartz. Employees are even racking up overtime, he noted.

“I know I’m a rare bird, but we’re just not seeing the problems others are right now,” Schwartz said.

Part of K&S Wire’s continued good solvency is linked to growth in the pet industry, for which the company does well in manufacturing animal cages. Another part — a big one, according to Schwartz — has to do with K&S Wire’s practice of “lean manufacturing” where unnecessary steps are eliminated in the production process and more is done at one station, steering away from the traditional assembly line. It has been a proven money saver for area industries, and Schwartz called it his company’s “salvation.”

However, one thing the wire manufacturer has had to do since the economic downturn is implement aggressive pricing in relation to the cost of production. In other words, the company’s products have gone up in cost.

“Yeah, we raise our prices as we get increases — we have to or we wouldn’t be here very long,” Schwartz said. “We’re just passing our cost increases on to our customers, and so far we haven’t lost any customers.”

In fact, Schwartz said he’s been getting a lot of old clients who had originally left more than 10 years ago to get their goods manufactured cheaper in Asia, specifically China.
He said some big companies are recently finding out that the economy is in even worse shape there now than in the U.S., and those cheaply-made goods aren’t coming so cheap anymore.

“At least that’s been our case,” Schwartz said. “And we hope it lasts.”