Tulsa World: Risks despite Recession

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Risks despite Recession
Tulsa companies founded during hard economic times find the rewards plentiful.

Paula Marshall, granddaughter of Bama Cos. founders and now CEO of the company, chats while in her office at the company headquarters near 11th Street and Delaware Avenue. Her grandparents, Henry C. Marshall and Cornelia Alabama "Bama" Marshall, founded the company during lean times in 1936. CORY YOUNG / Tulsa World

By KYLE ARNOLD World Staff Writer
Published: 9/20/2009 2:25 AM
Last Modified: 9/20/2009 9:05 AM

Tamara Walden is discovering the risk and reward of starting a new business during hard times.

The 30-year energy-industry veteran is trying to wrangle $1.5 million for a new business and Web site to sell green energies such as solar and wind to businesses.

But in times like these, finding ambitious investors and launching a business are no easy tasks.

"Obviously anytime you start a new business there is a risk, and the biggest risk we have is not getting our funding fulfilled," said Walden, one of the founders of Beautifuels.

While businesses across the nation and right here in northeast Oklahoma stay afloat, the recession of the last year hasn't been able to put out the entrepreneurial flame.

Bad times have taken their toll on employees and banks and bankrupted some local companies, but many of Tulsa's most profitable businesses were born in the ashes of recession and depression.

Local companies such as Bama Cos., shopping cart maker Unarco Industries Inc. and Frankoma Pottery were founded during the Great Depression. Fencing manufacturer Ameristar was started during the oil bust in 1982. Even Williams Cos. traces its roots to 1908, a year that a run on banks took 50 percent of the value out of the stock market.

A June report from the Kauffman Foundation showed that about half of the companies listed on the 2008 Fortune 500 list were founded during economic recessions and even speculated that the major companies of the future are getting their start as the economy faltered and now looks to recover.

The story of Bama Cos.' founding more than 70 years ago would be familiar to many who have been impacted by unemployment, tight credit markets and the stumbling economy of the last year.

Henry Marshall couldn't make ends meet growing sweet potatoes, so his wife Cornelia "Bama" Marshall headed to town and found a job at the local drug store.

Then son Paul Marshall, with slim job prospects himself, took a gamble and opened his own manufacturing facility in Tulsa, selling simple but irresistible pies from his mom's recipe.

That was 1937 in the midst of the most drastic economic downturn in the country's history. But today that little pie-making outfit has grown into 1,500 employees and sells to the behemoths of the food industry including Wal-Mart, McDonald's and Yum Brands.

"Dad and Mom would always talk about the Depression," said daughter Paula Marshall, who took over the company in 1985. "He hated borrowing money from anyone. When my father retired in 1985, we had no debt. And my philosophy today is the same."

There is no data yet on what the last year has done for entrepreneurship, but Sean Griffin, who chairs the Collaboratorium in Tulsa, said the organization has seen a major increase in applications for the business resource center since it was founded earlier this year.

"Right now we are about to expand into another floor and it's only been four months," Griffin said.

Economic recessions have an interesting impact on entrepreneurship because of competing forces stifling and encouraging business startups, said Larry Wofford, chairman of the Entrepreneurial Studies and Business Enterprise program at the University of Tulsa's Collins College of Business.

"When the economy is like this, it's much harder to get an idea and find customers," Wofford said. "Existing companies are having troubles getting customers, so a new company would have an even harder time."

Business startups might also have trouble finding capital from investors or loans from banks. Decreasing home values have also eliminated thousands of dollars of net worth for many Americans.

Sometimes, as is the case of Wagoner's Unarco Industries, the desperation of hard times leads to innovation. The company got its start in 1937 when grocery store owner Sylvan Goldman invented the modern shopping cart in Oklahoma City as a way to get customers to buy more products.

The first shopping cart was made from a folding chair and soon Goldman launched his own shopping cart factory, known today as Unarco Industries.

Goldman is long gone, but the company's innovation now comes under the sway of Berkshire Hathaway Inc. and investment guru Warren Buffett.

In the early 1980s, when the price of oil dived and severely strained the Oklahoma economy, Tulsa's Eddie Gibbs was hoping to set up his own manufacturing operation and make an improved hinge for fence gates.

"I started the manufacturing business in the fall of 1982, and we struggled a couple of years," said Gibbs, owner of Ameristar Fencing, which has more than 500 employees in Tulsa. "Then the guy that bought my old company went bankrupt and couldn't pay me the rest of the money he owed."

Ameristar started manufacturing hardware for wooden fences, but Gibbs and the company got its big break when it started making security fencing for government projects.

Within a few years, the company's original core businesses, hinges and hardware, had all but disappeared as Chinese manufacturers took much of their business. Now the vast majority of business comes from ornamental and security fencing.

Memories of past hardships haven't made Ameristar immune from recession. The company's business has dropped about 15 percent in the last year and it has laid off about 60 workers, although Gibbs is proud that all of those workers were new hires.

"But we are still going to make money this year and compared to the market and the other manufacturers in any other industry, we are making a profit," Gibbs said.

Kyle Arnold 581-8380
kyle.arnold@tulsaworld.com By KYLE ARNOLD World Staff Writer

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