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Though gasoline prices have fallen from the $4-per-gallon level reached earlier this summer, fuel-cost increases over the past year have already affected businesses across every industry.

High fuel costs may hit Iowa harder than most states, because of its bigger concentration of agriculture and manufacturing companies and large transportation sector that have led the state to rank 12th in the nation in per capita energy use.

“If the rural economy starts to slow down just a bit, then our vulnerability starts to increase,” said Iowa State University economist Dave Swenson. “Companies are not making increased profits, consumers are not willing to absorb the extra cost, and at some point, industries start to slow down. Overall, a lot of the metropolitan industries over the years have been heavily concentrated on financial and banking services, health care and education. Those industries are less vulnerable to that kind of pressure. Manufacturing and construction industries are especially a target.”

Here’s how several Central Iowa businesses have been affected by rising fuel costs and how they are trying to weather the storm:

Manufacturing and transportation

With about half of its business coming from agricultural equipment makers, which are doing well as crop demand soars, Innovation Injection Technologies Inc. has been able to offset a decline in orders from other industries, such as recreational vehicle manufacturers. Still, said company General Manager Josh Janeczko, an increase in oil prices also has driven up the cost of plastic by about 30 percent, shrinking the injection molder’s profit margins.

The company is not making any major changes apart from improving efficiencies where it can and letting temporary laborers go.

Brian Griffin, owner of Griffin Transfer & Storage Inc., said an increase in freight surcharges have helped cover the increase in fuel costs for his freight hauling service. He hasn’t wanted to raise prices on his residential and commercial moving business during its busy season this summer and is hoping sales will make up for operating cost increases.

“I think we’ve got it figured out,” he said. “It’s manageable.”

Jimmy DeMatteis, owner of Des Moines Truck Brokers Inc., a transportation brokerage firm that connects shippers and carriers, said that although his company’s first-quarter revenues were up about 12 percent, its operating costs rose 14.5 percent. It has passed on “unprecedented price increases” to its customers, mostly through higher fuel surcharges, but that still hasn’t made up for the entire increase in fuel costs.

“We’ve been fortunate in that our customer base has been receptive to the price increases,” he said, and it has a huge stake in the refrigerated food hauling business, which has remained steady compared with the dry-freight segment.

DeMatteis also has taken an active role in the trucking industry as a board member of the Transportation Intermediaries Association, which has led him to speak before Congress. In this larger role, he watched more than 900 truck companies fail in the first three months of the year, “the highest three-month total since the 9/11 catastrophe,” he said.

With fewer trucks on the road, some brokers have found it harder to find trucks to deliver customers’ products, DeMatteis said, but despite a database of more than 2,000 carriers, his company uses about 100 trucking companies that are still in business to handle the majority of its freight. On the customer end, he has seen companies try to consolidate orders and better plan out deliveries to ensure that delivery trucks are full.

Economist Swenson sees this situation as a bigger problem for rural communities. “Fuel prices have constrained the profitability of the trucking industry quite a bit,” he said, “and I think we can anticipate trucking companies’ unwillingness to serve some more marginal markets, including some rural areas.”

Retail

With gas prices rising, along with food and energy costs, consumers are cutting back spending on nonessential things such as restaurant meals or clothing. Those who offer delivery services are getting hit on both fronts – fewer sales and higher operating costs.

Krispy Kreme Doughnuts Inc.’s home office ordered its stores to cease its doughnut delivery service to other retail locations in April, forcing its Clive store to cut its staff by 16 people. Though the loss of its delivery service caused sales to decrease, store manager Pete Mettler said the store wasn’t making money off the deliveries because any profits were going toward fuel.

Sales are down about 10 percent this year, and the store has cut its hours from closing at 10 p.m. to closing at 7. The cost of making doughnuts also is up about 25 percent. This combination could lead to more cuts in staff and hours in the future, Mettler said.

“This is really bad,” he said. “People just don’t have the money to spend anymore.”

In addition to higher fuel costs, Storey-Kenworthy has been hit with manufacturers increasing the price of goods as they deal with rising raw-materials costs and companies cutting capital spending, especially for furniture.

To combat rising fuel costs, the company has purchased more fuel-efficient trucks that cost a total of $100,000 but will save about $18,000 a year. It also is trying to combine trips and better plan delivery routes that “allow us to give good service yet reduce the amount of miles we drive,” said company President Dave Kenworthy.

Though Kenworthy has experienced other downturns in the past, he said, “we’re trying to balance the budget and make sure our expenses are in line.”

Both Sara’s Garden House and The Florist on Fifth have raised their fees for delivering flowers. Lori Stull, co-owner of The Florist on Fifth in Valley Junction, said her store raised its delivery charge by about 50 cents, but otherwise has not had to raise the price for flowers. “We’re kind of seeing how long it will last,” she said.

Corporations and government

Many major corporations, especially in the finance and insurance industries, aren’t making huge changes, but have encouraged cost-saving measures for their employees, such as partnering with the Des Moines Area Regional Transit Authority (DART) to offer free bus service or subsidizing those who use DART’s vanpool or Rideshare programs.

DART had a 24-year high in ridership for the fiscal year ended June 30; its ridership figures were up 10 percent from the previous fiscal year.

Since December, Principal Financial Group Inc. has had a 20 percent increase in employees who participate in its free bus program. About 500 of its employees take the bus and another 300 participate in its vanpool program, which gives participants monthly subsidies.

Strategies to reduce energy use have been a focus at Principal for a while and have helped it become more efficient as fuel and energy prices rise. The company has an on-site 12-megawatt generation plant that helps reduce the amount of power it needs to buy from local utilities, especially during peak times.

Wells Fargo & Co. said it hasn’t made any dramatic changes to its operations in response to high gas prices. It offers employees a commuter benefit program that allows them to pay for public transportation using pretax dollars and encourages the use of carpooling by internally promoting the use of DART’s Rideshare program.

Meanwhile governments are also feeling the pinch of higher fuel costs, especially in vehicle fleets. Polk County’s fuel costs went up about $200,000, or 50 percent, from last year, said Mike Grimaldi, director of general services.

As a result, Grimaldi has been researching more fuel-efficient vehicles for the county’s 200-vehicle fleet; that figure excludes police cars, dump trucks, graders and other specialty equipment. Last month, the county ordered 14 Ford Hybrid Escapes to replace some of the 25 vehicles it wanted to replace this year. It would have ordered 25, but Ford is experiencing a backlog in orders.

The Ford Escape could get more than twice as many miles per gallon as the cars currently used by county workers and would be large enough to handle most of the work. Grimaldi expects the county would save about $1,500 per vehicle per year in fuel costs.

“Since you don’t have a whole lot of control over the price of fuel, what you can do is to bring the number of gallons that you use down,” he said, “while still providing services that you’re expected to provide.”

All of these challenges may be signs that Iowa is headed for or already in a recession. Problems such as flooding haven’t helped either, Swenson said, though disaster recovery has given a short boost to the construction industry. “We are slowing down a little bit,” he said, “and whether it’s a recession or just a prolonged slowdown, either way it ain’t great.”