Last week, 76-year-old Bill Weisberg ditched his cozy retirement for a risky ride in retail. He opened a discount athletic wear shop called Fabulous Buys in St. Louis Park and hired his grandkids to run it on weekends, convinced that his gamble can help jump-start Minnesota's limping economy.
Weisberg is undeterred by that fact that U.S. retailers are expected to shut 110,000 stores this year.
"You can't sit around grumpy, moping and feeling sorry for yourself in this recession," he said. "You've got to get off your duff and do something. And what more can you do but open up a retail store to provide quality goods at good prices?
"I am not totally crazy," Weisberg insists. "I opened a new business to fight this recession."
Enter the mavericks -- bold Minnesotans dashing into the worst-performing sectors of the economy just as others race for the exits. As risk takers, they gaze past the scattered wreckage of the current economy to see gem-like opportunity in the bedraggled retail, housing, auto and steel sectors. Optimists all, they believe their ventures will pay off handsomely when the economy recovers.
Just ask the Pohlad Group, which owns the Minnesota Twins and recently partnered with Twin Cities Automotive to buy Sears BMW in Minnetonka and Coon Rapids Chrysler Jeep. Last week it plucked two Inver Grove Heights dealerships from beleaguered auto mogul Denny Hecker. The fact that 70 Minnesota dealerships have folded in the last five years is no deterrent. The Pohlad Group plans to buy more.
"We are looking to be a premier automotive dealership group," said Pohlad partner Peter Hasselquist, chief executive of Twin Cities Automotive. "We are looking to grow."
Officials with the Department of Employment and Economic Development (DEED) note that recessions always produce a class of opportunistic risk takers. This downturn's no exception, they said.
Up on the Iron Range, Larry Lehtinen is ignoring the fact that United Taconite, Northshore Mining and Keewatin Taconite recently stalled several production lines because of the global recession and slumping demand for taconite, a key ingredient in steelmaking. Lehtinen, chairman of Magnetation Inc. and founder of Mesabi Nugget, is driving a new $5 million waste-tailings-to-iron project.
Meanwhile, in the Twin Cities, Ashish Aggarwal, his wife, Sushmi, and another business partner recently put down about $100,000 to buy the New Reflections Hair Salon in Edina, despite the empty storefronts across the street and the recession-pinched receipts showing up at their other new salon in Uptown.
"Naturally, these are challenging times. No doubt about it. People are cutting back and more conscientious about how they are spending each and every dollar," Aggarwal said. "But we are very optimistic going forward. I only feel optimistic that it can only get better and better. It can't get worse."
Sales at the new salon, renamed Salon Aura, are holding steady, staffers said. Renovations are expected to boost business.
That belief sustains the Aggarwals as they also plunge into the foreclosed home market. Looking past the financial troubles that led to 7,000 foreclosures last year, they scooped up 12 duplexes in 12 months.
"As more and more properties come onto the market, the prices have been attractive," Aggarwal said, noting that one triplex he bought listed at $375,000. Two years before, it sold for $680,000. "When you think about it logically, you should always be buying when the markets are down," he said.
In September, exercise physiologist Steve Ritz bet that the elderly, obese and injured would continue to invest in themselves, recession or not. So Ritz borrowed about $100,000 from KleinBank to open a second location for his Fitness First of Minnesota Inc., a personal training company. Now the new Excelsior site is bringing in clients and balancing out the 10 percent drop in business he's seen at his original Chaska site.
"I am frustrated by the recession. But I refuse to think that it's catastrophic. When others get bold I get fearful, and when they get fearful I get bold," Ritz said. "We still have a good business in Chaska and we have exceeded our expectations in Excelsior. I thought it would take a year to get where we are."
The Mark Davis family in Le Sueur, Minn., is likewise emboldened. The owners of a dairy and makers of Cambria quartz countertops are launching a mortgage and consumer finance company in Eden Prairie just as the housing market has dropped to its knees.
"I don't pretend to know a lot about [mortgages]. It's more intuition" that the time is right, said Marty Davis, the son in charge of running both the family's quartz business and the new venture, Cambria Mortgage.
He won't say how much the family has invested in the enterprise. What he will say is his family hired two former TCF Bank managers to run it, and that half a dozen customers already have applied for loans up to $15,000 to pay for Cambria countertops or wall tiles. Mortgage applications are the works from clients looking to refinance, Davis said. The company hopes to draw in buyers, too, he said.
Economists say it's a bold move.
"It's a treacherous lending environment -- probably the most treacherous lending environment we have seen in 40 years," said Wells Fargo economist Scott Anderson. "I am scratching my head a little bit as to why they would be leaping into this at this time."
Davis said now is the time. With the credit crunch, countertop customers and home buyers are having trouble getting loans, he said. "So we said, 'Hey, we will be entrepreneurial here and tap into that.'"
Anderson concedes there's some logic to that decision, especially for a niche player. "Certainly there is still a need for credit," he said. "Within chaos can come opportunity."
The mortgage business comes on the heels of a $45 million expansion of the Cambria plant just two years ago and follows "the bottom falling out" of the quartz tile and countertop business in November, when the economic crisis deepened.
Still, Davis said he believes the family's risks will be rewarded. "I am optimistic," he said.
Dee DePass • 612-673-7725
