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Fireworks vendors' business booms

08:09 AM CDT on Monday, July 6, 2009

By SHERYL JEAN / The Dallas Morning News
sjean@dallasnews.com

Stockbroker Steve Matzke opened his first roadside fireworks stand last year in Princeton to help make up for the slow financial business.Fireworks sales were so good that he added two more Colby Fireworks sites this year.

Video
Matzke family operates Dallas-area fireworks stands (Video/editing: Michael Ainsworth)
July 4, 2009
Business Videos

"With fireworks, everyone's happy to come see you. That's not so true with stockbrokers," said Matzke, whose wife, Debbi, and two of his three children help. "It's quick setup. You work hard for a couple of weeks, and then you're done."

Like summer flowers, fireworks vendors spring up overnight every June 24 with a burst of rainbow colors from the thousands of varieties of fireworks on their shelves. Dallas and Tarrant counties alone have 112 fireworks vendors.

In Texas, fireworks vendors face a short sales period. They work 16-hour days during the hottest time of year, and they deal with growing competition, increasing regulations and the continuing recession. Yet the profit margins are high.

Low entry costs – a $32 annual permit, labor and inventory – attract families and nonprofit groups that want to earn extra money or build a bigger business by selling products with names like killer bee, fiery eye and lighting fly.

"It's a tough business because you only sell for two weeks twice a year, and you hope that it doesn't rain on July 4," said Michael Girdley, president of San Antonio-based Alamo Fireworks Inc., one of the largest fireworks wholesalers and retailers in Texas.

State law generally limits fireworks sales by Texas' roughly 5,000 vendors from June 24 to July 4 and Dec. 20 to Jan. 1.

Most vendors operate on the edge of cities and on unincorporated land because many Texas cities, including Dallas and Fort Worth, ban the sale and use of fireworks.

Still, Texas fireworks sales rose 20 percent in the past five years to $52 million in 2008. Nationally, fireworks sales hit $940 million last year.

Fireworks vendors say they sell about 80 percent of their stock on July 3 and 4. The average sale is about $60, but some customers spend upward of $1,000 at a time.

The big guys

Alamo is the largest fireworks retailer in Dallas and Tarrant counties. Girdley's grandparents started the company in 1962, but its roots are in the 1920s when an ancestor sold fireworks door-to-door. Today Alamo has 185 locations in five states.

"We're just kind of a little, boring business – like someone selling watermelons on the side of the road," Girdley said. Alamo's revenue has doubled in the past 10 years, he said.

Although big companies dominate the business, there are many mom-and-pop shops. Entrepreneurs can start their own business or run retail outlets for one of the big companies for a share of sales.

Alamo, for example, provides the building, inventory and advertising and pays 15 percent to 20 percent of sales to someone who runs the site and provides labor. A first-time Alamo operator can take home up to $4,000, Girdley said.

The little guys

Chris Walters of Wylie hopes that's true. This is his first year running an Alamo megastore in Copeville.

"I wanted to try it, wanted the challenge," Walters said. He estimates his initial cost at a few thousand dollars.

The University Assembly of God Church runs an Alamo megastore in Waxahachie, earning $25,000 to $30,000 a year for the last three years, said Doug Sullivan, pastor.

"It's been phenomenal, and we're having a blast, no pun intended," Sullivan said. Last year, the Waxahachie church used a large portion of its fireworks sales commission to send members of its youth group to Charlotte, N.C.

Cody Wisdom followed a different path. He purchased the land and buildings for three fireworks sales sites in Collin and Hunt counties.

"I didn't want to build up a clientele and then lose the lease," said Wisdom, who works for a health insurer and takes two weeks off every July and December to run his Garland-based USA Fireworks. His first roadside stand opened in 2003 in Denton, but he lost the lease in 2006.

Lisa and Randy Burrows have shopped at Wisdom's Copeville location for five years. Last week, they spent about $400 on fireworks for their annual July 4 party on their 10-acre spread in Nevada.

"They have everything and treat us nice," Lisa Burrows said.

Wisdom wouldn't reveal revenue but said it's grown about 15 percent a year.

Regulations

Despite competition and economic pressures, fireworks vendors say their biggest challenges are weather and increasing regulations.

"In Texas, the laws are still in flux because of the battle between counties wanting to have more power and the fireworks operators not wanting them to," said Girdley. He's part of a group of fireworks vendors critical of what they say is a misuse of a law that hurts their livelihood.

A 2007 state law revision lets counties ban sales of some fireworks during droughts. On June 23, Bexar County declared a disaster, restricting the sale of fireworks to five days, banning most aerial fireworks and limiting ground fireworks to five designated safe zones on the nights of July 3 and 4.

Girdley estimates that Alamo's sales in that county will decline by about 70 percent.

Increased regulations here buck the trend of liberalized fireworks laws nationally, said Julie Heckman, executive director of the American Pyrotechnics Association.

"Texas bans are happening due to drought, and you can't argue with that," she said. "It's much safer to have a designated use area where people can go to shoot off fireworks."

Fireworks vendors are finding ways to offset the impact.

Alamo is expanding to other states, such as New Hampshire, where droughts aren't a big issue.

Colby Fireworks' Matzke also sells Christmas trees and plans to peddle pumpkins this fall. He hopes one day to grow the seasonal businesses into a full-time venture.

FUN FIREWORKS FACTS

•It's believed that fireworks were created more than 1,000 years ago in China or India.

•The 2006 New Year's Eve in Madeira, Portugal, holds the record for the largest display, with 66,326 fireworks.

•Last year, $940 million in fireworks were sold nationwide, including $52 million in Texas.

•Five states – Delaware, Massachusetts, New Jersey, New York and Rhode Island – ban consumer fireworks.

•Texas bans M-80s, bottle rockets less than 15 inches long and pop rockets less than 26 inches long.

•Nearly 5,000 retail outlets open in Texas each year.

•Fireworks can be sold in Texas from June 24 to midnight July 4 and Dec. 20 to midnight Jan. 1.

•A person must be 16 to buy fireworks in Texas.

SOURCES: American Pyrotechnics Association; Texas Department of Insurance; Texas Office of the Comptroller; Texas statutes

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