Jun. 5--With the start of another tempestuous hurricane season, businesses -- large and small -- might want to dust off their hurricane preparedness manuals. After all, the consequences of not having a Plan B if a hurricane knocks out the power or destroys a building can financially drown a company.
Consider this: In the first year after Hurricane Andrew, about 50 percent of affected business in Florida went bankrupt, said John Phelps, director of risk management at Blue Cross and Blue Shield of Florida. That number rose to about three-quarters in the second and third years after the hurricane struck, he said.
A major reason: Business went under because they couldn't recover or do so fast enough.
"They lost business," Phelps said, "employees found jobs elsewhere."
About 68 percent of local small businesses say they do not have a current and effective recovery plan to deal with disasters like a hurricane, according to a CenterBank survey of about 7,500 area firms.
Jacksonville-based W&O Supply last year learned the importance of having a disaster plan -- the hard way.
Hurricane Katrina wreaked havoc on the distribution company's Mobile, Ala., warehouse, ripping off the roof and knocking down the walls. The warehouse was shuttered for two weeks. W&O's New Orleans warehouse suffered minimal damage but the extensive damage to the city kept the distribution center closed for nearly five weeks, Chief Financial Officer Peter Osterman said.
In the end, Katrina cost W&O more than $1 million in lost revenue. The company estimated its recovery and rebuilding tab totaled upwards of $500,000 before insurance payouts.
This hurricane season, W&O has instituted measures -- including the relocation of communication infrastructure to a more secure off-site location -- to keep its operations humming.
"You can be out of business if you don't have the necessary resources and precautions to weather the potential impact of a hurricane," Osterman said -- a dire warning on the eve of the 2006 Atlantic hurricane season, which could churn out up to 16 named storms including six major hurricanes, according to the Associated Press.
How to Prepare Your Business
The Times-Union has compiled tips from the U.S. Department of Homeland Security's Federal Emergency Management Agency and CDW Government Inc. that businesses can follow to help with recovery if disaster strikes.
1. Identify and appoint a team of first responders to tackle disasters.
Blue Cross has a team of about 21 emergency responders. The team, which includes workers from human resources, claims processing and IT, are available 24/7 to respond to adverse events like a hurricane. They evaluate the situation and decide what needs to be done to support critical business operations like customer service and payroll processing.
2. Back up sensitive data and store copies of it off-site.
The MPS Group houses its Information Technology infrastructure, including servers, at a Southside building which can withstand Category 4 hurricanes. If a hurricane is expected to hit the First Coast, MPS overnights back-up tapes of sensitive information like payroll data and customer and employee databases to a site in Atlanta. The company sends a team of employees with the data. If local operations get hit, MPS can keep paying employees around the country and place clients with its contract workers.
3. Have backup generators and alternate power supplies for critical applications.
Power outages during the last hurricane wreaked financial havoc on Publix. The Lakeland-based grocery chain lost abut $60 million in frozen foods and perishables that spoiled following hurricane-related blackouts last year.
To prevent a repeat, Publix is investing about $100 million to buy 400 heavy duty generators for stores in hurricane-prone areas, spokesman Dwaine Stevens said.
Each of the 500-kilowatt generators is powerful enough to keep the freezers running for up to 72 hours. The generators will help stores recover from a hurricane quicker and limit losses from spoiled food, Stevens said.
None of Publix's 41 First Coast stores will have the generators, because the region is not considered high risk for hurricanes.
4. Have a plan to maintain operations if the company's location is heavily damaged.
W&O's Jacksonville headquarters is located in a metal building, making it susceptible to hurricanes. "If we get hit with a Category 2 [hurricane] here, we're going down," said CFO Peter Osterman.
To counter that, W&O last month transferred its critical communications infrastructure -- computer and phone systems -- to a downtown building that can withstand a Category 5 hurricane.
W&O has 13 distribution centers at major port cities across the country. So, if one warehouse is damaged by a hurricane or other disaster, the others can pick up the slack and try to get product to customers. W&O's inventory and sales orders are in a central database accessible to all distribution centers.
Blue Cross has access to mobile workstation units -- essentially trailers equipped with desks and computers -- that employees can use in case their offices are uninhabitable.
5. Have mobile and satellite phones in case land-line telephone connections fail.
Following Katrina, W&O overnighted fax machines, laptop computers and cell phones to its half-dozen salespeople in the Gulf Coast area so they could stay in touch with customers and continue doing business from their homes. W&O also has an Internet-based telephone system which allows the company to make calls over the Internet using a high-speed T1 line -- providing a back up in case a hurricane knocks out telephone lines.
6. Reduce the vulnerability of the company's physical buildings by implementing mitigation measures.
JEA has invested about $500,000 in metal shutters and other measures to protect its facilities from wind and water damage following a hurricane. Last year, the utility spent about $200,000 in a window-reinforcing technology at its downtown headquarters and at a nearby customer service building. The technology attaches heavy-gauge window film to each glass pane -- and then secures the film to the window's frame -- creating an anchored system that prevents the glass from shattering or from coming off the building.
"Our hope is that [the technology] minimizes the damage [from strong winds] to windows and to the interior of the building," JEA spokeswoman Gerri Boyce said.
7. Reach out to employees after a disaster
W&O has a toll-free telephone number its 165 employees can call to let the company know they are OK after a disaster like a hurricane. The company also has a "phone tree" -- a system where employees are responsible for calling three other colleagues to help quickly account for the workforce's whereabouts following a disaster.
Preparedness on the Web
Many helpful Web sites can aid businesses in disaster planning and provide useful information about how to prepare and protect a business.
U.S. Department of Homeland Security
(www.ready.gov) Business owners can find recommendations on how to prepare emergency and recovery plans, how to conduct a risk analysis, and measures to implement to lessen damage from disasters.
Institute for Business & Home Safety
(www.ibhs.org): Includes a section on protecting against hurricanes, hail, tornadoes, earthquakes, floods, wildfires and freezing weather.
The Disaster Contractors Network
(www.dcnonline.org) Connects business owners and homeowners with contractors and vendors offering repair and rebuilding services. Business owners can search the site for contractors by category, keyword or geographic location. The Web site offers services, including the ability to check if a contractor's license is valid and current.
The U.S. Small Business Administration
(www.sba.gov/disaster/getready.html) Contains disaster preparation tips and a checklist of planning tasks for business owners to consider.
(Florida Times-Union, The (Jacksonville) (KRT) -- 06/08/06)