Disaster may not be lurking around every corner, but it is a fact of life. The rapid-fire succession of devastating hurricanes in late-summer 2017 reminded the world of that. Service centers are not immune to potential catastrophe, whether from weather, fire, violence or any other potentially disruptive activity. And while they can’t prevent the arrival of a devastating storm and some other acts of God or Man, they can take proper steps to mitigate the damage when such chaos descends.
Successfully managing a business through disruption requires a strong plan before it arrives, sound decision-making and communication during the event and flexibility once it’s passed. And with each event, large or small, the smart operator learns a little bit more about how to pilot the business through the next disruption.
Fortune 500 companies occasionally have staff members designed specifically to ensure the company continues to operate during a time of crisis. Experts in the field met last fall in Chicago to update the industry on the latest developments in business continuity.
“Whatever you plan for isn’t exactly what happens. You have to make sure your plans aren’t too specific,” said Lynnda Nelson, the president of the International Consortium for Organizational Resilience at the Chicago Disaster Conference.
Service centers, particularly those on the Gulf Coast, have learned these lessons through the years. The Houston area has been particularly devastated by tropical storms, most recently Hurricane Harvey.
Triple-S Steel felt the effects of the storm in numerous ways. “We took on water in our office building. We had it at two facilities where we had the same thing happened – we had carpeting, sheet rock, fixtures, etc. that had to be gutted to be able to provide continued business,” says Paul Kruppa, vice president of operations for the Houston-based company. One of the company’s warehouses also took on water, though it drained rather quickly. Most of the company’s employees were spared the storms’ effects, though a few did suffer catastrophic damage, he says.
After the storm, the company operated with a skeleton crew for the first few days, as employees were either unable to get to work or tending to their own personal emergencies. “Those things obviously hindered us, but the same thing was happening everywhere else,” he says.
Naturally, the third-prong of a natural disaster for service centers is what it does to the company’s ability to move material in and out of the warehouse. A number of roads in the Houston area were not navigable, though that fact wouldn’t always be known by the company’s drivers. Triple-S grounded some of its trucks for several days due to the uncertainty, and only slowly ramped back up to speed.
South of Houston, Farmer’s Copper in Texas City, was spared the worst of the storm’s blast. However, Farmer’s was well positioned against Harvey due to its previous run-in with Hurricane Ike in 2008. Then located in Galveston, Farmer’s had 8 feet of water in the warehouse, destroying inventory and equipment in the process. Co-president Robert Farmer says it took several months to get back to normal.
Though Farmers eventually restored operations there, Robert and his brother Richard looked for a new location inland that was better protected against the storm. Though the new facility they relocated to in 2015 held up against the worst of Harvey, they’re not getting complacent.
“We have a hurricane preparedness plan that typically every summer we review it, tweak it. Since we’ve moved, we haven’t had to worry about raising machinery. We can pretty well work up until close until the time it’s planned,” says Richard Farmer.
A few weeks later, it was Florida in the tropical storm crosshairs, as Hurricane Irma hammered several different locations in the state. Eastern Metal Supply, an aluminum distributor, was among its victims, suffering some minimal structural damage at a few of its sites and experiencing some disruption to its business routes.
Eastern Metals has multiple locations in the state. The company was fortunate that its facilities that were hardest hit also are among the most storm-protected. As the company erects new facilities, it constructs to the most recent building codes, providing a nice buffer.
“It could have dinged us pretty good, but the new building codes helped us tremendously. That’s been a savior,” says Greg Weekes, company president.
Like other service centers that experience these occasional devastating storms, EMS has a comprehensive hurricane preparedness plan that kicks into gear when a storm is imminent. And Weekes says EMS carries significant business disruption insurance, “probably a little more than we should.”
EMS is somewhat unique in another way in that storms such as these are not just a problem, but a revenue-driver. Among the end markets the diversified company sells into is storm prevention. “The storms are very good to us. It’s unfortunate, because of the markets we’re in,” Weekes says, noting that Irma’s wrath is going to drive sales of windows, doors, signage and marine products, among others.
Long before Harvey and Irma, there was Katrina, the devastating storm that crippled New Orleans and other locations along the Gulf Coast. Bayou Metal Supply, Slidell, La., and D & M Steel Co., Belle Chasse, La., were among the companies that lived through that major weather event.
“The greatest impact the company had was that the employees were unable to come to work. If you fast forward to today, we all have some sort of hurricane plan. They involve things like securing your buildings and securing your material, but also take into account what’s going to happen to the local infrastructure, the roads, the bridges and what your employees are doing,” says John Gage, COO of Bayou Metal Supply.
D & M Steel did just that. Post-Katrina, the Belle Chasse, La., company developed a complete checklist for pre-storm preparation, for both the warehouse people and the office staff (see sidebar). Most of the items are self-explanatory, though company cofounder Murphy Biondillo is regularly asked about the counter-intuitive item on the list: leaving the bay doors open, but secure.
“If you close the door, the wind will blow the doors in or completely off the building,” says Biondillo, noting that in his facility there is a corresponding open bay door on the other side. “If you leave them open, nothing happens, though that’s why no equipment should be in the driveways either.
“Everybody thinks it’s odd about leaving the doors open, but through all the hurricanes we’ve been through, I’ve never replaced a door.”
Good organizations don’t just learn from the experiences of a disaster, they adapt. Cynthia Berry with Global Information Security and Risk Management said that when her organization lost a day of work to Harvey, the company changed on the fly. “Prior to this, we did not have complete work-from-home capabilities. As a result, we went from 50 percent being able to work from home to 98 percent,” she said at the Disaster Conference.
Hurricanes are, of course, just one kind of storm that can wreak havoc on a business. Independence Tube veterans can speak to the devastation a tornado can do. In April of 2011, Independence Tube’s Decatur, Ala., facility didn’t experience the worst-case scenario, but it was very close. An F5 tornado, one of a series that had been hammering the Gulf States over a 48-hour period in April, ripped through the company’s operation there.
With ample forewarning and a sound plan, the company was able to keep its 25 workers, plus two truck drivers taking shelter, free from injury. It tore off 75 percent of the roof and obliterated two of the bays. Though the company was fortunate the tube mill sustained little damage, the five-year-old building was a loss.
Executives from the company gathered immediately after the storm and decided they would rebuild. They were able to secure the same contractors used in 2006. They endured no layoffs, shuffling some employees to its facilities in Chicago and Marseilles, while those who didn’t want to leave Alabama helped with the cleanup, salvaging as much of the old inventory as possible.
“It was a full commitment of everyone involved to get everything taken care of,” says Jim O’Shea, inside sales manager for Independence Tube, now a Nucor affiliate.
The new building was built with the past in mind. Though the company’s employees were safe from harm during the storm, the new facility has even sturdier tornado shelters, as do the other buildings in the company.
“You don’t know what you need until something happens. As the tornado went through, we figured out what we needed: safe rooms for everybody, an action plan so the managers can let the employees know what they need to do and where they need to be in the case of an emergency, whether that’s a fire, a tornado, a flash flood.”
And not all disasters are weather-related. One of the more unfortunate types that have become a fact of life over the past 20 years is the threat of an active shooter. At the Chicago Disaster Conference, Ted Brown of KETCH Consulting explained the five stages of the shooter, and what can be done in each. During the first three stages, the fantasy, the planning and the preparation, there exist opportunities to stop the threat before it becomes a reality. Potential shooters often make their intentions known to others, or walk through the event before it happens, and recognizing the words spoken or actions being taken by an unstable ex-employee, for example, may prevent the next tragedy.
During the final two phases, approach and execution, typically the only way the shooter can be neutralized is through his or her death. Still, companies that prepare for such an incident can take steps to limit the damage done, or to make your location a less inviting place for an event to happen. “Take a look at your venue. Are their things you can do to prevent something happening?” Brown asked.
Bayou Steel has done just that. The company is installing a backlock on the front door, requiring the receptionist to buzz in any visitors. Other changes are also being undertaken to beef up plant security. “Those are the other things that as a business you have to think about,” says Gage. “They’re parts of today’s life.”
Another key part of today’s life is the influence of the digital world on business. The numerous ways of getting information out quickly, through cell phone calls and texts, as well as social media platforms is a boon to storm preparation and response. However, as companies such as United Airlines learned in 2017, the ubiquity of cell phone cameras and the power of social media can also be the source of unexpected crisis for a business. Crafting a sound social media strategy to both respond to crisis, and prevent one from occurring, is another important consideration for any business, speakers at the Disaster Conference noted.