SHELTER

March  2004

 

Dealing with Disasters
How Retailers and Distributors 
React to Hardship

by Alan B. Goldberg

Natural disasters do not discriminate. They strike in many ways, at any time, in any sector of the country and in communities large and small. Whether the cause is fire, flood, mud slide, tornado, hurricane or earthquake, the effect is the same: devastation. Much has been learned from recent disasters. In some cases where damage was caused by high winds, the result has been more stringent building codes. 

On a community level and with the help of local distributors and retailers like The Home Depot and Lowe’s, many homeowners have received some form of disaster relief. Today, there is much emphasis on educating the public, particularly the need to be prepared. Here are a few accounts of the impact of natural disasters and the outcome, from family-owned distributors to large corporations.

“We were affected by Hurricane Andrew, both on a personal and business level,” said Joe Garcia, president of Window Classics Corp., a distributor located in Hollywood, Fla. 

“The most difficult part was not having electricity for three months and conducting business with generators to supply power,” Garcia said. 

Garcia pointed out the frustration of trying to provide product when there were shortages while trying to find qualified people. 

“Our employees were dealing with their own losses. We moved people from other showrooms into the Miami area and other affected areas to keep our business going. We dispersed food and other supplies to employees in need and neighbors,” he added. 

Being Prepared
Garcia said he now understands the destruction that can take place and has made improvements at his facilities to make them more secure. In terms of business, as a result of the hurricane, the company is producing more custom-type products and is better prepared to supply product.

Fortunately, many distributors, because of their location, have not been affected by hurricanes. But one in particular is taking no chances. 

“As long as my family has owned this business (26 years), we have never experienced a devastating natural disaster,” said Dwayne Swanson Jr., vice president, Raymond Building Supply of North Fort Myers, Fla. “But, that doesn’t mean we shouldn’t be prepared.” 

Swanson said the company has been working on a disaster recovery program for all their locations. 

“We will have procedures [for implementing the disaster recovery program in the event of a crisis] in the very near future,” he added.

Don Harrison, manager of public relations for The Home Depot’s eastern division, is all too familiar with natural disasters (most recently with the New York blackout and Hurricane Isabel). He is involved with virtually every major one, up and down the Eastern Seaboard. “We’ve become very adept at preparing for natural disasters,” Harrison said. “We learned a lot from Hurricane Andrew—where one of our stores was taken down—about the need to be prepared well in advance,” he added. 

Harrison said that the key is planning and movement of product in areas where it is going to be most needed. He explained that in the case of a hurricane or storm that is developing, it is tracked closely. 

Once it is named, which is generally within a week of striking, The Home Depot locks in its prices at the affected stores and signs go up immediately. 

“We want our customers to know that our prices will not increase because of the possibility of product shortages,” Harrison said.

One of the many things that The Home Depot has learned from natural disasters, according to Harrison, is that people procrastinate and will wait until the last minute before they purchase materials. 

“We need to have product on the shelves in advance of the hurricane or we aren’t serving our customers, and we believe we do that better than anyone else. So it is essential that our trucks are on the move, up and down the East Coast, responding to stores in need,” Harrison said. 

Harrison pointed out that supplying product from one location to another, particularly on an emergency basis, can be a logistical juggling act. 

“We start with meetings and conference calls involving merchants, district managers and store managers to determine where the stock will come from, when it will be shipped and when it will arrive,” he said. 

Harrison added that plywood is usually the most demanded product and that The Home Depot works directly with paper mills to meet the demand. 

“We could have as many as 200 trucks on the road, going from Maine to Florida. In a two-day period, we will move as many as 25,000 sheets of plywood to stores that are affected. In fact, prior to Hurricane Floyd, which was a category 4, we moved 600,000 sheets of plywood into South Florida. The week before Hurricane Isabel hit the Virginia coast, we shipped 25,000 generators.” 

Educating the Customer
Another part of The Home Depot’s overall disaster program is providing relief and educating the customer.

 According to Shelley Shumaker, The Home Depot’s project supervisor for disaster relief, it is one of four key areas where the company is involved with helping the community. 

“We work through local organizations, such as the Salvation Army, Red Cross and fire departments. The company not only makes donations but we also have 300,000 associates who volunteer their time. They work in communities or through emergency agencies. Last year, we had 7,000 volunteers who helped with disaster relief. 

During Hurricane Isabel, we had volunteers in Baltimore where they assisted with clean-up. We will be assisting in California with replanting in burned-out areas. Last May, which was the worst outbreak of tornadoes, we tried to respond to everyone working through local organizations.” 

Shumaker said that every year, The Home Depot partners with The Weather Channel and publishes a hurricane weather guide which includes ways to prepare and a “before-and after” checklist of supplies.

Lowe’s also offers customers a severe weather guide.

In its “Severe Weather and Natural Disaster Readiness Guide,” Lowe’s presents invaluable information on: general preparation, family disaster planning, disaster supply kits, winter weather, tornadoes, wildfires, heat waves, hurricanes, floods and earthquakes and recovery tips. 

According to the guide, Lowe’s serves communities that have faced natural disasters, working through the Lowe’s Charitable and Educa-tional Foundation, the Home Safety Council and the Employee Relief Fund. 

A customer donation program is often activated locally for the American Red Cross with Lowe’s matching a portion of the funds received. Company trucks deliver and distribute free supplies to affected neighborhoods. Employees assist with clean-up and recovery efforts. 

In recent years, Lowe’s has responded to more than 100 natural disasters across the nation, donating truckloads of critical supplies, providing store credits to the American Red Cross and implementing price freezes. 

Following the Colorado wildfires of 2002, Lowe’s of Pueblo, Colo., donated 80 tons of feed hay for relief efforts and distributed it to local residents, and employees have been dispatched to communities hardest hit by tornadoes, providing emergency supplies. 

Distributors Lend a Hand
Distributors, like the big boxes, have joined relief efforts after disasters.

“While [our company has] not been directly impacted by a flood or another natural disaster, several customers were washed out by flooding. We have sent care packages to them and others in need; we have adjusted delivery schedules, provided extra service so customers get what they need, and we have worked with the local office of the Red Cross,” commented Terry Bumgarner, president of King Sash & Door Inc. of Clemmons, N.C.

Streuli Sales Inc. of Colfax, N.C., has also helped in a time of need. 

“We’ve been in business for 30 years, and, fortunately, we have not been affected by natural disasters. We are located on the fringe of hurricane country and have been spared by the impact of hurricanes. We’ve had ice storms, and once we lost power for five days which is very difficult for a family-owned business,” said Walter Streuli, president. 

Now the company is prepared in the event of another power outage. 

“Five years ago, when we added a new building, we decided to include a generator to give us a back-up,” Streuli said.

How Disasters Affect the Market
Schaefer Sash & Door Co. of Cordova, Tenn., has been affected in another way. 

“As far as natural disasters, we’ve been lucky,” commented Scott Schaefer, president. “But the volatility of the markets for lumber, worldwide, unlike our millwork business, which remains stable, affects our lumber business. The demand for plywood (often related to natural disasters) goes beyond our immediate area. Imports to other countries, particularly where there is rebuilding, determines availability of product to us.”

Joe Cornett, president and chief executive officer of Texas Wholesale Building Materials Inc. of Farmers Branch, Texas, concurs with Schaefer. 

Cornet said his business has not been directly affected by a natural disaster but has been impacted by a changing market from disasters in areas that his company serves. 

“In the roofing business, which is our niche, hailstorms cause extensive damage. We must have the ability to ramp up inventory and our overall operations to accommodate customers who need product. Following a major storm, demand for roofing materials can increase within 90 days to 18 months, depending on the extent of the damage. We are looking at both commercial and residential markets because roofing of any type can be affected,” he said. 

Cornett said that the availability of product can be tricky because the roofing market tends to be volatile. 

“Supply and demand are not just affected by a local area. Situations that take place on a national as well as global level affect us. High imports, for instance, to meet a demand for plywood (a key material) or other roofing materials in another part of the world affect our supply and can create an allocation of product,” Cornett said. 

Cornett pointed out that the company responds immediately if customers are affected by a natural disaster. 

“We send trucks with whatever merchandise it takes to keep them in business. In one way or another, all of us in the supply chain are affected and we must take care of each other. If someone’s business is destroyed, local distributors will get involved and assist. We can’t afford to let the market go out of control because we could easily see the cost of materials skyrocket,” he added.

From coast to coast, retailers and distributors have been impacted, directly or indirectly by natural disasters. How they deal with each one is as varied as the nature of their businesses.


SHELTER

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