Bridging the Gulf

Distributors and manufacturers respond to Gulf Coast hurricanes.

by Rich Vurva

Four weeks after Hurricane Katrina roared through the Gulf Coast region, scars left from the storm were still plainly visible at the Oliver Van Horn Company in New Orleans. One entire wall and a portion of the roof were missing, exposing inventory to the elements. But the physical destruction to the business tells only part of the story.

“In our New Orleans office, 10 employees lost their homes. One of our guys is missing and presumed dead. Another woman couldn’t handle the stress and committed suicide,” said company chairman and CEO Lee Eagan.

Eagan hopes to rebuild in the same location where the family-owned company has done business for four generations. The New Orleans location, about one mile from the Superdome, served as the company’s headquarters and was responsible for about 35 percent of the company’s total sales.

Eagan estimates losing more than $1 million in inventory. Because the company had the foresight to develop a disaster relief plan, it performed a complete system backup with the assistance of Prophet 21 as the Category 4 hurricane approached. That action enabled Oliver Van Horn to continue to serve customers from six locations that remained open after the storm.

“Our biggest issue is loss of revenue. Who am I going to sell to? I would say that half of the geography that we cover was hit by the storm,” Eagan said.

Eagan said he was overwhelmed by the outpouring of support from people and companies within the industry. For example, WinWare donated $5,000 in Wal-Mart gift cards for employees who were forced to evacuate their homes. A secretary from Prophet 21 sent Eagan a check for $200 to pass along to his employees and a supplier that does very little business with the company sent a $2,000 check. A competing distributor offered the use of an empty warehouse, and Eagan agreed to help that competitor serve his customers until the company is back on its feet.

Not everyone has been so helpful.

“We had a competitor hire away one of our branch managers after the storm. This kind of event brings out the best and the worst in people,” Eagan says.

Slow return to normal
In nearby Harahan, La., Applied Bearing & Supply’s business is down about 80 percent according to company president Jim McClain. Although his company sustained only minor inventory losses and about $50,000 in property damage from high winds, the distributor’s customer base was decimated.

“We still have customers that haven’t opened yet. We have several major companies that we do business with that were flooded during Katrina, then flooded again with Rita. They were working to get the plant open, only to get flooded again and have to start all over,” McClain said.

The storm caused the company’s Baton Rouge, La., location to lose power for two days and the Harahan location remained closed for three weeks. Baton Rouge employees who suffered the least amount of damage to their homes put in long hours while McClain and other employees who evacuated focused on finding food and shelter for their families.

“We lost access to the computer because the server was in Harahan. Once we left, they wouldn’t let us back for two to two and a half weeks. We had somebody sneak in across the levee, go to the store and pull the server and a few computers out. We got it set up here in Baton Rouge. We were up and running on the computers a week after the storm,” McClain said.

McClain has been buoyed by offers of support from members of IDC-USA, the distributor cooperative his company belongs to. The organization raised more than $25,000 for the IDC Charitable Trust Fund to aid the employees of members affected by the storm.

“IDC has been very supportive. They’ve offered all sorts of help,” he said.

McClain believes the rebuilding process will take years.

“We’ve got a few customers where we know their facilities have been totally devastated. They say they’re going to rebuild, but it might be one or two years before they really need anything (from us),” he said.

The Applied Industrial Technologies service centers in New Orleans and Laurel, Miss., were directly hit by the hurricane, and several other locations experienced power outages and interruptions in telephone service.

“Through quick team action, we worked to resume operations. Phone calls were rerouted where necessary to minimize any interruption of service. Our field team worked to establish contact with customers either in person or by phone. Cell phone, pagers, even home phones, were provided as needed,” said public relations manager Julie Kho.

The New Orleans facility remained closed until Sept. 15, with business being routed through Applied’s Baton Rouge location.

“Throughout this crisis, the safety and security of our employees remained our first priority. We are very pleased and relieved to report that all our employees are safe,” she said. Kho added that Applied established a recovery assistance fund to benefit the immediate needs of Applied employees impacted by the hurricane. Employees used the funds to pay for temporary shelter, gain access to cash unavailable from local banks, and cover daily living expenses.

More than a dozen Fastenal locations were temporarily closed following the storm. The company provided temporary housing for displaced employees and established a Fastenal Relief Fund, where it received donations through the end of October to help victims of the disaster.

Many distributors worked long hours to find temporary housing for employees and to continue to deliver products and services to customers not affected by the storm.

“It took days to locate all of our associates due to limited telephone connectivity to the area, but we were relieved to finally learn that all were accounted for and in good health,” said Shannon Bennett, director of communications for Hagemeyer North America.

She added that some Hagemeyer associates lost their homes entirely while others experienced varying degrees of damage to their homes and property.

“Our local leadership in particular is doing an excellent job in caring for these associates to ensure their needs are met during this difficult time. Employees at our sites across the country also worked around the clock or through the weekends to support the movement of products to ensure our customers and associates in the area have the products they need for relief and recovery,” she said.

Channel partners to the rescue
One week after Katrina slammed into Waveland, Miss., about 55 miles east of New Orleans, Joe Monti of Monti Electric Supply was on his way to the Intuit-Eclipse customer support center in Hyannis, Mass., with his company’s backup tape in tow. He made a backup tape before the company’s system went down and carried it above his head through waist-deep water that flooded the streets surrounding his distributorship. A team of Intuit-Eclipse engineers got Monti’s system up and running.

“As soon as the storm was predicted to hit, we began working our lists and found that we had about 25 customers that could potentially have been affected,” said Eclipse systems support manager Sean Leaver. “So we did everything we could to make contact with them and check on their status. Fortunately, a lot of those customers had their equipment located on the second floor of their buildings and were spared the destruction brought on by the flood waters. But no matter what the situation, we were ready to do whatever was necessary to provide help to anyone who needed it.”

Vendors offer support
Within days of the storm’s landfall in the Gulf region, suppliers and other companies in the industry began offering support to their channel partners affected by the hurricane. (See the sidebar below, “The industry responds” to read how some companies responded to the disaster.)

The Industrial Supply Association board of directors voted to make a $50,000 donation to the American Red Cross on behalf of its members.

“The loss of life and property to individuals and businesses in the Gulf Coast is overwhelming. In some cases, people have lost their homes and their workplaces. Our hope is that this donation by ISA on behalf of its membership will help support the relief efforts and massive rebuilding projects that will be necessary in that part of the nation,” said ISA president Tim Tevens of Columbus McKinnon Corp.

Many suppliers scrambled to develop ways to help distributors in the storm-ravaged region.

Recognizing that contractors will require sorbents to help clean up the wreckage caused by Katrina, SPC decided to donate a portion of its sales to the American Red Cross and the Bush-Clinton Katrina Fund headed by former presidents Bush and Clinton.

“Within New Jersey, we are trying to work with the state to provide employment to hurricane refugees temporarily relocated to our area. SPC is a family business, so giving displaced workers an opportunity to support their families while making products that will help clean up their homes is the least we can do,” said SPC president Michael P. Hobin.

Suppliers also offered extended terms to distributors affected by the storm. For example, Simonds International offered extended dating on all new orders, and “re-set the clock on all open invoices to the end of November, hoping to help them get back on their feet and get some cash flow going again,” said marketing manager Eric Pfeiffer.

Permatex Industrial relaxed its standard drop-ship minimums and policy for shipments into the hurricane areas, and extended payment terms to select distributors in the region. “We’ve tried to make it as easy as possible to get needed product into the hands of those rebuilding critical equipment in the area,” said senior market manager Jase Doan.

Weiler Corporation provided extended dating on all open and future invoices together with additional discounts on all product purchases to distributors in the Gulf region.

Diamond Chain Company waived all minimum order charges and after-hours reopening fees and expediting charges. The company also provided ground freight at no charge, negotiated extended payment terms and provided discounted pricing to replace damaged stock.

“We are prepared to help those impacted to recover as quickly as possible from the devastating effects of Hurricane Katrina,” said Diamond Chain president Brett Vasseur. “I also believe it is Diamond Chain’s duty to provide this special assistance to our customer base in a timely and cost-effective manner.”

Wobble Light, a manufacturer of portable lighting, donated a truckload of Wobble Lights to the impacted area on Sept. 2.

“Before we could even get the truck to pick up the lights, we had received more orders for lights than we ship in an entire month. Over the weekend our fax machine had paper falling out of it with orders,” said vice president of marketing Doug Collins. The company adjusted its manufacturing schedule to ensure continued production of enough product needed in the region.

This article appeared in the November/December 2005 issue of Progressive Distributor. Copyright 2005.

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