Weathering The Storms

2011 Alabama tornado

A 2011 tornado in Tuscaloosa, Alabama, damaged or destroyed about 650 local businesses.

Don’t be caught off guard—An emergency action plan can save the life of your business.

875. That’s the number of tornadoes that swept through the U.S. in April 2011. By comparison, consider that the previous high for any month on record was 542, back in May 2003. If April wasn’t bad enough, the following month bore witness to a devastating twister in Joplin, Missouri, that turned out to be the deadliest tornado since 1936. Two GAWDA members, Praxair and Matheson, suffered damage to their Missouri distributorships at the hands of this tornado.

Along with tornadoes, major storm systems this spring brought massive amounts of rain, resulting in flash flooding and record-high water levels along the Mississippi and Ohio Rivers. In Arizona, the largest wildfire in state history consumed close to 900 square miles of land. Before that, in January and February, a blizzard brought snow and ice as far south as Texas, bringing businesses across the country to a halt.

2005 Warehouse flood caused by Hurricane Katrina

Industrial Welding Supply’s (now Gas and Supply) New Iberia, Louisiana, warehouse amidst a 2005 flood caused by Hurricane Katrina.

Over the course of the year, distributors throughout the country have been forced to close their doors and cancel deliveries. For at least one distributor, the tornadoes of the spring were too close for comfort. Without an emergency response plan and no tornado shelter, the company’s buildings would not have held up very well if hit. Motivated by these recent events, the distributor is currently in the process of creating a plan for employees to follow in the event of a disaster or emergency.

For a business hit by a disaster, be it natural or man-made, preparation and response can be the difference between failure and survival. It is estimated that more than 25 to 40 percent of businesses that close after a disaster never reopen. While a distributor cannot protect against every scenario, an emergency plan is an important step in mitigating losses and regaining operability. Below are some considerations for disaster and emergency recovery plans. The individual elements of each plan will depend on the nature of the disaster and the business, and these are some important areas to address:

Know your vulnerabilities — Analyze the potential risks to your business, including all geographic and climatic hazards that could endanger the building. Consider possible disasters like power outages, computer viruses, fuel or water supply failures, chemical spills, arson and terrorist threats.

Virtual Disaster

Natural disasters aren’t the only outside threat to a business. How long would it take you to recover if accounts receivables files or customer contact lists were lost? According to Kaspersky Lab, almost 20 percent of businesses reported data loss as a result of a computer virus or malware attack over the past year. And restoring lost data is neither quick nor inexpensive. The National Computer Security Association estimates the following costs for restoring data:

• 19 days and $17,000 for 20 MB of lost sales/marketing data

• 21 days and $19,000 for 20 MB of lost accounting data

• 42 days and $98,000 for 20 MB of lost engineering data.

Eliminate everyday risks — Geography and climate cannot be changed, but some risks can be mitigated with a little foresight. Instituting a regular program of building inspection can reduce problems related to faulty wiring, broken pipes and defective heating or cooling systems.

Inventory your facility — Having a complete list of your possessions—with photo or video documentation—will help you get a fair insurance payment, and it shows proof when you want to deduct your losses on your tax return.

Ensure that you’re insured — Even if the business is not operational, expenses like rent, leases and loans will still need to be paid. A company can also be held responsible for assets held on site for others, i.e., cylinders to be refilled or machines brought in for repair. Make sure you have appropriate insurance and pay special attention to what risks are excluded in the policy.

Create a list of emergency contacts — Include local, state and federal emergency numbers along with numbers, addresses and email contacts for employees, major clients, suppliers, financial institutions, insurance agents and any other individuals or businesses that may need to be notified. Store the list off site.

Disaster-proof your finances — Open an easy-access emergency savings account with enough funds to cover at least three months of expenses. Keep in mind that creditors will not automatically defer payments, but most will agree to an extension once they are aware of the situation.

Locate alternate facilities for emergency use — Even customers who are sympathetic to your situation will be forced to look to other suppliers if their needs aren’t being addressed. Consider options for short-term rental of office or warehouse space.

Back up your files — Having copies of both paper and computer records will help get you back on your feet as soon as possible. Keep regular backups of computer files as well as insurance policies, lists of inventory and equipment, and accounting records.

read more onlineIf your welding and gases company has 11 or more employees at any given facility, OSHA requires a written Emergency Action Plan. Read Does Your Company Need A Formal Emergency Plan?

Develop emergency procedures — A plan must be easy to follow because people often struggle to think clearly in times of panic. Precise instructions and training are critical.

Keep employees apprised — Employees must know what steps to take during an emergency. Consider things such as valves that must be closed, backup power supplies and escape routes. Designate a muster point and conduct regular drills.

Update regularly — All your vigilance will be for naught if your information is out of date or if your staff is unaware of it. Contact information changes constantly, as do equipment and products.

This may seem like an overwhelming process, but no company is susceptible to all disasters. Decide which ones are most likely and plan for those. Then determine what types of loss would be most damaging and take steps to prevent them. Once you identify these critical elements, write an emergency recovery plan that details the priority in which your operations should be restored and where the resources to restore each business function can be found. The plan can always be expanded to include other scenarios.

In today’s highly competitive marketplace, even one unexpected day off can be costly. Preparation is the only prevention.

Hurricane Katrina brought flooding—shown here at Industrial Welding Supply’s (now Gas and Supply) pumping area (top left)—and 150 mph winds that damaged tanks (above) and scattered cylinders (bottom left) at Airgas’ location in Buras, Louisiana.

read more onlineStop Your Worries? Not!

So you don’t work in a flood zone, tornado alley, near an earthquake fault, or on a coast prone to hurricanes? Disasters come in all forms. Read what distributors did when cut off from an essential supply of gases in What To Do When The Sky Is Falling and Where Has All The Argon Gone?

 

 

By The Numbers

According to the National Federation of Independent Business, 30 percent of U.S. small businesses have been closed for at least 24 hours due to a natural disaster. Of businesses that close following a disaster, anywhere from 25 to 40 percent will not reopen. A 2010 survey by Travelers found that 44 percent of small businesses are operating without an emergency action plan of any kind. 48 percent of business owners rely primarily on their own expertise or their peers to identify and manage business risk, without consulting an insurance agent or attorney.

 

Gases and Welding Distributors Association