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Hurricane Harvey & Irma's Threat on the Product Economy

Posted by Joseph Tanador | September 8, 2017

As we reel from Hurricane Harvey and are still struggling to survive Hurricane Irma, here is how companies have been affected so far.


Extent of Damage:

After battering the northern Caribbean islands, Hurricane Irma caused fatalities and widespread damage in the region. The Category 5 hurricane has left twenty-three people dead and damaged or destroyed buildings and homes, displacing thousands of residents.

Prime Minister Gaston Browne of Antigua and Barbuda said "Barbuda right now is literally a rubble" as 95% of buildings were damaged and 40% of the country’s total population were left homeless.

In Saint Martin, four "most solid" buildings have been destroyed, rooftops and boats were cut into pieces, and electric towers were destroyed which left almost all of the island’s residents without power.

According to the Caribbean Disaster Emergency Management Agency’s estimate, 90% of Anguilla’s power infrastructure was damaged, 90% of government buildings damaged, and that the island suffered “significant damage to [its] main water supply.

Widespread damages were also reported in Turks and Caicos Islands and US Virgin Islands. Less damages were recorded in Haiti and the Dominican Republic; however, a major bridge on the island was reportedly destroyed.

St Kitts & Nevis was "spared the full brunt" of Irma but "significant damage" to property and infrastructure are still highly likely. In the Bahamas, meanwhile, the extent of damage remains unavailable. However, airports have reportedly closed. 

In Puerto Rico, more than a million people were left without power and 50,000 without water. Ports in the country have been shut down, while commercial flights were also reportedly canceled.

Currently, Hurricane Irma is monitored north of Cuba, where mandatory evacuations were ordered, and is forecast to hit Florida. Fuel shortages were already reported in Florida and analysts estimate that the Irma’s cost could hit $125 billion should it make landfall in Miami. We will keep you posted should damage reports in these locations become available.

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Hurricane Irma as seen from space. Photo via NASA. 

Companies affected:

Information on what companies have been affected is very limited as of this writing. But so far, more than 1,000 flights were already canceled. Affected airlines include American, JetBlue, United, Frontier and Delta. Key West International Airport has been shut down since Wednesday evening, Sept. 6. Several businesses in Florida, including banks, were closed.

FedEx has temporarily suspended some its services in southern Florida on Thursday, September 7 in preparation for recovery efforts. In Georgia, operations at the Ports of Savannah and Brunswick will be closed for three days slated September 9. Additionally, the Cuban government has started the closure of its nickel industry as the hurricane nears the country’s coastal areas.


Expected Long-term effects:

Critical part of US manufacturing supply chain is currently at a stand-still. The U.S. Gulf Coast is home to about 90% of the nation's capacity to turn out base plastics. Petrochemical plants that make the products and the rail companies that ship them are still restoring service after Harvey. Price spikes haven’t been seen yet because companies are still burning through existing inventory. But manufacturers don’t keep big stockpiles and could start running out as soon as next week.

Florida’s economy will likely be affected. The state’s economic output in 2016 was at $815B, making it the fourth largest economy in the US. As Hurricane Irma forecast to hit the state, the number of companies moving to Florida may be reduced. Or worse, some may move their operations to other states/country. Companies may also consider sourcing supplies from manufacturers located in countries with lowest risk of disasters.

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Miami grocery shoppers hoard food in preparation for Hurricane Irma.

Kako Escalona via Shutterstock.

Companies’ “survival” tactics:

In case your company is located where the hurricane is forecast to hit, these tactics might help: Always be prepared. If your operations is located near the coastal area, DO NOT ignore evacuation orders. Stock up emergency supplies. Make sure that your facility is secured -- double check if the roofs or walls are stable. Coordinate with your employees on how to communicate should lines become unavailable (social media may be an option). Also, important data and documents should be secured. There are a few cloud servers to choose from. To keep your operations running, having a temporary location may also be an option.   


For best practices, revisit us here.