Dealing with Disaster - Hurricane Helps and Hurts Businesses
There's the luxury of being halfway between both coasts. And it obviously came in handy when the hurricanes hit down south. But thanks to that hurricane, the profits of some sweet Missouri companies aren't so sweet right now.
What could a store full of chocolate have to do with Hurricanes Katrina and Rita. Plenty, as it turns out. Even in Kansas City, the headquarters for Russell Stover.
"Every single week is a new adventure as to whether or not we will have enough to run our plants," Russell Stover Co-President Scott Ward said.
The "enough" they're missing is sugar. Katrina shut down two of the major refineries in the New Orleans area. According to the USDA, these New Orleans' refineries produced about 5,500 tons of sugar daily. A loss of refineries causes a sugar shortage. A sugar shortage causes a sugar scramble.
"Now, virtually everybody's fighting to find a way to get enough sugar," Ward said.
Ward says they had to buy sugar on the open market for about 100% more than usual.
"We're paying such a huge premium and, with that, no price increase. We're really struggling if we are even making a cent on every piece of candy we make," Ward said.
To try to salvage something, Russell Stover says an eventual price increase is inevitable.
"Hershey, the largest chocolate manufacturer has already announced increases. We're going to have to," Ward said.
So, your chocolate Santas might cost a little more in the future. But one Russell Stover employee says getting the shelves filled in her store wasn't her main concern.
"I wasn't so much worried about the product as the families, you know, the people," Lou Ann Delpercio, the Manager of Kansas City's Russell Stover said. "Do our people ask, well, what's gonna happen? Yes. But, they're also more toughened and experienced in dealing with disasters of some sort. Weather plays havoc with us every single time."
And these most recent weather catastrophes are playing havoc with a lot of Missouri businesses as well as the economy. An Economic Development Department report estimates for each loss of $1 million in sales caused by Katrina, Missouri's economy loses 14 jobs, $435 thousand in personal income, $40 thousand in state revenues and $1 million in gross state product. And problems with the sugar supply are only one example. How about the supply of a healthier snack.
Missouri's known more for it's corn than its chocolate, and it is certainly not known for its bananas. But in Queen City, Missouri, there's a big business surrounded by corn fields that "Doles" out your Chiquitas. The hurricanes changed everything for transportation.
"Picture your [KOMU's] broadcast tower in Columbia getting blown down and your building flattened. Then, pitch a tent and get a remote truck, and operate your studio out of that. Maybe you can get an idea," R&O Midwest Container Operations Manager Curtis Snider said.
The company moves Dole and Chaquita bananas in sea-going containers from Gulfport, Mississippi to 14 other states in the central part of the country. The company's dispatch center is about 20 miles north of Kirksville. It may seem a little strange to run a company like this from so far away from the banana docks.
"Why Missouri? Why are you in Queen City, Missouri? The sign says 'Don't blink, you'll miss us.' Well, we didn't get blown away by the storm now, did we," Snider said.
R&O is still trucking their bananas, but their competition isn't. They were wiped out because their dispatch centers were in Gulfport, Mississippi.
"We were just the only ones left with any vital communication. So, it provided to be a very good time to be in Queen City, Missouri," Snider said.
Before the storm, R&O ran about 125 trucks. But the storm took 30 or more. The company has seen about a 50% drop in revenue, and have had to make personnel cuts in their dispatch office. When Gulfport got hit, a huge chunk of the country felt it.
"From this port, we serve easily 2/3 of the United States. Those landlocked states rely on a container port such as Gulfport. We're a pretty vital link to not just the local community, but the national community," Mississippi State Port Authority Don Alee said.
Gulfport is slowly rebuilding.
"We're getting back into a regularly scheduled service of ships," Alee said.
So that means R&O's phones are still ringing off the hook trying to get those bananas up the highway. R&O, just like Russell Stover, is trying to clean up the mess the hurricanes have left in Missouri.
Aside from the Missouri connection, Russell Stover and R&O are similar in another way, they're both obsessed with the Weather Channel. Members of both companies say they are Weather Channel junkies because their businesses are so affected by weather.