Major Snow Events Thwart the Pace of Business

By Mark R. Smith, EDITOR-IN-CHIEF

That first snow storm that started Friday, Dec. 18 and ended late on Saturday, Dec. 19, 2009, was intense: Approximately 21 inches of snow fell at BWI Thurgood Marshall Airport.
Then came the affair that spanned Friday, Feb. 5 and Saturday, Feb. 6, 2010: That was about 25 inches; then on Wednesday, Feb. 16, 2010, the total was "just" a little more than a foot.
That's enough snow to make the several inches of snow that fell on Saturday, Jan. 30, seem like a mere flurry in retrospect. The total this history-making winter (so far) is about 70 plus inches, depending on your place of residence. But at this juncture, who's splitting hairs?
While some industries can benefit from a measurable snowfall - just look at the contractor's name on the side of the snowplow and check those half-empty shelves at your local grocery stores - this unprecedented snow-laden winter has meant some tough consequences reverberating throughout the business community.
"There are other industries where snowstorms simply delay purchases, like if the consumer wants to buy something at Best Buy or Home Depot," said Andrew Flott, president and CEO with Revere Bank in Laurel, "but if you run a Panera Bread franchise and miss a Saturday, that revenue is gone forever."

Staying Connected
Flott said that, while Revere Bank was affected by the storms, today's technology came in rather handy until it was able to reopen its doors.
"While most employees made a genuine effort to get to work, there was a considerable amount of customer interaction over the Internet during these recent storms," he said. "Fortunately, today people can work from their homes and keep in touch on their computers and cell phones ... that worked very well for a short period of time."
The newer twist was contacting employees via texting. "We set up an outlook distribution e-mail to all 26 employees' cell phones," he said. "That worked well, too."
Even under the ever-mounting thick blanket of crystalline precipitation, Revere Bank was able to open at some point during each snow day. "We even opened one CD over the phone at the start of the second February storm, though we were only open from 8:30 to 10 a.m. that day," said Flott.
Under such circumstances, normalcy can still be a bit tough to regain, even after the plows have made multiple passes by one's home and work addresses. "This was a situation where employees didn't, or couldn't, come to work," he said. "When they returned, some might have talked about the snow to the point of distraction."

Lost, Not to Be Found
Another issue concerns companies paying their employees, whether they made it in to work or not.
"You tell your employees that they have to make the time that they missed up," Flott said, "but the employer often won't get full value back. You don't want to cut anyone's vacation, so you ask them to work extra. But the usual office staff isn't on hand when they do - so some employees might not expend maximum effort."
He also discussed those missing revenues that can't be recouped.
"If I was going to settle a $1 million loan and couldn't due to the weather, that means that a loan might not get booked for two more weeks," he said. "So the $2,300 that I would have made in interest on that deal will not be earning anything during that stretch. That's money that I won't get back."
Paul Hartgen understands Flott's plight. The president of the Maryland Restaurant Association in Columbia said that his industry averages $25 million a day in sales,
"so when people can't get out and you shut a restaurant down for the day, that really hurts. That's an especially tough hit on a weekend day, since that's the busiest time of week."
Hartgen offered what's becoming a familiar refrain: "Our clientele can't make [the revenue] up by customers spending twice as much another day," he said.
The state will feel the impact with a downturn in tax revenue for December and February (and maybe even for January, due to the smaller storm falling on a Saturday) as a result. "It costs the state money to plow roads, but it also costs the state, its cities and its towns money due to that missing tax revenue," said Hartgen.
While the retail industry was hit as well, Tom Saquella, president of the Maryland Retailers Association in Annapolis, found a silver lining around the recent weather events.
"I think most retailers would say 'thank God' that the [two February storms] didn't occur in December or April, when the industry traditionally starts picking up around Easter," said Saquella.
Indeed, January and February are traditionally the slowest months in the retail industry. "Actually, the December storm was much more devastating to us, since it happened on the Saturday before Christmas," he said. "However, business was brisk early that next week and we got much of our business back."
The two February storms were appropriately timed, Saquella said. "Some retailers at the malls [did] well on President's Day [which was celebrated on Monday, Feb. 15]," said Saquella. That's a pretty good weekend for furniture sales, and it's also when many retailers take their last shots for selling out winter merchandise.
But he touched on the public's emotions, too. "However," he said, "much of that [activity] could also have been due to cabin fever."

Crunching the Blizzard Numbers
There is a science to understanding the economic impact of crippling weather events. Berwyn, Pa.-based Planalytics works with utilities and companies, large and small, to analyze the weather's impact on purchasing patterns and on local economies.
"We track scanner activity at the supermarkets, retail outlets, etc., and let the consumers vote with their wallets," said COO Scott Bernhardt. "We see spikes in the sales of winter wear, snow shovels, you name it. We track hundreds of products."
Planalytics also employs historical data concerning weather patterns in given towns "to get a baseline to help illustrate the true effect of a given storm," he said.
Bernhardt estimated that the federal government closing [which happened during all three major storms and even between the two events in February] "costs $100 million a day," he said. "Also, the three airports in the Baltimore-Washington region schedule 2,000 flights a day combined; so, using the conservative number of $150 per ticket cancelled, that adds up."
In Baltimore City, with its [2000 census approved] population of 785,000 people, $102 million per day in revenue was lost just in basic commerce. "That's not counting delayed purchases, just money that is never coming back," he said. "It's not going to Starbucks, to a restaurant or spending money on basic daily stuff. That hurts, especially in this economy."

Normal Works
As for snow removal, Bernhardt offered comparisons with a caveat.
"In New York City, it costs $1 million per inch to shovel snow, but they have great quantities of scale there due to the colder climate. But Baltimore City budgets less money for snow removal, and when the storms are so frequent and so intense, the city spends way over budget."
That's not news to Tom Davis, director of business development for The Brickman Group, a landscape maintenance firm that conducts its mid-Atlantic operations out of Columbia. He said Brickman "pulled in crews from its offices in New York, southern Virginia, the Carolinas and Georgia" to deal with the raging storms.
Davis called the efforts "similar to those of BGE when it requests assistance from other regional utilities" and noted that Brickman's team included 2,000 workers, 850 trucks and 600 loaders at work across Maryland and Northern Virginia.
While Flott opined that companies that offer snow removal services as part of their repertoire benefit during a major storm, such circumstances "can actually present a Catch-22," said Patricia Baldwin, treasurer of Reliable Contracting in Millersville.
Reliable, which rehired 40 laid-off workers to assist with its snow removal efforts, contracted for $500,000 in services during and after the Dec. 19 storm [figures for the double-hit in February are not yet available]. The company catered to its regular customers, like Westfield Annapolis [Annapolis Mall], Anne Arundel Medical Center and various property management companies "almost around the clock," from Feb. 5 to 19, Baldwin said.
Additionally, the company worked for government entities that were suddenly in need, such as the state of Maryland, BWI Marshall and the City of Annapolis. The storms were so intense that Reliable took the unusual step of hauling snow that it normally would have simply plowed off of the roads.
As for that Catch-22, Baldwin cautioned that the financial aftermath of these storms may not always be as they seem. "Remember, these storms have also meant that whatever projects we were working on were delayed, and now we're having issues with the mud," she said.
So like most companies, the crew at Reliable is more than content with a more predictable winter "with no snow," she said, "because that allows us to keep more men employed and working."