Recovering from Disaster
On Friday afternoon, Nov. 17, 2000, I walked into the headquarters office of the St. Louis wholesaler where I have served as president for the past 12 years. With products including specialty fasteners, thermal insulation, heating and air conditioning, and air filtration, we had expanded during the 1990s to 10 branches throughout Missouri and Illinois. I bounded up the steps and greeted the switchboard operator with a smile. It was just before Thanksgiving and on this Friday afternoon I was in a cheery mood.
In response to my greeting the operator said, "I'm afraid you're not going to be so happy with the news I'm going to tell you. There's been a fire at our Columbia office."
Seeing the worried look on her face, I asked if anyone was hurt and was relieved when she said no. But when I asked her how bad the damage was, she replied, "They say there's nothing left!" After I realized she was serious, it set in motion a chain of events as we dealt with the loss, recovery and return to operations in the mid-Missouri university town where we had operated a warehouse with a four-person staff for the past decade.
This article will relate our experiences, the choices we faced, and the actions we took, for good and bad, to deal with this disaster. It is my hope that it will provide you with some idea of how you might proceed should your company face a similar situation.
We had, like all wholesaler companies, purchased insurance for just such an occasion for many years, but in our 120-year history had never faced such a complete loss. We now realize that it can happen to any business and that quick response is the key to maintaining your market position in its aftermath.
Our chairman, William H. Brauer (who had been present when the news broke) was already gathering people together to begin responding to the situation. First, we immediately informed all headquarters employees that we intended to maintain our presence in Columbia and would do whatever was necessary to that end.
We were in contact with Branch Manager John Kallenbach via his cell phone as he and his three employees stood outside the burning building while multiple fire departments doused the flames with massive quantities of water. He was told to assure the three employees that we would reopen and that their efforts would be needed more than ever to keep serving our customers. If there was down time over the next few days because they had no facility from which to work, they would not be docked in pay. The last thing we needed was for a key counter person or driver to leave because of fear for his job.
The fire had broken out during business hours while two of our warehouse workers were in the enclosed customer counter area. Apparently a light fixture ignited some ceiling insulation and fire dropped to some of the cardboard cartons of inventory. The fire spread too fast to do anything other than remove a truck parked in the building and the cash and sales tickets from the day's transactions.
I immediately reported the loss to the property and casualty insurance broker. Within minutes I received a call from the head of the agency, assuring me that our coverage was in force (which was very comforting to hear, even though I had no reason to believe otherwise). The broker made plans to meet me at the fire site in Columbia (120 miles from St. Louis) early the next morning. We agreed that it would be best to provide a security guard at the site overnight to protect against looting.
My next call was to the landlord of this rented warehouse, who resided in Columbia and was already aware his building had burned. We touched on lease provisions impacting on this situation and considered the time it would take him to rebuild. We agreed that it was impractical for our business to wait for rebuilding and he referred me to some of his real estate associates who could quickly point us to available replacement buildings in the area.
All of this happened within the first hour, during which our owners and senior managers began gathering at the headquarters office for a meeting to review strategy for dealing with the crisis. It was decided that a team of four - myself, Vice President Bill D. Brauer, Sales Manager Markel Fitchpatrick, and our Warehouse and Facilities Manager Cliff Albers - would travel to Columbia the next morning and meet with the entire Columbia staff at the site. We would also look at available new locations to be proposed by the local real estate agents. The telephone company was contacted to arrange for the Columbia telephone number to ring directly in our St. Louis office. We planned to have some of the Columbia counter personnel stationed there on that next Monday to greet regular customers and assure them of continued service. The delivery truck that had been salvaged from the fire would make the long run directly from St. Louis to keep deliveries flowing to our customers in mid-Missouri. All branches within our company were advised to render all possible assistance to the effort to keep serving Columbia customers.
Dealing With The News MediaAs the day wound down, I received a call from the daily newspaper in Columbia, which was covering the story with a picture on its front page. To questions about the cause of the fire I demurred, since there really was no information yet available. However, I told the reporter that we would reopen as soon as possible, that we would continue to serve our customers and keep the flow of needed product to the area going, and (of most importance to the reporter, it seemed) that no jobs would be lost. The next day's edition of the newspaper seemed to reflect this positive spin. Internally, we advised all of our people to refer all media inquiries directly to me. We also advised our switchboard operator to respond to any inquiries from cus-
tomers or suppliers by telling them we would reopen shortly and were currently working to take care of our customers.
This concluded the first phase of our response, which involved the immediate reaction to the news. It can be summed up in a few key actions:
1. Stabilize the employees so there are no defections.
2. Verify insurance and clear instructions with the insurer representative.
3. Control responses to the media.
4. Make arrangements for taking care of customers who call in or need immediate service.
RebuildingThe next day we moved into the second phase, which is focused on strategy for rebuilding and resuming operations. The team dispatched to Columbia met at the site with the insurance broker representative, who took exhaustive pictures of the burned building. We verbally agreed that it appeared to be a total loss, informed him we would immediately provide a computer printout of the branch inventory and valuation, and had the local staff begin a room-by-room detailed recall of all non-inventory items of personal property, fixtures and equipment. Unfortunately, we had not made a photographic or video record of all areas of the building, which would have helped, but their recollection was good and we soon had our list with values assigned based on purchase records or "best guess" analysis of worth. This list would prove invaluable not only for insurance recovery, but for a checklist of what needed to be obtained as we set up a new warehouse.
Our search for a substitute location presented us with a quandary. We sought a property of approximately the same size with a dock and drive-in door. Those we found in the same price range were either very shabby or located out of the way of industrial traffic. We had enjoyed a long-term lease at the burned property with favorable rental terms. To replicate the situation would cost quite a bit more in monthly rent. Facing this dilemma and needing to act fast, we sought the aid of the insurance broker to intervene with the insurer to seek a rent subsidy for a period of time to allow us to secure a workable building. Our theory was that if we could immediately find a comparable building, we could open quickly and thus reduce the insurer's exposure for business interruption insurance. They agreed to this and we seized on a good property that was immediately available. Just eight days after our fire we had a table set up in the new warehouse with a cash register and a small supply of emergency inventory items. Our customers had been advised by letter of our intention to reopen and to keep serving them. Within the next few weeks as inventory was added to the building, we would make good on that promise and send out a notice that "we are back - better than ever!"
The replacement of inventory and fixtures became the focus of this strategic phase as our product managers, guided by my fellow owners Bill D. Brauer and Bob Brauer, carefully reviewed our inventory printout to determine what really needed to be replaced. To a certain extent the fire acted to clean out our slow-moving and old inventory, so that was an unexpected plus, but certainly not worth the aggravation.