Big and Small Consulting

The Effects of Hurricane Ida

The supply chain already faced hurdles due to the coronavirus shutdowns. However, there were added issues Louisiana had to face, regarding the energy sector, due to the 2021 ice storms of Texas, the ransomware attack of the Colonial Pipeline, the executive order causing the cancelation of the Keystone XL Pipeline, and international shipping delays. Amidst the shortage of supplies, rising costs, and shortage of employees, another issue has added hurdles to the already struggling businesses; Hurricane Ida hit Louisiana on August 29, 2021.

The costs of damages due to Hurricane Ida are still debatable as damages are still undergoing estimates. However, it is currently assumed to be roughly $18 billion but may reach upwards of $95 billion. If the cost of the damages does rise above $18 billion, with current inflation increasing, it could outdo that of Hurricane Andrew in 1992 at $26.5 billion. With these issues at hand, what does it mean for businesses? It will likely decrease available supplies even further, raise costs of supplies even more, and increase difficulties in finding qualified laborers.

According to the latest reports from the U.S. Bureau of Labor, there are only 4,430,270 skilled construction trade workers. A further breakdown shows that there are only 656,510 electricians; 128,680 roofers; 699,300 carpenters; and 451,390 plumbers, pipelayers, pipefitters, and steamfitters.

The current population of the United States is 331,449,281, according to the U.S. Census Bureau. When one accounts for the entire workforce, at 139,099,570, this means that only 41% of the population is working. When you look at the total numbers of the workforce and look at the numbers of construction trade workers at 4,430,270, this equates to construction trade workers being only 3% of the entire workforce. It certainly shines a light on how small the number of skilled workers in trades like carpentry, plumbing, electricity, and roofing is.

Occupation Title Employment Employment per 1,000 Jobs
Construction Trades Workers 4,430,270 31.850
Roofers 128,680 0.925
Pipelayers, Plumbers, Pipefitters, and Steamfitters 451,390 3.245
Electricians 656,510 4.720
Carpenters 699,300 5.027
All Occupations Nationwide 139,099,570 1000.000

Numbers retrieved from U.S. Bureau of Labor Statistics

To get a better idea of what Louisiana has available regarding construction and extraction trade workers, one must take a closer look at the numbers. According to the U.S. Census Bureau, as of 2020, Louisiana has a total population of 4,657,757. Looking at the same data, only 1,719,561 people in Louisiana are working. What this means is that only 36.9% of the people in Louisiana are gainfully employed. To break it down further, in this instance, one must look at the total number of workers in Louisiana’s construction and extraction industry. The numbers provided by the Bureau of Labor Statistics show that there are only 109,770 people employed in that industry in Louisiana. When this is calculated, it shows only 6% of employed workers in Louisiana are in the construction and extraction industries. Those are not very high numbers, especially in comparison to places like Florida and Texas.

Map and Numbers Retrieved from Bureau of Labor Statistic.

What does this mean for your business? If a disaster hits your company, the chances of having it rebuilt may be small due to shortages of supplies and available laborers to fulfill the need right away. Instead of just waiting weeks, it may now take months or years, especially with natural disasters and other issues to contend with. In fact, the Association of General Contractors of America has found that Seventy-Percent of construction trade firms is having difficulties finding enough skilled workers.

Other issues to contend with, especially in the wake of Hurricane Ida, are the crippling effects on the ports like Port Fourchon, Port of South Louisiana, Port of New Orleans, and Port of Greater Baton Rouge. These areas in Louisiana are part of key industrial areas and ports that supplies the United States with much-needed materials like grains, plastics, steel, rubber, paper, and wood. If these ports suffer significant damage, they can be closed or have reduced capacities for days or weeks. In the wake of Hurricane Ida, Louisiana is also facing disruptions to its energy supplies, which could mean higher gas prices. Since some major oil companies and refineries had to reduce their capacities by 8% due to the Hurricane, things will be a bit more complicated.  The impact on imports of supplies and fuel could mean even fewer materials available for businesses and less fuel for them to be shipped.

Yet, it is essential to remember that there is something good on the other side of every bad thing that happens.

In this instance, what can be brainstormed to entice workers to gravitate towards trade skills? There is already a negative perspective that trade skills are not worth it, but what can be actively done to change this misconception? What success stories can be shared about those who were able to learn a trade at less cost than degree programs, made more money, and had fewer debts? Businesses can do more to share their stories to help battle misconceptions. Share the stories on the actual values that have been provided to others and the problems that were able to be solved as a result. Can other actions be done to increase interest in trade skills?

Another positive aspect of the devastation from Hurricane Ida is that while it is crippling, it will not be so in the future. Consider this, more money must be spent on insurance, building supplies, and other materials to clean up and recover. The enormous amounts of money needing to be spent at one time for the situation increases economic growth in the local areas and the businesses that profit from it. Considering a lot of our supplies come in through these ports, it is imperative these areas are repaired and back to capacity as quickly as possible.

While the Hurricane does, indeed, affect other areas relying on the supplies coming in, this lets businesses know that planning is crucial to their ability to reduce disruptions as much as possible. What are other assets available for these moments? What backup materials, products, equipment, and networks can be utilized in the meantime?

Another positive aspect is that construction, energy, and infrastructure industries are deemed essential businesses by the governor of Louisiana and the Cybersecurity and  Infrastructure Security Agency. This means that these industries can currently function at full capacity in the state of Louisiana instead of at a reduced capacity. The ability to operate fully means that qualified construction trade workers may come in from other areas or states to repair or rebuild any damages caused by Hurricane Ida.

Another aspect to investigate, if feasible, is having the buildings built to sustain winds over two hundred miles per hour by using new designs such as ICF (double insulated concrete forms). Many other procedures can help mitigate damage to businesses in hurricane-prone areas, such as drain tiles, backflow valves, and submersible pumps. The costs will be much more expensive in the short term when going by the standard building codes, but it is more cost-effective in the long run due to not having to rebuild, repair, or halt production capabilities. Some would claim that if a persistent problem is effectively eliminated, then fewer jobs and fewer products would be used in the future to repair standard materials continuously.

Suppose more businesses invest in these newer technologies and products to increase the structural integrity of a building. Investments will help provide funds into the industries specializing in it; they will then have the ability to develop further or improve what is already available. Giving them the chance to improve will help other businesses in the long run by providing them with the services and products to protect their assets.

While businesses need to look after their bottom line, it is vital to remember that if they do not support other companies, there may be no supplies, products, or services available to utilize to grow their profits. In times like this, efforts need to be taken to balance the supply chain and strengthen it.

 

This has been a Janus Report exclusive brought to you by L. Clemons-Taylor & Mark Taylor. If you would like advice or assistance to grow, expand, or open a business, you can contact us at Big & Small Consulting.

 

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