Frigid Air and Business – 6 Areas for Preparedness

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Last year, the frigid weather that blanketed big swaths of the U.S. with snow was in part an explanation of why earnings rose at the slowest pace in almost two years.

Freezing temperatures and mountains of snow in the first three months of 2014 kept shoppers indoors, grounded flights and made it harder for shippers to fill product orders. As a result, Macy’s Inc. shut 244 stores for at least part of January, Union Pacific Corp.’s trains ran 9 percent slower and Delta Air Lines Inc. canceled 8,000 flights in January and February.

Arctic Blast

Extreme weatherArctic air associated with the polar vortex will lunge into the North Central United States early next week and will expand southward and eastward to affect about 200 million people as the week progresses.  According to , Expert Senior Meteorologist with AccuWeather, heating demands will jump with the worst of the cold felt from Fargo, North Dakota, and Minneapolis to Chicago and St. Louis.

According to AccuWeather Chief Meteorologist Elliot Abrams, “The arctic blast will have the greatest shock over the Central states.”

People over parts of the Plains may experience a temperature plunge of 40 degrees or more following high temperatures this weekend.

December-like cold will be felt farther along in the South and along the Atlantic Seaboard. The cold will rush into the South Central states by the middle of next week, but will not reach the Atlantic coast until later next week and into next weekend.

Weather.com reports that the cold this time will last longer and will be more widespread than other cold surges we have seen so far this season.

The cold front begins its plunge in Montana and the Dakotas late Sunday, then into the Plains Monday, bringing much colder temperatures. will go from a high near 60 degrees on Sunday to a high in the 20s on Monday.

Highs 10-30 degrees below average will plunge into Plains, western Great Lakes, Upper and mid-Mississippi Valleys on Monday and Tuesday. and  may see their first sub-freezing high temperature of the season by midweek. In fact, highs may struggle to top the freezing mark in the Twin Cities for several days. The last time Chicago had a daytime high that didn’t rise above freezing was March 25.

The cold front is expected to reach the Northeast by Wednesday, with the brunt of the cold first being felt Thursday. High temperatures won’t likely top 50 degrees Thursday in The last time that happened was on March 26. may see its first freeze sometime late next week. may also drop to 32 degrees, which last occurred on April 18.

The cold will plunge into parts of the South. will see highs only in the 40s starting Thursday, and daytime highs in  may struggle to reach 50 degrees for several days late in the week.  will see high temperatures only in the 40s for several days next week. The last time Dallas did not reach 50 degrees was back on March 3.

IMPACTS TO BUSINESS

1: EMPLOYEE ABSENCES: Employers should be prepared for increased employee absences, which may disrupt normal business operations and fulfillment. School closings and delays will disrupt schedules, and transportation systems may be slowed. During the worst of the cold snap, some small businesses may  experience a massive lag in productivity due to grounded flights and absent employees.

2: RETAIL SALES: Auto Sales were deeply effected last year, and hundreds of retailers closed shop temporarily due to weather.  Last year, many U.S. retailers said the weather took a toll on business as shoppers hibernated at home. Gap Inc., the biggest U.S. apparel-focused retailer, closed more than 450 stores for at least one day in February of 2014, and sales at stores open at least a year were down 7 percent in that month.

3: FROZEN HOUSING STARTS: Cold weather, especially in the Midwestern states, delayed the construction of many homes. Housing starts fell by over 30 percent in the Midwest last winter from 2013’s pace, in sharp contrast to the rest of the country where starts were up by 5.6 percent. Construction companies coped with delays and waited longer to hire many of their seasonal workers.

4: LOGISTICS AND TRAVEL DISRUPTIONS: The logistics and travel industries experienced severe disruptions last winter. Airlines cancelled 6.5 percent of flights in January, up from 1.5 percent in January of 2013, losing an estimated $75 million to $150 million. The economic losses from delayed travelers was far greater.

Rail traffic also slowed significantly. One of the industry leaders, Union Pacific, reported that its trains ran 9 percent slower this past March compared to the year prior. Businesses saw delays in deliveries, and some of the largest logistics companies reported that the winter interrupted their delivery systems. FedEx estimated operations costs were $70 million greater this year compared to a typical winter, and UPS reported similar winter expenses.

5: FOOD PRICES SPIKE: While most of the country was colder and snowier than normal, California continued to suffer from a three-year drought. The drought especially hurt the agricultural sector. About 800,000 acres, or over 10 percent of the acreage of California, was expected to be idle as a result of the drought, causing $3.6 billion in crop losses. California grows 99 percent of the nation’s almonds, over 90 percent of the broccoli, 80 percent of the lettuce, and 90 percent of tomatoes. Prices for these products rose by double digits, and food prices continued to rise through the summer.

6: UTILITY COSTS: Natural gas prices for commercial and industrial businesses were over 20 percent higher in March of 2014 compared to the same month in 2013. Businesses and households used more energy for heating, which not only led to larger bills but also to higher prices. Weather-related disruptions to the delivery networks of natural gas, particularly in North Dakota’s Bakken region, also increased energy costs.

windchill

NEXT STEPS

In preparation, assign someone as your company’s point person for communication during a weather related crisis.

Assure someone on your senior management team has the authority to make sweeping decisions such as the ability to close offices in times of emergency, and assure continuity of communicating those decisions to everyone affected.

Make sure everyone on your staff knows who that person is (and who their delegate is, if they’re unable to fulfill their role).

Create Message Maps beforehand, and clearly define your communications protocol so you’re not scrambling to inform key stakeholders such as employees, customers, suppliers, vendors, your Board, and the community of your contingency plans.

Determine whether you’re set up to allow your employees to work remotely in an effective manner. This isn’t about a telecommuting policy; it’s about having the technical setup that your employees need in order to work from home in unusual situations.

Last, call us if you need help – 770.643.1114.  You may also wish to download our most recent brief – Keys to Creating a Culture of Preparedness.

Whether you call it business continuity, disaster recovery or risk management, it all leads towards the same thing—a culture of preparedness.

This paper is based on the webinar, Keys to Creating a Culture of Preparedness, presented by Ann Pickren, MBTI, crisis communication expert and COO at MIR3; Jim Satterfield, President, COO, Firestorm; and Joe Miner, Global Internal Audit IT Supervisor, P&G. Download Keys to Creating a Culture of Preparedness.

Sources:

Bloomberg

Business Forward 2013-2014 Survey

Weather.com

AccuWeather

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