Hurricane Katrina — After the Storm
NEVER BEFORE has the face of the commercial printing industry changed so drastically, so quickly or so permanently. After one of the worst hurricanes in U.S. history hit New Orleans in August 2005, two-thirds of The Big Easy’s printers were gone.
Pre-Katrina, there were 120 printers in the New Orleans area. After Katrina, there were (are) only 36. The math is almost unbelievable, but the numbers do not lie. These grim statistics come from the Printing Industry Association of the South (PIAS). Ed Chalifoux, president, provides the surreal details.
“After Katrina, most printers just shut their doors. Seventy-five percent of shops with 10 employees or less did not reopen. They remained closed, mostly because they lost everything. Their presses were sitting in several feet of saltwater, their paper supply turned to pulp, their computers were destroyed, and all of their print jobs were compromised at best, lost at worst.
Flood vs. Wind Damage
“Insurance companies paid, on average, $500,000 for flood damage. But there was wind damage from the hurricane, and a lot of that was not covered,” Chalifoux continues. “The money printers did collect was not near enough to recoup from the damage. Thus, many of them opted out of the business, rather than try to start over or rebuild with only a fraction of the funds they needed—which would be a daunting task.”
Of course, there were a few survivors.
“Some shops were not hit at all; some weren’t hit that bad; some were hit but didn’t want to quit,” Chalifoux adds. “Many merged: Two, three businesses operating as one, starting over as a new company.”
Mpress is a good example. It’s the merged operation of three printing businesses: Monahan, Metairie and Franklin Southland. All were New Orleans printers impacted by the storm.
“Southland lost everything; its entire operation was underwater,” Chalifoux explains. “Metairie suffered a significant loss of business, too, but the location remained intact. So, Southland moved in with Metairie. Monahan fared pretty well—physically untouched, but emotionally drained after losing half of its 65-employee work force, who were evacuated and displaced. Monahan’s owner decided it was time to get out of the printing business. And, so, Metairie eventually sold out to Monahan, and the three former printing companies are now combined under the Mpress corporate umbrella out of the former Monahan facility.”
Another case of once competitors putting their heads (’er, and businesses) together is that of Harvey-Hauser Printing, whose namesake is derived from the merger of Harvey Press and Hauser Printing.
Harvey Press, established in 1928, was a web and sheetfed printer with about $9 million in annual sales. Jerry Hudgens, former co-owner of Harvey Press and present operations manager of Harvey-Hauser, details the accidental beginning of a beautiful relationship.
Hurricane Katrina left Harvey Press with gaping holes in the roof, walls blown in and much of it underwater. The plant was destroyed, and none of the equipment was salvageable, including three 40˝ (Heidelberg and Komori) sheetfed presses and two half-webs. The entire operation and its 75 years of history were gone.
“There was nothing we could do,” adds Brian David, president/co-owner of Harvey-Hauser. “Our main focus was to continue business by outsourcing to two printers (that, as a precaution before Katrina, we lined up as a backup) in Little Rock.”
From a small satellite office in Mandeville, LA, Harvey Press became a broker, of sorts. Customers were called to let them know the printer was still in business (albeit outsourcing its work) and to give them the new contact information for the company.
Harvey Press outsourced for about three months, but the execs realized they couldn’t continue conducting business like this for an extended period. The printer needed to get back into manufacturing locally, so David and his partner, Kevin Alker, started looking for another printer locally that it could merge with.
Some companies, like Hauser Printing, were open for business and able to work, but had lost their client bases. After Katrina, Hauser was getting most of its work through brokers. Since Harvey Press was already acting as a broker (post-Katrina), Hudgens and David believed Hauser’s equipment, services and capabilities fit well with Harvey Press.
“Owner Gary Hauser was at the point in his career where he was looking to retire down the road,” David explains. “He was ready for a change. We showed up at his door, and the rest is history.”
Thus, the small team of nine Harvey employees moved into Hauser’s plant, started using Hauser’s equipment and continued their print operation. “After negotiating to buy the business,” David says, “we ultimately merged into Harvey-Hauser Printing on April 30, 2006.”
“Today, we are a merged company, and we’re back on our feet,” relates Hudgens. “We’re only doing about 60 percent of the business we were doing at Harvey Press but, considering we lost everything in the storm, we feel fortunate to be back in business at all. But, as New Orleans grows back, so will we.”
Saved by Consolidation
Adversity builds character. Necessity is the mother of invention. And, “Consolidation is the new face of the printing industry in New Orleans.”
So says Tim Levy, vice president of New Orleans-based Pel Hughes Printing. When asked how Katrina impacted the printing industry in the Big Easy, Levy answers in one word: Consolidation. He acknowledges that a lot of printers closed their doors, others had no doors to close (their businesses had turned to rubble) and still others joined forces to survive.
Echoing Chalifoux’s assessment of the many mergers, he offers a prediction mixed with a bit of advice: “Smaller printers are going to have to invest in new technologies in order to meet the now important disaster recovery demands of larger clients.”
Disaster recovery is a big issue (and problem) for many small shops. According to Chalifoux, few printers had recovery plans before Katrina. Now, most have them, as some are required by their insurance carriers to have such a plan, and others are required by their customers to have insurance. PIA/ GATF has disaster plan templates and, after Katrina, PIAS got involved, helping printers with their recovery plans.
When Levy and fellow Pel Hughes execs saw their plant—and the depth of its destruction—their eyes were shocked open. No amount of preparation could have saved the company, Levy claims. No disaster scenario could have prepared him for this. There was never anything like Katrina. So, there was nothing to compare with the horror and ruin she wrought.
In the past, Pel Hughes’ disaster recovery plan had worked well. However, when compared to the disaster called Katrina, the plan had never really been put to the test. “Most hurricanes only caused power outages and disrupted our operations,” he explains. “Katrina was similar, but, once the levees failed, it became catastrophic.”
And, so were the damages to Pel Hughes. “Every piece of equipment, including three Heidelbergs, sat in two feet of water for three weeks,” Levy exclaims. “Our damages totaled $5.85 million.”
However, like many people affected by Katrina, a lot of printers pulled together in the face of disaster.
“It was very humbling to see the support that we received from other printers—even our competitors,” Levy recalls. “I feel like we became ‘brothers in arms!’ We now mutually respect each other for having survived such devastation.”
Two years later, Levy reports that Pel Hughes is operational, but the printer is still trying to regain stability. “We’re very proud of what we’ve accomplished thus far, but we still have some work to do. Many lessons have been learned about surviving disaster, reviving your business, handling/sharing the risk—and about people pulling together in the face of adversity and tragedy. But the lessons are life-changing and ongoing.”
Chalifoux, as president of the PIAS, goes to New Orleans quarterly. Each time he goes, he sees that things are getting better. Attitudes are getting better, reconstruction efforts are getting better, business is getting better.
“Nowadays, people are discussing how things are going, how they’re progressing, moving on (instead of how they weren’t). The talk now is about getting back to normal—business as usual. Their mantra is to become profitable once more.” PI
Pennies From Heaven? No, $50K From PIAS
The Printing Industry Association of the South (PIAS), headed by Ed Chalifoux, set up a disaser relief fund, which raised up to $50,000 for printers impacted by Katrina. PIAS received contributions from PIAS members, as well as other members of the PIA/GATF, especially from the Florida and New England regions.
PIAS gave the money to printers, who, in turn, gave the money to their employees. The amount averaged between $3,000 and $5,000 for each printer, or about $400 per person.
“It wasn’t a lot of money, but everyone who received it was very grateful,” Chalifoux says. “These people lost everything. When you have nothing, a little means a lot. A few hundred bucks seemed like a few thousand. That’s how thankful they were.”
Firsthand Survival Tips
Management at Harvey Press learned a lot in the aftermath of Katrina. When their New Orleans printing business, Harvey Press, was completely destroyed, the biggest lesson they learned was “How to Survive.”
They survived, first, by outsourcing their work to “backup printers” that they had contacted on higher, dryer ground. Later, they merged with another local firm, Hauser Printing, and created an entirely new company: Harvey-Hauser Printing.
Today, Brian David and Jerry Hudgens are back on their feet, and their merged printing operation is back in business. While struggling to get back to (Harvey’s) pre-Katrina revenues, the printers claim they are doing fine. They report that, in a city that lost two out of every five people, they are well on their way to full recovery.
Here are a few of their priceless tips:
• Have a plan in place. Anticipate in advance. Have complete backup files—especially of the last week of work—so, if necessary, you can have a backup printer who will still be able to produce the work.
• Build alliances with printers outside the area. Do this, so you don’t have to start from scratch. We were quickly placing orders with other (backup) printers because we had an agreement already set up.
• Remove all records. Take them with you in your vehicle to the evacuation area. And be sure to have your backup records stored safely offsite.
• Back up the company’s e-mail system. Our e-mail at Harvey Press was backed up and managed in Atlanta. If we hadn’t, we would have been out of business. We highly recommend having a backup/server offsite for your company e-mail system.
• Review insurance policies annually. Make sure everything’s up to date. As you add equipment, update the policy.
• Keep detailed records of all assets. This includes equipment, materials, supplies, furniture, everything. You must have records of all of your assets. And, all those records must be backed up—offsite! And, that means all the executives’ files and records, too. Ninety percent of our paperwork was destroyed.
• Open a cash-only account at a secondary bank. Have a cash account at a bank other than your primary bank (that holds your mortgage/loan and handles most of your financial transactions). If you have a cash-only account (cash is the only business you do with that bank), then that bank can’t put a “hold” on your cash. If a bank holds your loan, it can also put a “hold” on your cash.
• Contact customers ASAP. That was critical. If we didn’t, they would have gone elsewhere. We called customers right away and gave them our new new phone numbers and address. We let them know that we were still working on their print order and would have it done as fast as we could. We explained how we had a backup printer, but we would still be responsible for printing their material with the same quality and service.