Financial district's fallout Companies suffer in wake of blast

March 02, 1993|By Ian Johnson | Ian Johnson,New York Bureau

NEW YORK -- As the nation's financial pulse beat slowly back to life yesterday, the effects of Friday's bomb blast in the World Trade Center continued to devastate many of the city's businesses.

Lower Manhattan was less crowded than usual as the center's 50,000 employees and 80,000 daily visitors were held back from entering the vast complex of shops and offices.

Normally the city's most important commercial center, the World Trade Center yesterday was a high-rise ghost town that left some parts of downtown without their customary crowds and consumers.

In addition, the explosion dealt another blow to the nation's beleaguered insurance companies, which are recovering from last year's natural disasters, and to New York City itself, which has been fighting an uphill battle to persuade companies to keep offices in its sometimes user-unfriendly environment.

The immediate impact, however,was felt by the trade center's 900 tenants and nearby restaurants and shops.

"This is really going to hurt," said Paul Tivlin of the Beaver Deli in the financial district. "The lunch crowd is half what it normally is. I just hope they get it fixed soon and the people come back."

The five commodity exchanges were given emergency approval to open for business, ensuring that the world's prices for goods like cotton, coffee, sugar and cocoa could be set.

Most of the exchanges opened punctually yesterday, except the Coffee, Sugar & Cocoa Exchange, which opened at noon. The Commodity Exchange and the New York Mercantile Exchange opened late and closed early because of lack of ventilation for computers and heat for the building. The Cotton and Futures exchange ended trading two hours early.

Financial companies, including 40 Japanese firms, were open for business from different offices around New York and New Jersey after they came in over the weekend to pick up and move vital documents and computer files.

Arguably the company with the most at stake was Cantor Fitzgerald & Co. Inc., a major bond trader whose absence from the government bond-buying market could have crippled dependent companies across the country.

World Trade Center officials set up emergency generators in the company's 104th-floor offices Sunday to allow the company to prepare a move to rented offices in New Jersey. It also used offices in California and Boston to help bid during yesterday's Treasury bill auction.

The world's largest bank, Dai-Ichi Kangyo Bank, said it used an emergency backup computer system in New Jersey to handle clerical business and had an office in midtown Manhattan for other operations. Some banks estimated, however, that they stand to lose up to $20 million a day in lost business, especially in currency trading.

Even less fortunate were small tenants and others who happened to be in the towers when the bomb went off. They formed a bedraggled line yesterday in a vast concourse underneath the towers, hoping for permission to enter and retrieve documents or personal belongings, which they abandoned when the building was evacuated Friday.

Con Brady, whose company, Dryline Partitions, had been renovating the Vista Hotel on Friday, said his employees had left behind power tools and other equipment.

"I've got 10 men standing idle until I can get them some tools," Mr. Brady said. "This is costing us."

One of the few winners from the mess could be security-service companies, whose stock shot up in trading yesterday. If the World Trade Center bombing was just the first in a wave of terrorist attacks, then security companies would prosper, some investors are betting.

City officials said they could not yet calculate the disaster's cost, but rough estimates are running into the billions of dollars, for lost business, destroyed infrastructure and the cost of cleaning up 10 million square feet of soot-filled offices.

The tab will be covered by dozens of insurers, which have already suffered through lean years recently because of a string of natural disasters, such as last year's Hurricane Andrew. Industry officials said insurance companies would not be exempt from paying, even if the bomb explosion eventually was proved to be a terrorist attack.

The complex's owner, the Port Authority of New York and New Jersey, is self-insured for $600 million in property and $400 million in liability insurance. Individual companies have their own coverage. No estimates have been made of the costs because the towers are still not open.

"A lot will depend on how much federal money flows to the area," said Ronald Krauss of the American Insurance Association. "It's certain to be a costly catastrophe."

Despite publicity surrounding the blast illustrating how ill-prepared the quasi-public port authority was to tackle an emergency, the authority is likely to proceed with a $100 million bond sale tomorrow, analysts said. Thousands of people in New York and New Jersey invest in the tax-free port authority bonds, which are sold to finance economic development and transportation projects in the two states.

The explosion also raised new doubts about New York City as a location for corporate headquarters. The city, which has seen intense corporate flight to surrounding counties and states in recent years, could absorb a new round of flight, warned Rachel Davis, a professor of urban economics at New York University.

"It's a cost-benefit analysis as to whether you stay in the city and put up with its problems," she said. "If security starts becoming a problem because of terrorist threats, then New York City may not look so attractive."

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