Md. faces storm tab of $1 billion-plus Lost productivity is estimated by UB economist

More misery on the way

Many industries, and employees feel the chill

January 11, 1996|By Michael Dresser | Michael Dresser,SUN STAFF Sun staff writers Shirley Leung, Suzanne Wooton and Kathy Lally contributed to this article.

The economic disruption caused by this week's monster snowstorm could cost Maryland more than $1 billion in lost productivity, a University of Baltimore economist said yesterday.

And that's not counting the effects of a possible shutdown tomorrow, when the state could be smothered under another blanket of snow that's measured in feet. That could run up the bill to $1.4 billion, or about $280 for every Marylander who survives this winter.

Michael A. Conte, director of the university's regional economic studies program, based his rough estimate on a calculation that each working day that Maryland's economy is shut down takes $400 million off the gross state product. He estimated that the state's economy was operating at half-capacity yesterday.

"Economic activity has come to a halt much more in this episode than it has in past storms," Mr. Conte said.

The economic chill brought on by the storm sent shivers through dozens of industries, from manufacturing to services to transportation. Some of its hardest impact was felt by the most vulnerable workers -- low-paid hourly employees, part-timers and people whose income depends on tips.

The storm also was hard on Maryland's state government coffers.

The cost of salt -- well over $2 million -- was enough to give a government bean-counter high blood pressure. The state also is paying $500,000 to $600,000 a day in overtime pay to emergency workers, the governor's office reported.

Marvin Bond, a spokesman for the Maryland comptroller's office, said the state was losing $2 million to $3 million a day in sales tax alone as giant malls were turned into deserted warehouses for most of three days.

Tom Saquella, president of the Maryland Retail Merchants Association, said the snowstorm completed a double whammy that started with a disappointing Christmas season for retailers. But he expressed relief that the snow came during the slowest month of the retail year.

"If you're going to have a problem, then January's the time to have it," he said.

Among those whose pockets were picked by the blizzard were a dozen workers who were laid off by CableCo, a Baltimore cable-laying company that was in a "complete shutdown," according to construction manager Tom Sweeney.

"We do a lot of trenching and we can't see the ground to trench," said Mr. Sweeney, who was back in the shop for the first day since the storm. He said that if a new storm hits, the company might not be able to resume work for two weeks. Meanwhile, his employees would be filing for unemployment insurance, he said.

Steve Burch, regional vice president for Comcast Corp., estimated that the storm would cost the company's three Baltimore-area cable TV systems about $150,000, even after a 200 percent surge in pay-per-view TV orders. "Our installation activity has been pushed off a week and another storm could push it to two weeks," Mr. Burch said.

Homebuilders were in a particularly nasty fix. Dwight Griffith, president of Griffifh-Brilhart Builders in Towson, said the company was unable to do any outside work and was having trouble getting workers to construction sites where they could do inside work. Instead of paying his crews to build, he was paying them to shovel, he said.

"It adds to the cost and it delays the jobs," he said. One custom home building project on a rural lot in Parkton will likely be shut down for two weeks, he said.

Jeff Kuhlman, a General Motors spokesman, said GM's Broening Highway plant was running at three-quarters of its normal production yesterday and is expected to return to full capacity today.

"We lost production all day Monday and all day Tuesday. Folks could not get in," said Mr. Kuhlman.

At Bethlehem Steel Corp.'s Sparrows Point plant, the cold sheet, tin and plate mills all ran at a reduced rate for lack of staff, said company spokesman Ted Baldwin. He said the company is still assessing how much money was lost in the storm, which hit at one of the mill's busiest times of the year.

H&S Bakery Inc. of Baltimore said the company was unable to make bread deliveries Monday and that many institutional customers -- from restaurants to school cafeterias -- canceled their usual orders because the snow shut them down.

The airlines and trucking companies suffered huge financial losses as the storm paralyzed the transportation industry, closing vital highways and airports across the East.

"Conditions were so bad our couriers couldn't make pick-ups. But nothing was moving out of the airport anyway," said Bill Bush, a supervisor for Federal Express at Baltimore-Washington International Airport. "Even if we had been able to move, businesses were closed and not shipping."

"I couldn't put a dollar figure on it, but we lost a lot of money," he said.

Throughout the East Coast, shippers were forced to delay movement of virtually every type of cargo, ranging from chemicals to lumber as trucking companies concentrated on digging out their fleets.

"We had 50 trucks that weren't moving," said Larry English of OST Trucking in East Baltimore.

When combined with the effects of the federal government shutdown, the storm ensures that Maryland is well on its way to a miserable first quarter, Mr. Conte said. But out of the snowdrift of gloom, he managed to shovel out a nugget of hope.

"The economy does tend to come back very strongly from these kinds of setbacks," he said, recalling that a series of ice storms in the first quarter of 1994 "really put the kibosh" on the state's economy. But 1994 turned out to be a "banner year" for Maryland, he said.

"I think we're going to see something like that happen in 1996," he said.

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