Gulf states face rebuilding their economies as well as their structures

Areas hit hard by Andrew needed decade to recover

Katrina's Wake

September 01, 2005|By Jamie Smith Hopkins | Jamie Smith Hopkins,SUN STAFF

Oil rigs washing up on beaches. Casinos ripped from their moorings. Refineries closed. Shipping facilities damaged or destroyed. Small businesses flooded and then looted.

Hurricane Katrina - which wrought damage that appears to be worse than anything the nation has seen before - hit the Gulf Coast in such critical spots that it's not simply homes that must be rebuilt, but the region's economy.

Including stemming the floods, cleaning debris, and restoring power and telecommunications, much must be done before businesses can even think about rebuilding, let alone reopening. The areas hit hardest by Hurricane Andrew in 1992 needed a decade to fully recover, and Katrina is thought to be worse.

New Orleans is underwater, possibly uninhabitable for months.

"You've lost everything," said Norris L. Beren of the nonprofit Emergency Preparedness Educational Institute in the Chicago area. "You've lost the entire power grid; you've lost almost any possibility of even getting around. So there's nothing here. There's nothing. It's like going into the desert and ... starting from scratch."

The rest of the country will get a taste of the problem because nearly a third of domestic oil comes from that region, and the Port of New Orleans is one of the busiest in the nation.

But for Louisiana, Mississippi and Alabama - among the poorest states in the nation - the impact is so large that it's impossible to say where the ripple effects will stop. Insured losses, estimated at as much as $25 billion by AIR Worldwide Corp., a risk assessment company, don't begin to cover it.

The area's major employers - the energy industry, the ports, and leisure and hospitality - were all hit.

"We are scrambling over here," said David Strow, a spokesman for Harrah's Entertainment Inc., which has three casinos that sustained damage - one in New Orleans that won't reopen for at least four weeks and two in Mississippi that they can't even begin to assess.

Uncounted numbers of workers are homeless, assuming they're alive. New Orleans alone is a city of nearly a half-million people.

"We're focused on ... locating our employees," said Rob Stillwell, a spokesman for Boyd Gaming Corp., which owns a casino on Louisiana's Lake Pontchartrain. "The business part of it at this point, really, is secondary."

The Gulf Coast's major east-west highway, Interstate 10, is in pieces.

"I'd say it's going to take at least a year for some of their basic industries to get back in business," said Bernard L. Weinstein, director of the Center for Economic Development and Research at the University of North Texas.

Homestead, Fla., which was badly damaged by Hurricane Andrew, needed three months to work on the basics: electricity, water, shelter. But Mary Finlan spent five years after that coordinating volunteers to help with the rebuilding. And Finlan, who runs the local chamber of commerce, figures it was a full decade before businesses were flourishing again.

"So they're looking at a long time," she said of the Gulf communities. "I feel as though what they face is a million times worse than what we faced."

Homestead lost things it can never regain. It had just built a spring-training facility for the Cleveland Indians; the baseball franchise was lured away to undamaged territory, and the stadium has never been used by a professional team. Homestead Air Force Base shut down.

But huge amounts of money were invested in the community, population 27,000 at the time of the storm. Without Andrew, then-City Manager Alex Muxo doesn't think Homestead would have gotten its speedway, which now hosts the final Nascar race of the season.

"There is a tremendous opportunity for economic development or redevelopment," said Muxo, now senior vice president of Huizenga Holdings. "You're almost given a clean slate."

Galveston, Texas, on the other hand, could not hold onto its economic hub status after a hurricane slammed into it in 1900, killing more than 6,000. Businesses moved inland to Houston, said James F. Smith, a finance professor at the University of North Carolina at Chapel Hill. He said the same fate could await New Orleans if people decide that a city below sea level isn't worth the risk.

But if it's fully rebuilt, the construction work would inject billions of dollars into the local economy, and New Orleans would "be far better than it was," he said.

What happens to its convention business is an equally tricky question. The city is a major convention destination, and competition for such events is fierce. Weinstein is sure images of the damage are prompting lots of cancellations this season - which is about to begin - and could affect the area for years because conventions are typically booked years in advance.

Even organizations eager to show their support for a rebuilding city might be leery of booking until the rebuilding is done.

One of the first steps for economic rebirth - once the waters have receded and it's safe to get in - is cleanup. Storm Reconstruction Services Inc., based in Mobile, Ala., is mobilizing about 2,500 employees to get debris off the streets of Gulfport, Miss., and elsewhere. Atlanta-based Disaster Services Inc. is starting its dehumidification and drying work on businesses in Mobile and expects to work its way in as roads reopen.

Sun researcher Jean L. Packard contributed to this article.

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