- Sandy's $50 Billion Impact
- December 15, 2012 | Authors: Michael S. Amato; Jeffrey A. Wurst
- Law Firm: Ruskin Moscou Faltischek, P.C. - Uniondale Office
Just as the economy was showing signs of recovery following the longest downturn since the Great Depression, the New York Metropolitan Region has been devastated by the effects of Hurricane Sandy. The damage caused by the storm is not limited to the destruction of property, businesses have been hard hit as well. While insurance claims are estimated to reach or exceed $20 billion, the financial impact of the storm is expected to exceed $50 billion.
While the storm might create a needed shot in the arm for the construction trades, in general, businesses are feeling the tremendous impact of the storm. Area businesses were closed in the days immediately subsequent to the hurricane due to a lack of utility and transportation services. It was virtually impossible for employees to get to work and those who could were faced with blackouts preventing them from attaining any reasonable level of productivity. Many businesses were directly impacted by significant property losses, both to their facilities and inventory. In addition, the breakdown of distribution systems left inventory levels in short supply.
In addition to the obvious issues of restoring utility service and clearing debris, businesses and consumers now face the growing challenge to obtain fuel to operate their businesses. The shutdown of New York Harbor through November 2nd, the temporary shutdown of pipelines, together with damage to refineries serving the tri-state area, resulted in dangerously low levels of gasoline inventory. Filling stations that have power are unable to secure consistent supply, coupled with the large number of stations that remain closed due to lack of power, have resulted in lines at filling stations not seen since the oil crisis of the 1970s.
Businesses large and small are faced with significant challenges in recovering from Sandy. In addition to the costs to rebuild those businesses that have been damaged, the economic shutdown resulting from Sandy will have a direct impact on the bottom line. While certain industries such as utilities, energy and lumber, all essential to the recovery effort, may see increases in the near term, most businesses face a long road to recovery. Businesses that thought they were making it through the "economic storm" are now back in harms way.
Lenders and financial institutions have indicated that they may make some accomodations to individuals and small businesses impacted by Sandy, including, modifications and/or extensions of loan payments, credit cards and lines of credit and reducing or eliminating penalties for issues resulting from Sandy.