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Few Coast industries and businesses closed permanently

Considering the amount of damage caused by Hurricane Katrina a year ago, it is remarkable that so many Coast businesses and industries were able to get up and running in a relatively short period of time, says Jay Moon, president of the Mississippi Manufacturers Association (MMA).

“We were relieved few manufacturers actually went out of business completely because of the hurricane,” Moon said. “There are two reasons: Few were actually in the area where the storm surge was. Secondly, most manufacturers’ facilities were built to stronger standards than your average residential facility. They had big iron beams, for example. I’m not minimizing the damage, but industries were not completely wiped out. Overall from the manufacturing standpoint, we have come out of the storm as well as can be expected.”

Unlike in New Orleans where flood waters stood for a long time, the storm surge came in and went out quickly on the Mississippi Gulf Coast. That helped mitigate damage. Still, the storm surge was salt water, which is very corrosive. Moon said the salt water had an impact on machinery. Some was fixed locally, some was sent away for repairs, and some equipment had to be replaced. Businesses also had to replace office equipment like computers.

Considering the scope of the disaster, it might be surprising that only 304 manufacturing jobs were lost as a result of Katrina. Moon said most of those were seafood related. Seafood processing plants on the water were largely wiped out.

Three of the 10 manufacturing companies that haven’t reopened were related to seafood processing. Moon said while the industries that were lost weren’t very large companies, nonetheless MMA was sorry to see any of them close.
Facilities damage was only part of the challenge. There was also a lot of business interruption. Vendors and customers may have been wiped out. Considering all that, Moon believes the state fared well.

“A number of businesses were back on their feet quickly,” Moon said. “For example, Oreck got back into production soon. Within a few weeks many of these companies were at some level of production, and have since moved back into a full level of production. Manufacturers in the rest of state are doing well, and recovered very quickly. Once power was restored, they were able to do get back on line.

“The biggest issue for most manufacturers on the Coast is availability of labor. It has to do, obviously, with the housing and other issues there. That is the biggest continuing legacy of Katrina, the impact on the labor pool. A MMA member in Laurel is so desperate he put a billboard up on I-59 advertising for people to come in for jobs. These are good, well-paying jobs with benefits. He just can’t find people. I hear that all over. That is an area we are continuing to work on to try to train new workers and make those available to industry.”

The economy overall continues to expand, so that creates additional demand. And with billions of government and insurance payments funneling into the Gulf Coast, business activity is expected to be extremely strong.

“I think the incredible amount of activity on the Coast is just the tip of the iceberg,” Moon said. “I think the Coast is getting ready to take off in so many ways.”

Jackson County is fortunate that its largest employers — Northrop Grumman and Chevron Refinery — bounced back quickly after the storm, said Royce Cumbest, chairman, Jackson County Economic Development Foundation, and president and CEO, Merchants & Marine Bank, Pascagoula.

“Chevron and Northrop Grumman have come back so fast and so strong,” Cumbest said. “Northrop Grumman has 12,000 employees now. It was 13,000 previous to storm, so they are almost back up to their pre-Katrina levels. The Port of Pascagoula is back at almost 100% right now. We had in this metropolitan statistical area 2,654 hotel rooms available pre-Katrina and now we have 2,228 rooms available. We’re doing pretty good there. Sales tax collections are up quite a bit. Most businesses have reopened. I think a lot that didn’t reopen didn’t reopen by choice. Several owners were close to retirement age. They took their insurance money and decided not to reopen.”

Cumbest said a report online at www.lorencscottassociates.com by a professor emeritus of economics at Louisiana State University, an economic overview of all the hurricane impacted areas, gives good marks to Pascagoula.

“He makes a pretty strong point the Pascagoula area has made a significant recovery and is enjoying a more rapid recovery from the storm than any of those other metropolitan statistical areas covered in the report including those in Louisiana and Texas,” Cumbest said. “Our economy has bounced back a lot quicker than some areas whose primary major employers were hit hard.”

Cumbest said his bank’s deposits are up quite a bit, and loan activity has also increased. He is finding that generally true with other bankers along the Coast.

“We have still not seen the grant money flowing in yet like it will hopefully do in the near future,” Cumbest said. “I think we’re going to see a construction boom ahead of us sometime. I’m just not sure what the timing is going to be on that. Right now housing and the labor supply to handle construction are going to be the big issues, as well as insurance including insurance premium increases we have seen. Farther out if we can’t meet the housing demand or have problems getting insurance for homes we are going to build, we have a real problem.”

In the Coast’s largest city, Gulfport, city officials said most of the businesses that were damaged or destroyed by Katrina have re-opened for business. Sales tax revenue, the city’s greatest source of income accounting for about 36% of its annual revenue, has been consistently strong, and is expected to offset losses in gaming and property tax revenue.

“On average, we are seeing sales tax numbers about 50% higher month to month than we were in 2005, and in January of this year, we experienced a 116% increase, cashing the largest sales tax check ever received in Gulfport’s history,” said Kelly L. Jakubik, spokeswoman for the City of Gulfport. “At this rate, the city is expected to exceed its sales tax budget by at least $6 million this year.”

Contact MBJ contributing writer Becky Gillette at bgillette@bellsouth.net.

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