August 28, 2017 / 3:54 AM / 5 months ago

Harvey disrupts business, but some set to benefit

(Reuters) - Days before Hurricane Harvey barreled into the Texas coast on Friday, home improvement retailers were preparing truckloads of lumber, shingles and other materials that property owners in the storm-raked communities will need to rebuild.

The deliveries will have to wait, however, as 56 stores between Home Depot and Lowe’s in southeast Texas remained closed as of Sunday amid widespread flooding. Once they reopen, the chains could be among the biggest beneficiaries of the post-storm recovery.

Lowe’s has sent “500 truckloads” of supplies to the storm zone, said spokeswoman Sarah Lively. “We are reopening those stores as quickly as possible.”

For the moment, the biggest storm to hit Texas in 50 years is posing a major disruption to one of the most important economic crossroads in the United States and the heart of its oil industry. Ports, railways and highways are closed or clogged, potentially blocking movement of key parts of the U.S. manufacturing supply chain.

Catastrophic flooding triggered by now Tropical Storm Harvey inundated Houston on Sunday, forcing residents of the fourth most populous U.S. city to flee their homes in anticipation of more days of “unprecedented” rainfall.

The home improvement retailers, well versed in the business of disaster, are likely steps ahead of most companies.

At Home Depot, spokesman Matt Harrigan said preparations began “as soon as the storm was on the radar.”

Both Home Depot and Lowe’s said they have set up command centers to manage the response. Both companies also said they will freeze prices for lumber, roofing and other rebuilding materials for a time in the affected zone.

Other U.S. companies, including automakers, railroads and insurers, will likely be trying to send investors similar reassuring messages as trading starts on Monday.

An eighteen wheel tractor trailer is stranded on Interstate highway 45 which is submerged from the effects of Hurricane Harvey seen during widespread flooding in Houston, Texas, U.S. August 27, 2017. REUTERS/Richard Carson


Texas is a significant vehicle market, particularly for highly profitable pickup trucks built by the big three Detroit automakers.

In the short term, the storm will hamper operations at dealers and could dampen August sales. But longer term, “it seems there has been enough flooding to damage thousands of light vehicles that will need replacing,” said Nick Colas, an independent analyst based in New York City.  

Flooded downtown is seen from a high rise along Buffalo Bayou after Hurricane Harvey inundated the Texas Gulf coast with rain causing widespread flooding, in Houston, Texas, U.S. August 27, 2017 in this picture obtained from social media. Mandatory credit: Twitter/@caroleenarn via REUTERS ATTENTION EDITORS - THIS IMAGE HAS BEEN SUPPLIED BY A THIRD PARTY. MANDATORY CREDIT. NO RESALES. NO ARCHIVES

For insurers, the storm could be a mixed blessing.

“Insurers - from a long term point of view they can raise their rates, but some insurers, if they have a particular geographic or sector concentration can get really beaten up,” said Michael Purves, chief global strategist at Weeden & Co.  

“Maybe the winners are the companies that have the least damage but the most license to increase their premiums.”

It was not clear on Sunday how the storm would affect supply chains for automakers and other manufacturers that depend on goods flowing to and from northern Mexico.

Ford Motor Co, General Motors Co and Fiat Chrysler Automobiles NV said on Sunday they had thus far not seen any impact or issues with getting parts across the storm zone but were monitoring the storm closely. The area of Mexico south of the storm zone is a major center for auto parts manufacturing.

BNSF Railway Co. and Union Pacific Corp, told customers they would likely curtail operations in flooded areas.

Reporting by Dion Rabouin and Megan Davies in New York and Joseph White in Detroit; Editing by Sandra Maler and Mary Milliken

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