After the storm: Dark clouds, green lining

Long before Hurricane Sandy arrived, hardware stores throughout the Eastern Seaboard found themselves swamped with customers trying to stock up on everything from batteries to rubber gloves. But now that the worst is over -- and property damage estimates are in the $50 billion range -- the effect on the home improvement industry is coming into focus. 

After two full days of darkness, the New York Stock Exchange opened on Wednesday Oct. 31 to a whirlwind of activity. Traders seemed especially interested in Home Depot and Lowe’s, the nation’s two largest home improvement chains. (Menards, No. 3, is a Midwestern retailer.) Home Depot closed at $61.38, a 2% rise in share price, and Lowe’s was also higher, closing at $32.38, up 3%.

Diane Swonk, chief economist of Mesirow Financial, told the Detroit Free Press that grocery stores and home improvement outlets realized net gains as customers stocked up on emergency supplies. Online retail will likely experience an uptick as shut-in consumers shop the Internet instead.

Swonk also said that homeowners forced to repair damage will likely make further renovations that they've put off, boosting economic growth. The storm is "unleashing pent-up demand," she said. "It's the most perverse stimulus to the economy."

The catastrophe, which took at least 72 lives in the United States alone -- will also provide a job boost to the construction industry.

“We are likely to see localized spikes in construction employment throughout November and the winter as crews are mobilized to rebuild communities damaged by Hurricane Sandy," said Ken Simonson, chief economist for the Associated General Contractors, in a prepared statement.

Reopening and restocking stores that are located in a hurricane’s path has become like military drills for national retailers; they’ve had lots of practice. But even the small independents, as well as their regional warehouses, have become sophisticated when it comes to distribution. Losing power presented a special challenge to supply chain partners, but many used iPads and other satellite-powered communication devices to place and receive orders.

Despite advanced telecommunications systems and meteorological warnings, it was impossible for supply to keep up with all the demand.

On Oct. 29, the day before the hurricane lay siege to the East Coast, a Home Depot in Poughkeepsie, N.Y., sold 140 generators within three hours. But many left empty-handed. So one customer bought a chainsaw just in case a tree fell down on his house, according to the Poughkeepsie Journal.

An editorial about price gouging during natural catastrophes in the Wall Street Journal interviewed an executive of Generac Power Systems, one of the nation’s largest suppliers of commercial and residential generators. Generac (unlike the writer of the op-ed piece) agreed with laws that prohibit the practice. But waiting to buy a generator when everyone else needs one is not a wise shopping decision, the Generac executive pointed out.

Brian Young, a PRO Group hardware store owner in Catskill, N.Y., tried to get his customers to plan ahead with an email blast on Saturday Oct. 27, three days before the storm. He listed what he already had in stock -- generators, disposable propane tanks, sump pumps, kerosene lamps and oil and waterproof boots. After losing his store and two houses to Hurricane Irene, Young doesn’t believe in being too prepared.

In the LBM channel, Weyerhaeuser shut down several of its Northeast distribution facilities, according to a CNBC report. CEO Dan Fulton told the news outlet that the closures would cause a “short-term disruption” in its supply chain. “Supply channels are tight, production channels are strong, and we expect that momentum to continue into the quarter,” Fulton said.

But for now, most households are not quite ready for lumber or engineered wood. All of that will come later, after the insurance money, the FEMA funds and the donations start to trickle in.

Lowe's announced on Oct. 31 that it will donate $1 million to disaster relief and rebuilding efforts in communities affected by Hurricane Sandy. Lowe's will work with its national nonprofit partners to provide both immediate and long-term support to local communities across the Northeast. Its stores are also accepting donations through the Red Cross.