The Cost of a Frosty V-Day


The snowstorm that swept the middle and eastern states was bad for businesses hoping for Valentine's bucks, but good news for salt sellers

For many kids in the Midwest and Northeast, Feb. 14 was a day off from school. Instead of bundling up to head to class, it was a day for sledding and for making snow angels and snowmen. Sure sounds like fun.

But the Valentine's Day snowstorm took an economic toll, as it blanketed a large swath of the country. There was high drama as several airports shut down and others canceled hundreds of flights. New York Governor Eliot Spitzer activated the state's Army National Guard to assist in snow removal in Oswego County, which received more than 100 inches of snowfall in certain areas over the past week. The Indiana National Guard opened armories for travelers seeking shelter after Indianapolis received 7.4 inches of snow on Feb. 13.

And towns and cities were taking a huge bite out of their snow-removal budgets. With the latest snowfall, Rockford, Ill., had nearly used up its $1.8 million budget for the winter. Baltimore was close to the end of its $3.6 million snow-removal budget. Baltimore spent $703,000 on the night of Feb. 13 alone, as city crews dropped more than 8,000 tons of salt and deployed 143 salt and plow trucks. "All night there was nothing but ice that came down, so the focus was to get the trucks out to salt constantly on the main streets and the side streets," said Baltimore Mayor Sheila Dixon at a press conference.

Frozen Flowers

Indeed, the burden on local townships and cities is only part of the price of a snowstorm. There's also the loss of hourly wages for workers who can't get to work, the loss of retail and restaurant sales for businesses, and even lower tax receipts for local governments because of lower retail sales. In a study done by Global Insight, the economic research firm found that in a dozen snow-fighting states the daily cost of a major snowstorm could total as much as $3 billion.

What's worse is that the Valentine's Day snowstorm will especially wreak havoc on the local florists and the movie theater and restaurant industries, as sweethearts might decide to stay home in the ice-cold weather. "It's not like you will eat twice next week at a restaurant," says David Wyss, chief economist at Standard & Poor's.

To prepare for the snow, Julie Hallgren, who runs the North Park Florist in Buffalo, N.Y., says she delivered many of her flower orders the night before. "We hired a lot of extra drivers," says Hallgren. And a few folks even braved the piles of snow to come to the store and buy.

Salt and Sand

That probably wasn't the case in many other parts of the Northeast. Blizzard warnings spread through Massachusetts, New Hampshire, Vermont, and Maine. The snow made its way in from the Midwest, where it had already dumped as much as 15 inches in Ohio and Indiana, and 16 inches in Illinois.

On a more local level, the snowstorm renewed a debate in the snow-removal business about whether to use more salt or sand on the streets. In Colorado Springs, Street Division Manager Saleem Khattak fought to increase the percentage of salt in the salt, sand, and gravel mixture his city uses. Previously, it used just 5% salt, but he managed to increase that to 20%. That has both good and bad points, Khattak says: "Salt is the actual ingredient that does the melting, but the chloride gets into the drainage system and into the waterways, which isn't good for fish and water life."

In Norwalk, Conn., the city changed to a 100% salt spread in the street. At $53 per ton, salt costs more than double the price of sand, but Norwalk Public Works Director Harold Alvord says, "It's going to be cheaper in the long run, because it's more effective and it doesn't clog drains like sand."

Holding Pattern

On the flip side, the snow was good news for ski resorts. The warm weather of this winter has hurt the Northeast region's $1 billion ski business, and many resorts have had to rely on snow-making machines on a handful of slopes. The fresh snow should invite a rush of people this month. It's also good news for hardware stores that sell snow blowers and salt, as well as those in the landscaping business. "Landscapers work all summer long mowing lawns and they remove snow in the winter. But this year, that source of income wasn't quite there for them in the mild winter of the Northeast," says S&P's Wyss.

Hours before the snow blowers and landscapers got busy removing the snow, the storm closed Washington's Dulles International Airport and Ronald Reagan Washington National Airport, Bradley International Airport in Connecticut, and New York's Dutchess County, Orange County, and Westchester County airports, according to the Federal Aviation Administration. Clearly, that means a huge loss for airlines and passengers, who now have to make up for unfinished business.

Click here to see some of the high costs extreme weather has inflicted recently.

Gogoi is a contributing writer for BusinessWeek.com.

The Good Business Issue
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus