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A year later
Business First of Buffalo - by Tracey Drury Business First
USA , November 29, 2007
When tragedy struck last Sept. 11, the last thing on anyone's mind was business: Many of us stood glued to a television or radio waiting for news about how many people were killed and how the terrorist attacks could have happened here, in the United States.
It didn't take long for others to realize their businesses could see a significant dent in revenues and business, especially if they had clients in New York City. That was certainly the case for Kim Latko, president and owner of Creative Plastics.
The Riverside company manufactures custom acrylic displays and promotional items. One of its main customers is Century 21 Department Store, whose largest store was located across the street from the World Trade Center complex and was destroyed during the WTC collapse.
Another customer, a cosmetics company, was located in the trade center basement. A third customer had planned a fundraising event for Sept. 16, but was unable to receive its order of promotional bean bag bears because trucks were unable to get the delivery made.
Long-term effects
"We were stuck with all the bears as well as the lost revenue," Latko said. "That was the immediate affect. Then more long term, a lot of our client base is in the hospitality base and use amenity trays to hold shampoos and soap. The hotels, motels and casinos all continue to have spending freezes on."
In total, Creative Plastics lost about $200,000 in revenues and canceled contracts. A $44,700 disaster loan from the Small Business Administration helped offset some of the losses, but the company saw flat revenues all year. Latko considers herself lucky the company might come close to last year's revenues of just under $1 million, despite the fact she was projecting an increase prior to Sept. 11.
"The business is definitely still affected, but we've made a lot of adjustments," she said. "We're lucky to still be in business."
Latko's story is typical of the those told by 45 area business owners and managers who responded to an unscientific survey conducted last month by Business First to gauge the long-term effects of the Sept. 11, 2001, terrorist attacks.
Some 76 percent of the respondents said the terrorist attacks "somewhat" or "significantly" affected how they did business. Respondents differed sharply over how long it took them to recover. Forty four percent said their businesses still have not recovered, while nearly 18 percent replied that it took less than one month to recover.
It took nearly three months for 11 percent of Western New York companies to recover, while 18 percent of responses said it took them about six months to return to normal.
Nearly three quarters, or 73 percent of the companies said revenues were "somewhat" or "significantly" affected by the attacks. About 27 percent said revenue was not affected at all by Sept. 11.
Nearly 71 percent of companies said they did not change their existing insurance policies in the wake of the attack, while 16 percent said they made "significant" changes. Just nine percent said they had "somewhat" altered insurance plans.
Despite increased security at the nation's airports, business attitudes about air travel did not change much among the majority of companies. Nearly 82 percent said they had not changed air travel policies, while 9 percent indicated they had "somewhat" changed their attitudes about flying. Only 7 percent said the attacks resulted in "significant" changes in company air travel policies.
And despite all the publicity surrounding charitable giving for disaster relief as well as local giving, 73 percent said their charitable giving remained unchanged or decreased, while 20 percent said their policies changed somewhat.
Small businesses have been affected all over the country by the events of Sept. 11, including businesses of every size and every type. In addition to the $417 million in economic injury disaster loans approved in New York City contiguous counties, more than 4,200 loans were approved for the rest of the country totaling more than $444 million.
William Leggiero Jr., area director for the SBA Disaster Area 1 Office in Niagara Falls, said the impact has been far-reaching nationwide.
"The average loan is about $106,000 – that's a pretty good size," he said. "If you look back at SBA over the last five years, the average business disaster loans were around $54,000. So I would say that small business definitely has been impacted and it's going to take a while before customers come back and spending resumes."
The loan numbers don't necessarily give a complete picture of businesses who feel they were affected, since the actual number of businesses who request loan information and then follow through with a returned application can be as much as double the number actually approved.
"There are a lot of businesses out there that were affected who haven't submitted an application and others that submitted that weren't successful," Leggiero said." Businesses have to get out there and see what help is available and apply for that help and just not despair."
Mixed results
Jim Howard, president SkyCrane Ltd. in Niagara on the Lake, Ont., does a quarter of his company's business in the U.S. , specializing in all aspects of high-rise construction and tower cranes. While the company's volume hasn't decreased, Howard has seen a general reluctance on the part of U.S. customers to make purchases. The change, however, began prior to Sept. 11.
"September the 11th obviously had a psychological impact in that there's some uncertainty, but our belief is it is more the economic downturn that started several months earlier and that it has just kind of dragged or extended the recovery somewhat," he said.
Mike Rizzo, owner of Zippy Delivery, said the greatest challenge for his company was wondering if it would affect them at some point.
"It never happened," he said.
For The Bonadio Group, which offers insurance risk management services and cost segregation studies, the effect of Sept. 11 was a mixed bag. The company lost $300,000 in work that was already started when the tragedy struck on projects in and around the World Trade Center, as well as another $200,000 in revenue from hotel owners due to an immediate decrease in business and leisure travel. But the company also benefited from an increase in risk management business as well as in consulting work assisting small businesses to obtain SBA disaster loans.
Philip Mann, managing partner, felt somewhat awkward talking about economic losses compared to the loss of human life.
Philip Mann, managing partner, felt somewhat awkward talking about economic losses compared to the loss of human life.
"However, the harsh reality of 9/11 is that many businesses suffered great economic hardship as a result," he said.
Increased sales
Some of those businesses surveyed by Business First saw a positive change. Auto dealers such as Paddock Chevrolet saw new vehicle sales jump after General Motors and other auto makers kicked off the 0.0 interest 'Keep America Rolling' program.
"Initially, I was fearful of what the impact would be on the economy. There was certainly an overwhelming thought of what's going to happen next," said Duane Paddock, president of the Kenmore dealership.
The program resulted in sales well beyond what dealers normally see in the fall and winter seasons.
"We had times we would have 40 to 45 consumers in the building at one time, all buying," he said. "We just did not have enough product to handle it. We did not have enough sales consultants to handle that large an increase of business in such a short period of time."
So while Paddock and his employees would have preferred to be at home with their families, instead they had to work overtime to accommodate all the auto sales.
Others, like Technology Distribution Network Inc. in Tonawanda beefed up efforts to reach out to government markets and were rewarded with an $860,000 contract with the Air National Guard to provide security computers at domestic bases.
Rodney Hensel, vice president for marketing, said it was a tough situation because the company saw an opportunity, but didn't want to be seen as taking advantage during a sensitive time.
"From a marketing standpoint, we wanted to offer our services and be responsive and helpful without exploiting the situation in any way," he said.
The Riverside company manufactures custom acrylic displays and promotional items. One of its main customers is Century 21 Department Store, whose largest store was located across the street from the
Another customer, a cosmetics company, was located in the trade center basement. A third customer had planned a fundraising event for Sept. 16, but was unable to receive its order of promotional bean bag bears because trucks were unable to get the delivery made.
"We were stuck with all the bears as well as the lost revenue," Latko said. "That was the immediate affect. Then more long term, a lot of our client base is in the hospitality base and use amenity trays to hold shampoos and soap. The hotels, motels and casinos all continue to have spending freezes on."
In total, Creative Plastics lost about $200,000 in revenues and canceled contracts. A $44,700 disaster loan from the Small Business Administration helped offset some of the losses, but the company saw flat revenues all year. Latko considers herself lucky the company might come close to last year's revenues of just under $1 million, despite the fact she was projecting an increase prior to Sept. 11.
"The business is definitely still affected, but we've made a lot of adjustments," she said. "We're lucky to still be in business."
Making changes
Aurora Consulting Group Inc., a technology company in East Aurora, saw a significant impact from Sept. 11, said President and CEO Jeff McCaskey. The company, which invested in new software systems and servers that were more generic and reproducible in the event of a building disaster, didn't see things return to normal for about six months.
The greatest challenge throughout the period was researching old systems to define emergency replacement scenarios. The company has since changed by increasing security measures in dealing with data, facilities and offsite duplication of critical information and computer backups, he said.
The greatest challenge throughout the period was researching old systems to define emergency replacement scenarios. The company has since changed by increasing security measures in dealing with data, facilities and offsite duplication of critical information and computer backups, he said.
For Joseph Lukasiewicz, the effect of Sept. 11 was more personal: He was among 30 people laid off from Enidine Nov. 5. The layoff came as a surprise, he said.
"I had come out of a meeting two weeks before that and we had been told that although the market had slowed, because our business was both domestic and military, other sectors would cover for us and to expect some areas clamoring for others to help their sections grow," he said. "I felt pretty confident the business would grow."
Lukasiewicz, who had moved his family back to Buffalo to take MIS manager job two and half years earlier, has just accepted a job as director of IT at EPIC. He's also teaching a class at Villa Maria College on the fundamentals of computers and spends time networking with a group of other unemployed professionals through the Buffalo Employment and Training Center.
"One day the paper had zero computer jobs a few months ago. That was absolutely the lowest point in the job search," Lukasiewicz said. "There's some shell shock. Companies were afraid, 'how's this going to affect my business?' When they realized life will go on, they have begun to hire people."
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