It could take a lifetime of hard work and long hours to bring up a business, but when disaster strikes, a few minutes might be all that’s needed to bring it to ruin. While some businesses may be protected from some calamities by avoiding regions known for earthquakes or floods, some things cannot be fully avoided. The best way to minimize a loss in that case is to prepare for it ahead of time.
“We’ve had customers who never in a million years dreamed they would get hit by a tornado, but they thought of saving a little money by not insuring to the full value of the facility,” says Art Moeller, property engineering manager for Nationwide Agribusiness Insurance Co. “They think, ‘What are the chances of me losing everything?’, until the F5 that’s running a mile wide comes through, and they end up getting themselves in a real bind.”
Coming back from that kind of loss is possible, but it will require some financial assistance, not to mention willpower. Moeller says in the event of a catastrophe that causes heavy damage or a total loss of a facility, a company needs suitable property insurance, along with enough coverage for business interruption to get an operation back up and running after a catastrophic loss.
One of the keys to a recovery is to somehow get back to making product as quickly as possible. While customers may be sympathetic to a point, the cold fact is that they have a business to run also, and if a company that’s suffered a loss can’t provide the expected products, another company will.
“These producers are needing to meet certain contracts,” Moeller says, “so can you develop a relationship with some of your competitors, where you might go and produce some of that product at their location?”
The key, Moeller stresses, is to have the disaster recovery and back-to-business plan set up in advance, so in the event of a major loss, the company can start moving forward almost immediately.
Rebuilding and recovering
On Saturday, July 21, 2007, Steve Sytsma, vice president of Byron Center, Mich.-based Byron Center Meats, was packing for a week-long vacation when he got the phone call that all businessmen dread. An electrical fire that started in the facility’s offices had destroyed the office space, the retail area and about a third of the company’s production area. All of the meat in the building was lost, due to the fire and the resulting smoke damage.
“At first, we felt defeated,” Sytsma recalls, but the company quickly jumped into action. A phone call with the company’s insurance agent confirmed that the company was well covered for business interruption. A team of family, friends and employees moved every piece of equipment out of the building for cleaning, while others cleaned the building from the floor to the attic.
“We had a crew of a couple hundred people here on Saturday, and they worked around the clock,” Sytsma says. He attributes much of the turnaround to good relationships with his company’s contractors. “We were able to put in completely new electrical, plumbing, phone and refrigeration systems on Saturday by 4:00 PM.”
The team put up some walls to block off the fire-damaged areas, and they built a tunnel through the area to connect the functioning parts of the plant. The offices and retail areas were moved to another building across the parking lot.
“On Tuesday, we were approved by the USDA inspection and were cutting steaks again for restaurants,” Sytsma says. One of the company’s other specialties, custom slaughtering, was done at another meat-processing facility by
Roger Wood Foods of
It took the company three weeks to scrub clean the plant, wall off the fire-damaged areas and get the plant ready to produce again.
“We had to add coolers, change rooms and do some external renovation and construction on the back of the plant in order to accommodate the product flow and cross-contamination issues,” says David Solana, president.
The offices have been relocated to trailers offsite, and a storage facility 30 miles from the plant has been utilized as well. Due to some quick thinking, the company’s information systems were kept intact.
“While we had good backups, during the fire while we were standing out front, two key employees and I went in, ripped out the servers and brought them out. If we hadn’t done that, there would have been information loss,” Solana explains. “I don’t think in this day and age you can depend on everyone being forthright in paying what they owe, so you have to be careful with controlling and protecting that data.
“We’re in the sausage business, but we need to be sure we’re in the data business as well,” he adds.
Roger Wood Foods is rebuilding now, with the manufacturing portion expected to be complete by the end of August. As a result of the fire, the company is doing less direct-store delivery and is also dealing more with distributors.
Solana says the company had a good insurance policy, he advises companies to be careful.
“You need to make sure that you understand what you have, and the provider is a quality provider and is good with paying what they owe in a timely fashion.”