El Nino: Some companies to benefit while others get hit

The strongest El Nino on record is expected to drench the southern half of United States this fall and winter, according to the National Oceanic and Atmospheric Association (NOAA).

The meteorological phenomenon will undoubtedly bring benefits for some industries and setbacks for others, across the breadth of the United States.


Residents of Petaluma, California, paddle through their neighborhood in February 1998, after El Nino storms caused flooding and mudslides in Northern California.
John G. Mabanglo | AFP | Getty Images
Residents of Petaluma, California, paddle through their neighborhood in February 1998, after El Nino storms caused flooding and mudslides in Northern California.

For the West Coast and across the South, that likely means heavy precipitation and snowfall; the East Coast and North can expect slightly warmer temperatures.

Although a deluge sounds like the answer to California's prayers, one season of rainfall will hardly relieve the drought-stricken state. Nevertheless, Shon Hiatt, professor at the USC Marshall School of Business, is optimistic, "at the California level, any more water is great."

A big El Nino can bring both relief, but it also can cause costly damages. During the 1997-98 El Nino, NOAA reported more than $550 million in damages in California. The Federal Emergency Management Agency (FEMA) is strongly urging homeowners and business owners to purchase flood insurance as a preventative measure this year.

Here are the potential winners and losers of this year's El Nino:

  • Winner: Roofing companies

People are scrambling to prepare for the big storm. Fixing old, leaky roofing has been a top priority, and many roofing companies are booked through the fall and winter.

  • Loser: Timber and lumber firms

Heavy rainfall and flooding can create severe complications for forestry, thus taking a toll on timber and lumber companies. Soil inundation, loss of access to roads and bridges, and higher operating costs are just some of the problems.

  • Winner: Ski resorts

"People are very, very hungry to come back out and hit the Sierra Nevada again," said Kevin "Coop" Cooper, marketing manager of Kirkwood Mountain Resort in Lake Tahoe, California. Many ski resorts in Colorado have already received 9 to 17 inches of snow, according to Vail Resorts.

  • Loser: Construction companies

Although some repair construction companies might benefit, "delaying projects is definitely going to have a (negative) financial impact," explained Brigham Yen, a realtor and broker who writes an industry blog called DTLA Rising.

  • Winner: Professional cleanup services

Natural disasters are a big business for companies such as Servpro. Professional cleanup services are still reaping the benefits of disasters like Hurricane Joaquin.

  • Loser and winners: Farmers

Some farmers in California are likely to see some drought relief — especially in the San Joaquin Valley — but that much-needed water isn't likely to fall everywhere it's needed. "The big question is whether the rainfall from El Nino will actually make it up to the northern part," says Hiatt. Most of California's produce is farmed in the north.

Moreover, much of the southern United States, which is expected to get more rain as a result of El Nino, has already been hit by flooding this year, sometimes more than once. That's especially true of farmland in Texas.

That said, California is responsible for almost half of all the fruit, nuts and vegetables grown in the United States, so any relief there is welcomed.