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Harvey disrupts business, but some are set to benefit

  • Days before Hurricane Harvey barreled into the Texas coast on Friday, home improvement retailers were preparing truckloads of lumber, shingles and other materials that property owners in the storm-raked communities will need to rebuild.
  • The home improvement retailers, well versed in the business of disaster, are likely steps ahead of most companies.
  • Other U.S. companies, including automakers, railroads and insurers, will likely be trying to send investors reassuring messages as trading starts on Monday.
Customers shop at a Home Depot store on July 26, 2017 in Chicago.
Getty Images
Customers shop at a Home Depot store on July 26, 2017 in Chicago.

Days before Hurricane Harvey barreled into the Texas coast on Friday, home improvement retailers were preparing truckloads of lumber, shingles and other materials that property owners in the storm-raked communities will need to rebuild.

The deliveries will have to wait, however, as 56 stores between Home Depot and Lowe's in southeast Texas remained closed as of Sunday amid widespread flooding. Once they reopen, the chains could be among the biggest beneficiaries of the post-storm recovery.

Lowe's has sent "500 truckloads" of supplies to the storm zone, said spokeswoman Sarah Lively. "We are reopening those stores as quickly as possible."

For the moment, the biggest storm to hit Texas in 50 years is posing a major disruption to one of the most important economic crossroads in the United States and the heart of its oil industry. Ports, railways and highways are closed or clogged, potentially blocking movement of key parts of the U.S. manufacturing supply chain.

Catastrophic flooding triggered by now Tropical Storm Harvey inundated Houston on Sunday, forcing residents of the fourth most populous U.S. city to flee their homes in anticipation of more days of "unprecedented" rainfall.

The home improvement retailers, well versed in the business of disaster, are likely steps ahead of most companies.

An employee, left, holding 'Out of Order' signs for gas pumps walks between vehicles waiting to refuel at an HEB Fuel gas station in Houston, Texas, on Thursday, Aug. 24, 2017.
F. Carter Smith | Bloomberg | Getty Images
An employee, left, holding 'Out of Order' signs for gas pumps walks between vehicles waiting to refuel at an HEB Fuel gas station in Houston, Texas, on Thursday, Aug. 24, 2017.

At Home Depot, spokesman Matt Harrigan said preparations began "as soon as the storm was on the radar."

Both Home Depot and Lowe's said they have set up command centers to manage the response. Both companies also said they will freeze prices for lumber, roofing and other rebuilding materials for a time in the affected zone.

Other U.S. companies, including automakers, railroads and insurers, will likely be trying to send investors similar reassuring messages as trading starts on Monday.

Big market for trucks

Texas is a significant vehicle market, particularly for highly profitable pickup trucks built by the big three Detroit automakers.

In the short term, the storm will hamper operations at dealers and could dampen August sales. But longer term, "it seems there has been enough flooding to damage thousands of light vehicles that will need replacing," said Nick Colas, an independent analyst based in New York City.

For insurers, the storm could be a mixed blessing.

"Insurers — from a long term point of view they can raise their rates, but some insurers, if they have a particular geographic or sector concentration can get really beaten up," said Michael Purves, chief global strategist at Weeden & Co.

"Maybe the winners are the companies that have the least damage but the most license to increase their premiums."

It was not clear on Sunday how the storm would affect supply chains for automakers and other manufacturers that depend on goods flowing to and from northern Mexico.

Ford Motor, General Motors, and Fiat Chrysler Automobiles said on Sunday they had thus far not seen any impact or issues with getting parts across the storm zone but were monitoring the storm closely. The area of Mexico south of the storm zone is a major center for auto parts manufacturing.

BNSF Railway and Union Pacific, told customers they would likely curtail operations in flooded areas.