Tornadoes pick economic winners and losers as they churn through communities.
Homeowners who have seen their property reduced to rubble by the tornado that moved through south Wichita on Saturday are clear early losers, while the lagging construction industry is likely to get a boost, as are retailers who sell items such as cars, clothes and bedding that will need to be replaced.
The negative effects of a tornado come from damage to property and replacement costs for that property, as well as from lost wages of workers, such as those at aircraft companies, who are temporarily idled by halts in production, said Jeremy Hill, director of the Center for Economic Development and Business Research at Wichita State University.
Both those effects could create tax variables, as well, Hill said.
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“If you have less income, you would be spending less during that time,” he said.
The positive effect comes from a boost in new construction to rebuild ravaged structures, which will be particularly helpful for a construction sector that has been very weak, Hill said.
“It’s short term, but it definitely puts an injection into it,” he said.
How much of an economic impact the Saturday tornado had on the area in damage continued to be assessed Monday. City and county officials gave an early damage estimate of $283 million, based on appraised values of properties along the path of the tornado, using overlay maps and property value records.
But that number is expected to go down as assessors use new overlays showing more precisely where the tornado skipped, where it touched down and where it inflicted heavy damage, said Tim Norton, Sedgwick County Commission chairman.
He hopes the county will have a new estimate by the end of the week.
“We started with the biggest number and are kind of whittling at it,” Norton said. “When you’re dealing with residential, commercial and heavy industrial, it gets kind of dicey.”
Because the area wasn’t totally devastated, local businesses should capture most of the rebuilding work and associated wages, Hill said. In Greensburg and other towns that were almost completely destroyed by tornadoes, outside companies benefited.
The new construction business is “basically unwanted business, though,” for the city’s builders and building supply specialists, according to Star Lumber president Pat Goebel. Business opportunities range from immediate repairs and emergency building location to the longer-term reconstruction projects.
“We look at it more like a service,” said Ben Hutton, who heads Wichita’s Hutton Construction.
Hutton played a big role in the initial cleanup and recovery five years ago in Greensburg, especially for the city’s school district.
“Sure, eventually those folks have to rebuild and reconstruct, and that turns into a business opportunity. But we’re not chasing anything,” he said.
Hutton said his company will meet soon with a couple of clients who had tornado damage, but he didn’t identify them.
Star Lumber officials are gearing up for a run on building supplies by both businesses and homeowners, but the run hasn’t started yet, Goebel said.
“We checked around (Sunday) to see if we needed to open, but the general consensus was everyone’s still in the damage assessment phase,” Goebel said. “In the past, we’ve had a large amount of business from these storms, but a lot depends on the type of damage.”
Tornado victims are facing a quick repair job to secure their buildings, Goebel said, or launching down a longer path toward total reconstruction if their property has been destroyed.
With substantial roof damage in southeast Wichita, the storm may be yet another bonanza for roofers, Goebel said.
“That end’s fairly slow right now,” he said. “Last year, a couple of mean hailstorms kept those guys hopping, but I don’t anticipate any trouble getting them geared up and able to handle that.”
Workloads are relatively light for residential and commercial builders, Hutton and Goebel said, so business and home owners shouldn’t struggle to find builders.
Goebel said he’d rather sell to new builders, rather than to home and business owners who have suffered a loss.
“It’s business, sure, but it’s never a good thing for anyone when this happens,” he said. “It’s tough work, tough business. At the end of the day, these things aren’t good for anyone.”
Wess Galyon, president of the local builders association, said there are business opportunities for local residential builders, but there also are business opportunities for scam artists – contractors sweeping in from out of town to grab repair jobs quickly.
Galyon urged anyone with repair or reconstruction work to stick with local, licensed contractors and follow the protocols set out by their insurance company.
Retail sales in basic necessities such as clothing and bedding and chain saws also will see a boost, Hill said. But that benefit will be short-lived as well.
“All those are consumed quickly, then it will go away,” Hill said.
Federal and state aid could add another injection to the economy, Hill said.
Gov. Sam Brownback on Sunday issued a declaration of disaster emergency, clearing the way for making state aid available to counties needing help. The state will evaluate the damage to see whether to apply for federal funds.
Officials in 38 other counties that were affected by the Saturday storms also are assessing damage, said Sharon Watson, director of public affairs for the Adjutant General’s Office, which is in charge of emergencies statewide. The Kansas Division of Emergency Management will contact those counties to determine the amount of damage sustained, perhaps beginning next week, she said.
After the extent of total damage is determined, the decision will be made whether to request joint preliminary damage assessments teams to assess the state’s eligibility for federal disaster assistance. Brownback would make any FEMA request.
Insurance payments for homes and any farmland lost to the storm will begin flooding the area, Hill said, but insurance companies will seek rate increases down the road.
“They’ll start making payouts soon, but in the long run, everybody’s costs will go up,” Hill said.
In the end, the loss of someone’s home is something that can never be recaptured, he said.