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Making El Nino into dinero
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October 14, 1997: 1:57 p.m. ET
Despite weather damage fears, small firms still profit from storm pattern
From Correspondent Casey Wian
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SEAL BEACH, Calif. (CNNfn) - In 1983, the last time the weather system known as El Nino hit, storms and other abnormal weather patterns caused an estimated $13 billion in damage worldwide. Although there are fears of even greater economic impact this year, some people have already found a way to turn the weather disruption into profit.
Revenues from emergency building are up. Stacy Kanzler, president of the Sandbagger Corporation, reports a flood of orders for automatic sandbag-filling machinery, estimating that sales of the $16,000 device (which fills sandbags 40 times as fast as they can be filled by hand) are up by 500 percent. Business has already been so good this year that she is planning to take Sandbagger public next year.
Demand for the sandbagging machines has been heavy. As Kanzler says, "We're out there full time, delivering 50 machines in the last two weeks." Most sales have been to the residents of cities like Redondo Beach, where home and business owners still remember the devastation wrought by storms in 1988 and 1995.
Meanwhile, other coastal communities like Seal Beach have imported trainloads of sand from the desert to protect beachfront properties. In Seal Beach's case, the cost of bringing sand to the beach is estimated at $1 million.
Flood insurance is also selling at a premium, with Huntington Beach agent Carl Ferraro expecting a revenue boost of $6,000 a month. "We'll probably write a hundred [new policies] in the month of October if it continues this way," explains Ferraro. "And we were close to 80 last month. As it continues to rain, people will continue to call us."
Ordinarily, a firm like State Farm sells about a hundred flood insurance policies a week. This month, sales have reached 16 times that figure, and flood fears are expected to rise until the effects of El Nino crest later this year. Since flood insurance is fully underwritten by FEMA, the insurance companies take no risk.
Certain businesses actually welcome El Nino for the unseasonal precipitation and early snowfall it brings. California ski runs have opened several months early this year, and as far inland as Denver, the threat of early winter conditions has boosted spending on safety-oriented merchandise. Jim Robeson, a sales manager at Denver's Courtesy Ford, reports that sales of four-wheel drives advertised in connection with El Nino have risen by 50 percent.
Meanwhile, the global commodities market, always at the mercy of rainfall, appears to be adjusting to the stormy weather. "A lot of people have already banked on some El Nino problems," shrugs Steve Bruce, a commodities trader for ED & F Man International." And they're already long. So they're already in bed expecting some problems. Might not happen."
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