Canada

Apocalypse now

The ice storm pulls the plug on business

BRENDA BRANSWELL January 26 1998
Canada

Apocalypse now

The ice storm pulls the plug on business

BRENDA BRANSWELL January 26 1998

Apocalypse now

The ice storm pulls the plug on business

BRENDA BRANSWELL

STEPHANIE NOLEN

DANYLO HAWALESHKA

The light inside Huimin Wong’s store signalled that she was ready for business. But on Jan. 14, when she reopened her Ste-Catherine Street gift shop after it had been closed for a week, it remained empty. Scores of offices and businesses in Montreal stayed shut as Hydro Quebec tried to fix its fragile power system, pummelled by the worst ice storm on record. “I’m so upset,” sighed Wong, slumped by the silent cash register. “People are afraid of falling ice, they aren’t shopping anyway.” After power began to return to the city last week, the government requested businesses to keep their doors closed until Thursday in order to conserve power. Wong and her husband, who operate two gift shops in Montreal, opened a day early, eager to make up for the $350 of lost daily revenue. But to no avail. “Maybe it will turn out OK, and we’ll survive this,” she said.

At the height of the crisis, one Ste-Catherine Street video store posted a sign advising customers that it would be closed “until the end of the apocalypse.” For many farmers, business people and employees stuck without power, revenue or pay, that sentiment would not seem extreme. With an estimated $2-billion price tag, the storm is the most expensive natural disaster on Canadian record. Hydro Quebec’s extensive repairs alone may cost $500 million. And the Alliance of Manufacturers and Exporters of Quebec’s preliminary estimate puts the losses from office and plant closings at $800 million, with retail losses running at about $40 million for each day that stores remained closed.

The tab is still going up south of Montreal, where several municipalities continue to exist without power. Mitel closed its Bromont semiconductor plant last week, but still paid its 360 employees. “I have no idea what it is all going to cost, but in a wild estimate I would say $300,000 to $400,000 a week,” said Claude Auclair Jr., a manager at the plant. Some companies, such as IBM, planned to resume production this week with the help of generators.

(IBM was forced to shut down its Bromont operation for five days.) The situation was more dismal in St-Jean-sur-Richelieu, which was still completely blacked out at week’s end and likely will not have its power fully restored before Jan. 26. In the abandoned downtown core one day last week, electrical cables still lay on the ice-coated sidewalk. The only sound in Robert Jacques’s Monsieur Cash Inc. pawn shop was a ticking clock. Dressed in a blue jacket and wearing a tuque to keep warm, Jacques worked for four hours in his frigid, unlit store, although business was moribund. “I don’t want to think about it,” laughed Jacques about how much money the blackout is likely to cost him.

According to Yves St-Maurice, senior economist with the Mouvement des caisses Desjardins, the storm could prove to be the “coup de grace” for small businesses that were already in difficulty. The agricultural sector was also hard hit. One Quebec farmer lost 10,000 chickens—they suffocated after the air circulation system failed as a result of his generator breaking down. Laurent Pellerin, the head of Quebec’s Union des producteurs agricoles, says the blackout has put a strain on farmers and increased their workload. “They’re exhausted,” he says. And the Quebec Maple Syrup Federation estimates that 30 per cent of sugar bush operations in the province have been damaged by the storm.

Despite the individual hardship, some I observers say the disaster is unlikely to have a significant overall impact on Quebec’s economy. Joe Scanlon, director of Carleton University’s Emergency Communications Research Unit, which studies disasters, maintains that such events have no appreciable economic impact. “It balances out,” says Scanlon, noting that losses are offset by the infusion of money into the economy from government aid and insurance companies. So far, in fact, the federal government provided $50 million in immediate relief for Quebec, which was hit hardest by the storm, and $25 million for Ontario, the first advances in what will eventually amount to many times more.

The Insurance Bureau of Canada also estimates that it will pay out about $600 million in insurance claims in Quebec alone. Raymond Medza, the bureau’s general manager for Quebec, says insurance covers such things as damage to cars and households caused by falling branches or ice. Any damage caused by ruptured water pipes is also covered, unless the power failure lasts four days or more. At that point, claimants must show they took the precaution of shutting off all water to the house or apartment, and letting the taps run dry.

Some economist agree with Scanlon’s point of view. “Once things get back to normal they’ll crank up production,” predicts Royal Bank of Canada economist Carlos Leitao. And Gérald Ponton, president of the Alliance of Manufacturers and Exporters, is similarly optimistic that the economic impact of the disaster will prove negligible by year’s end. “Well simply remember this as the worst nightmare ice storm ever experienced in Montreal,” he asserts. But for now, many people simply want to forget about the storm altogether.