February 1, 2013
When one of its facilities was struck by an EF5 tornado on April 27, 2011, Independence Tube Corp. vowed to rebuild the facility. The reconstruction, which was aided by its staff, its customers, and its suppliers, was a Herculean effort that resulted in a small miracle exactly a year later: the new facility reopened for business on April 27, 2012.
When you run a business, you encounter all sorts of contingencies. If you have planned well, you probably won’t miss a beat. A worker calls in sick; you have cross-trained your staff so other workers can fill in. A machine breaks down; you have a maintenance staff and spare parts on hand to get the machine up and running. An inbound truck is delayed; you keep a little extra supply of raw material in inventory so you can continue making parts. A tornado tears down more than half of your building, destroys several critical machines and damages a few more, and scatters your inventory far and wide. Wait. You didn’t plan for that.
A tornado of that intensity is extremely rare. Of the 1,300 or so tornadoes that hit the U.S. every year, most are EF0, which is the lowest ranking on the Enhanced Fujita scale, with wind speeds no more than 85 miles per hour. If an EF0 goes through a built-up area, the damage typically is light—shingles torn from roofs, signs torn down, and small branches broken off trees. Many tornadoes travel just a few miles through unpopulated areas, cause little more than some crop damage, and usually result in no fatalities. At the other end of the scale are the most fearsome storms, EF5s, which have wind speeds that exceed 200 MPH and leave little but carnage behind. It’s not uncommon for an EF5 tornado to cause $2 billion in damage.
When a big tornado hits a residential area, most homeowners can do little more than salvage the few items they can find, file an insurance claim, and start from scratch. However, when a big storm gets close enough to damage a business’s building and some of the infrastructure, but doesn’t cause a total loss, it’s a completely different situation. This type of thing requires hundreds, if not thousands, of business decisions about assessing the damage, rebuilding the facility, repairing any salvageable inventory, repairing or replacing damaged equipment and tooling, and working out arrangements with suppliers and customers. Related decisions center on helping the staff and their families get through the aftermath. All told, it’s a matter of working with vendors, suppliers, customers, and employees to rebuild the business.
This is what happened in late April 2011. Weather conditions from the southeastern U.S. to Ontario, Canada, unleashed 358 tornadoes over four days, April 25-28. Although 96 percent of them were EF3s and below, and the average path was less than 10 miles long, averages don’t matter. On April 27 one of the biggest storms of the outbreak, an EF5, tore through more than 100 miles of communities and countryside throughout northern Alabama and southern Tennessee. The path of destruction was about 1.25 miles wide. Although it missed two urban areas in northern Alabama, Decatur and Huntsville (pop. 56,000 and 546,000, respectively), it took 100 lives and left a wake of destruction in more than a dozen communities. It got close enough to Decatur to hit Independence Tube Corp.’s facility, which is 9 miles northwest of downtown.
Although 25 people were in the building at the time, they were blessed with an amazing stroke of luck: None were hurt. What happened during the following 12 months is just as remarkable, and a testament to Independence’s ability to execute a recovery plan in the face of nearly overwhelming circumstances. A year later, to the day, the company reopened the facility for business. Its response to this disaster is the reason the staff at TPJ-The Tube & Pipe Journal® named Independence Tube Corp. the recipient of this year’s TPJ Industry Award.
On April 27 the National Weather Service’s Huntsville, Ala., office issued 92 tornado warnings, 31 severe thunderstorm warnings, and seven flash flood warnings. By the end of the day, 39 tornadoes had developed in the Huntsville office’s county warning area (CWA), which consists of 14 counties: Lauderdale, Colbert, Franklin, Lawrence, Limestone, Madison, Morgan, Cullman, Marshall, Dekalb, and Jackson in Alabama; and Franklin, Moore, and Lincoln in Tennessee.
The storm that hit the Independence facility was one of the biggest storms that slammed Alabama that day. According to data provided by the National Oceanic and Atmospheric Administration, its track was 132 miles long, and it was the only storm reported by the Huntsville office to develop winds in excess of 210 MPH. After the tornado had passed, the 25 employees emerged from the tornado shelter to find the unimaginable.
It soon came to light that Dwight Eisenhower’s observation was right on target: “In preparing for battle I have always found that plans are useless, but planning is indispensable.” In other words, the plan itself isn’t necessarily useful, but formulating a plan provides two crucial benefits. First, the process of working up a plan—that is, the painstaking job of working up a thorough, detailed strategy that accounts for every aspect of the situation, big and small—is an invaluable experience. Second, it provides a starting point, providing a general route to get to the goal. The actual route, based on myriad decisions made and actions taken, probably won’t follow the plan too closely, but that doesn’t matter. Starting with a plan that is open to change and improvement is much better than starting with no plan at all.
As soon as the executives at Independence heard the news, they took action.“Some drove down from Chicago that night,” Werner said. “I was in Florida when I found out, so I immediately went to the airport. I wasn’t able to get a flight, so I wound up renting a car and driving all night to get to Decatur the next day.”
The company put together a recovery team that included managers, supervisors, and employees from all of the company’s locations, and it solicited ideas and input from everyone in the company. “We realized that everyone’s ideas and opinions, no matter how minute, would add to our success in this recovery,” said John Helinski, the Decatur division manager.
One of the company’s first actions was to place advertisements in several industry magazines announcing that it had been hit by a tornado on April 27, and that it started rebuilding on April 28. It was the company’s way of communicating to every customer and vendor that it was ready to roll up its sleeves and get to work rebuilding the plant and rebuilding the business. It was a very public commitment.
Another opportunity to spread the word came up when several Independence executives and managers attended the Metals Service Center Institute’s annual meeting. The timing for these face-to-face discussions was about perfect, coming four days after the storm—long enough for the word to get around the industry that the tornado had destroyed the building, and soon enough to head off any doubts about the company’s commitment to rebuild.
Emphasis on Employees. While Independence needed some workers to remain in Decatur, it didn’t have enough work for all of them, so every member of the Decatur workforce was offered three options: work at the company’s Chicago location; work at its Marseilles, Ill., division; or remain in Decatur. At any given time, about half of the employees worked at the other divisions during the recovery effort.
Working from the plan, the company compensated its transfer employees for travel, housing, and per diem meals.
A big, bureaucratic organization might have stuck to the plan to keep it simple, but in a small company, taking care of the employees can be much more complex.
“When you have 72 employees, you know them well and you realize they have a life outside of work—each employee has a spouse or a girlfriend or a boyfriend, maybe a child or a family—so we asked them to let us know what was going on with their families, and how we could help,” said John Anton, Chicago division manager. “It’s not just about the 72 employees. It was about their families and their extended families.”
Responding to the staff’s varied needs, the management team let each relocated employee decide how much time to spend at the temporary location.
“Some relocated for the duration, some as little as a month, and some didn’t go at all,” Werner said. The company had plenty of work in its Illinois facilities, which soon were absorbing the orders normally processed in its Decatur division. Also, the company used Decatur staff to bridge the gaps created by vacations, especially during summer months, when it normally hires temporary workers. In the Marseilles division, it added a second crew to the night shift, and it added to the material handling crews at both locations to help with the increased throughput.
Concentrating on Customers. Independence’s main goal wasn’t merely to serve its customer base to the best of its ability. It set its benchmark much higher than that: It wanted its customers to feel no pain.
“We immediately did an intensive open-order review, a rigorous in-process and inventory review disposition, and made plans for storing finished goods inventory,” Helinski said. “We shifted production to our northern locations and contacted our customers directly by e-mail, telephone, in person, and indirectly by advertising.”
The three Independence locations didn’t have 100 percent crossover in their manufacturing capabilities, which brought to mind some of the warnings when the company obtained its quality certifications.
“When quality systems like ISO and QS first came out years ago, the auditors would ask, ‘What would you do if you lost a division? Where is your redundancy, and how will you maintain consistent quality?’” Anton recalled. “Many people thought it would never happen, but it did. You need to have a plan for transferring production to your other facilities.”
For another type of company, say a big conglomerate that makes many types of products, this might be impossible, but for a tube and pipe producer that has product overlap among its locations, this isn’t too difficult. Still, Independence had a couple of hurdles to get over. The company had to purchase tooling for three of the four sizes it produced exclusively at Decatur. The vendor expedited the order and was able to deliver the new tooling to the Marseilles division within two months. When production commenced, the company faced a decision concerning the additional 575 miles of shipping distance for some of its customers. Who would pay for shipping those orders the extra distance? Independence did. Its customer base knew that the company was dealing with a disaster, but Independence wanted the customers harm, no hassle, not a headache, not even any additional shipping costs. Independence picked up the tab.
“It wasn’t our customers’ fault that a tornado hit our building,” explained Anton.
Synchronizing With Suppliers. Many of the vendors didn’t wait to hear from Independence. Instead, vendors called Independence, asking what they could do to help. In some cases, Independence put orders on hold; in others, they rerouted orders to the company’s other locations; in still others they accepted orders already in transit and placed the material in temporary storage yards.
The company is proud of the fact that it didn’t cancel a single order, but gives credit to its suppliers for their flexibility during the rebuild.
Because the company had good relationships with other businesses in the industrial park, it was able to borrow heavy equipment immediately. However, getting started in a situation like this is more difficult than it seems. The company had finished goods, semifinished goods, and raw materials in inventory, much of it covered with wreckage from the building. How much of it was undamaged, how much could be salvaged, and how much would have to be scrapped? The company couldn’t get started until it had permission from its insurance carrier, and when it did start moving material, it had to keep track of the dollar value of every piece of material that was undamaged or salvageable. It was as much an accounting operation as it was a salvage operation.
As soon as the inventory and debris were removed, the team set to work on the reconstruction.
“Excavators, demolition experts, debris haulers, structural engineers, machine overhaulers, electricians, construction companies—all had to be contracted,” said Mark Voelkel, the engineer in charge of the demolition and rebuild. The company was fortunate that this was part of the plan, so it was as ready as it could be. Also, because the building was constructed recently (in 2006), the contractors that had built it were available to rebuild it.
The reconstruction would require substantial amounts of structural tubing, so it put in orders to its other divisions.
Although it would be impossible to describe every step of the reconstruction in detail, the numbers speak for themselves. The project required 1,350 tons of steel, which involved replacing the entire roof and 167,000 sq. ft. of siding. The effort required ordering and coordinating the delivery of resources from six countries and organizing the work of more than 30 contractors.
“At any given time, we had 300 workers on-site,” Voelkel said.
Although it sounds like a contract nightmare, it wasn’t. Starting a business project in a small community in Alabama doesn’t always require signatures on dotted lines.
“Many of our contractors worked on handshake deals,” Werner said.
As incredible as it may seem, the company didn’t focus 100 percent of its efforts on rebuilding. It used the opportunity to improve its operations and its facility.
“You might think you know the community, but when something like this happens, you really get to know it—especially when you see how well the people of the community come together and cooperate in a crisis,” Helinski said.
“For example, we had quite a bit of inventory and no place to store it,” Werner said. “One of our suppliers, Nucor Steel, had some undeveloped land nearby. It graded and improved the lot so we could use the area for outdoor storage,” he said.
“Also, one of our customers, Saginaw Pipe, lent us a crane and told us to keep it as long as we needed it,” Voelkel said. “That was extremely generous.”
Eventually it became one of the many heart-warming stories that came out of the effort.
“We got a call from our insurance representative, who questioned the number of cranes on-site,” Werner said. “We were using 10, but Travelers Insurance was paying for nine. He’s a dollars-and-cents guy, but even he was impressed with the level of cooperation in Decatur.”
Touched by the generous outpouring of help from the community, Werner humbly acknowledges that Independence received more than it gave. Still, the company did find ways to make some contributions to the community.
“For example, the Tennessee Valley Authority had to move the second-largest transformer ever built through the town,” Helinski said. “There was no good way to offload it from the boat, so several companies, including Nucor Steel, used salvaged materials, including a damaged scale, to build a dock off the back of our property, so they could offload it and move it over our property and into town.”
Quite a few homes in the area were wiped off the face of the earth, and Independence made a financial contribution to help the newly homeless to begin their own personal recovery efforts.
Finally, the company provided broad-based support to its Decatur staff and, indirectly, their families. It found ways to keep them on the payroll, despite not having a mill to operate.
“We had an agreement with our contractors that they would put our guys to work before they went out and hired any general laborers,” Werner said. “We also put some of our staff to work doing passivation work on our raw materials.” This multifaceted effort to keep everyone on the staff employed resulted in a scarcely believable, but very noble, result: No layoffs.
Developed by Tetsuya Fujita and Allen Pearson, the Fujita scale is also known as the Fujita-Pearson scale. An observational tool, it assesses a tornado’s intensity by evaluating the damage left in a storm’s wake. The original scale was introduced in 1971; in 2007 the Enhanced Fujita (EF) scale was introduced in an effort to more closely match wind speeds to observed damage.
It lists 28 entities—softwood trees, hardwood trees, freestanding poles and towers, transmission line towers, and nearly two dozen types of construction, from mobile homes to institutional buildings—to provide a basis for assessing the damage. The observed damage is used to approximate the storm’s wind speed. An EF0 typically breaks a few branches and tears shingles from roofs; an EF5 leaves little standing in its wake.
Intensity Wind Speed (MPH)
EF5 More than 200
It’s hard to say if more tornadoes are occurring these days than in the past. Maybe the U.S. is enduring storms that are more numerous and more intense, or perhaps the citing and reporting are more thorough. Either way, three tornado records were set in the last few years: most tornadoes (1,817 in 2004), most intense tornadoes (13 EF4s in 2010), and most damage from tornadoes ($20 billion, estimated, in 2011).
No two businesses are alike, so no two disaster recovery plans are alike. However, this doesn’t mean you need to create your program from scratch. Several websites and books can get you started:
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