Katrina Slams Gulf Coast Economy
RENEE MONTAGNE, host:
Hurricane Katrina has delivered a punishing blow to the economy of the Gulf Coast. Virtually every industry from tourism to oil and gas production has been paralyzed. As NPR's John Ydstie reports, businesses are struggling to assess the damage to their facilities and figure out how they'll get up and running.
JOHN YDSTIE reporting:
Casinos are among the major tourist attractions and largest employers along the Gulf Coast. Harrah's, one of the biggest gaming companies in the world, has 8,000 workers in three facilities there, but they're not likely to be returning to their jobs any time soon. Gary Loveman, the company's CEO, says two of its casinos floating on barges in Gulfport and Biloxi were largely destroyed.
Mr. GARY LOVEMAN (CEO, Harrah's): In one case, the barge was lifted off its moorings and taken across on to the street, dropped. That one I'm sure is a total loss. The other one I think is close to a total loss, although it didn't move as far as the former one.
YDSTIE: A third land-based casino in New Orleans was relatively unscathed, but it's unlikely to open soon because of the disastrous conditions in the city as a whole. Loveman is confident, though, that the region will rebound. To ease the blow on workers, Harrah's says it will pay their salaries for at least the next 90 days.
Shipbuilding is another major employer in the region. Northrop Grumman Ship Systems, Pascagoula, Mississippi, shipyard has 12,000 workers. It suffered significant flooding damage according to the company's communications director, Brian Cullin. But he believes the company could resume production within a matter of weeks depending on one thing--electricity.
Mr. BRIAN CULLIN (Communications Director, Northrop Grumman Ship Systems): For our yards, power is obviously a very huge element to our operations. And right now, power on the coast is very challenging to say the least, so we need power. And as soon as we get power, that will help open the door to operations.
YDSTIE: While damage assessments are still coming in, another industry likely to recover relatively quickly, according to economists, is the oil and gas industry. It has lots of resources and experience at handling the effects of severe weather. But for many other industries, the rebound could be much slower. One regional economist suggests more than half a million of the region's workers could be unemployed for months to come. Given the record of slow recovery after Hurricane Camille in 1969, Louisiana State University economist Jim Richardson is particularly worried about the city of New Orleans.
Mr. JIM RICHARDSON (Economist, Louisiana State University): There was a study on Camille which suggested that it took maybe as much as almost five to six years for that area to get back to what you might call normalcy. You can't get New Orleans back up to normalcy in 30 days. It may be six months, it may be a year. However, I think the thing to note is that it will get back there.
YDSTIE: Economist Mark Zandi of Economy.com says the damage to infrastructure will pose a huge a challenge to recovery in the region this time.
Mr. MARK ZANDI (Economy.com): We're talking about roads and bridges, the water system, of course, electricity. So that also is going to delay and impede any rebuilding efforts that are going to place. So I do fear that the economic fallout from Katrina on this region's economy is going to be very severe. And it's shaping up to be the case that when it's all said and done, this probably will end up being the most costly natural disaster in our history.
YDSTIE: Often insurance payments and government aid after a disaster boost a region's economy beyond its previous levels. That happened in Florida last year, but Zandi says that's not likely to be the case this time. He says even though insurance claims could exceed $20 billion, they won't cover all the losses. That's partly because the low income levels in the region mean many people couldn't afford to buy insurance.
John Ydstie, NPR News, Washington.
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