Press Release
September 12, 2003

Brooklyn businesses – especially small businesses – were hard hit by last month’s blackout, according to a recent survey by the Brooklyn Chamber of Commerce.  

Within days of the power outage on August 14, 2003, the Brooklyn Chamber of Commerce issued a survey to its 1,200 Members to determine some of the effects that the blackout had on Brooklyn businesses.  All businesses throughout the borough were encouraged to participate in the survey.  The survey response rate was 6.6 percent.
 
80 percent of those businesses that responded indicated that they had closed for some period of time during or after the blackout, with the mean closure time being 1.5 days.  76 percent of those that responded indicated they lost revenue as a direct result of the blackout, with revenue losses being reported across many types of industries including business services, retail, and manufacturing. 

“What our survey confirms is that it wasn’t just restaurants and grocery stores that took significant losses, but many of our retail shops, manufacturing firms and other small businesses were severely affected,” Kenneth Adams, Brooklyn Chamber of Commerce President, said.  “When a retail store is forced to close on a busy shopping day, when a printing shop can’t complete a large order on time, or when a construction project is delayed a day or two, the impact can have a ripple effect on other businesses in the area.  Such indirect consequences are even harder to measure, but the economic impact is substantial nonetheless,” Adams said.

Of those companies that cited revenue losses, almost a quarter indicated that they recognized a loss of more than 20 percent of their weekly revenue.  The most commonly cited reasons for revenue loss included a loss of customers, employee salary costs, and losses due to equipment failure.  34 percent of the respondents indicated that the blackout caused some damage to their inventory, equipment or supplies.  The dollar value of the damage reported ranged from $100 to $10,000. 

94 percent of the businesses reported that they are now fully operational.  Those businesses that are not fully functional cited damage to telephone and fax lines or damage to other essential equipment.  One business indicted more then $7,500 worth of damage to an elevator.

Jack Katz of the Flatbush Avenue Business Improvement District, one of the Chamber Members that returned the survey, reported that there were five stores that experienced looting along Flatbush Avenue.  “Overall, both the community and police did an excellent job of coming together and minimizing the impact,” said Katz.

At least 80 percent of affected businesses do not expect their insurance policies to cover any of their losses.  20 percent were not sure if they would be covered, but none of those that responded felt they were sure to be reimbursed.

Complete survey results follow:

Summary of Findings From the Brooklyn Chamber of Commerce Blackout Survey

• A total of 80 valid surveys were returned.  Based on an estimated distribution of 1,200, our response percentage is 6.6%.
• The industry breakdown is as follows:
  - Business Services = 17.5%
  - Social Services = 16%
  - Healthcare = 13%
  - Finance, Insurance or Real Estate = 10%
  - Retail = 6%
  - Restaurants = 6%
  - Manufacturing = 5%
  - Entertainment = 4%
  - Transportation = 4%
  - Wholesale Distribution = 4%
  - Communications or Energy = 4%
  - Construction (supplies or services) = 4%
  - Grocery & Food Products = 0%
  - Other = 7.5%
• 80% of the respondents indicated that they closed for some period of time as a result of the blackout.  The mean time that business remained closed was 1.5 days.
• 76% of the respondents indicated they lost revenue as a result of the blackout.  The percentages were as follows:
  - Less than 5% = 25%
  - 6-10% = 22%
  - 11-15% = 8%
  - 16-20% = 16%
  - 21-30% = 11%
  - > 30% = 10%
  - No Answer = 8%
• The following is a breakout of factors that contributed to revenue loss:
  - Spoiled perishables = 10%
  - Loss of customers = 49%
  - Lack of deliveries or supplies = 24%
  - Employee salary =  48%
  - Loss due to equipment failure = 31%
  - Employees unable to travel to work = 48%

Note: Respondents were asked to check all that applied.

• 34% of respondents indicated the blackout caused some damage to their inventory, equipment or supplies.  The total $$ value of the damage ranged from $100 to $10,000.  One respondent indicated $7,500 in elevator repairs.
• No respondents indicated that they expected insurance to cover their losses, although 20% indicated “not sure” or did not answer this question at all.
• 94% of businesses indicated they were now fully operational.  Four businesses indicated they were not citing a broken elevator and non-operational phone/fax lines as reasons.

Summary of Additional Comments

• “5 stores in the area sustained damage – looting. But overall the police and community did a good job coming together.”
• “Had to work more over the weekend to make up for lost revenue.”
• “The recovery was quick – we were lucky it was a Thursday evening.”
• “Communications failures with no back-up power, and a lack of emergency plan when the City needs to be evacuated.”
• “Central Brooklyn should consider investing in a generator as a safety precaution for future occurrences.  Such an investment would likely be more cost effective.”