Profits Fail to Reverberate for Most Firms
This is bad, but at least it will kick-start the economy, people told each other after the Northridge quake. Eighteen months later, you can still find people who think so, but they are a lucky, dwindling few.
Scores of business owners made money off the quake initially, as people scurried to fix chimneys and stash belongings. But despite an influx of nearly $20 billion in quake-related aid, economists say there’s been no boom for the many, just boomlets for the few.
One of the lucky ones is Tom Trimble, for whom the good times have continued unabated, even now. The earthquake vaulted Trimble, 31, from the ranks of small, residential landscapers to the Valhalla of big commercial maintenance jobs. He’s doubled his staff to 20 and landed a fat contract to landscape the rebuilt, formerly quake-ravaged Northridge Fashion Center.
Trimble has garnished the mall with greenery and erected more than 300 palm trees, which were trussed, uprooted and shipped from Borrego Springs in flatbed trucks. Trimble’s workers hauled them upright with nylon straps so as not to bruise them, then packed them in sand so they wouldn’t fall.
Trimble is busy 12 hours a day. He recently opted out of a family vacation, driving his wife and kids to the Bay Area one Saturday, then flying back alone in time for work Monday morning. And while the quake may be receding into memory, Trimble’s balance sheet won’t let him forget: Revenues of his firm, Greenbelt Landscape Construction, doubled to $1 million last year and may double again this year, he said.
Even better, the repair work put him in the right place to win a long-term maintenance contract for the whole Northridge mall. So unlike the scores of other plumbers, painters and assorted hard-hatted workers still teeming across the mall these days, Trimble’s personal boomlet seems likely to last. “If we do a good job, we will be here till we die,” he said.
Likewise, Calabasas developer Dirk Perriseau can thank the earthquake for lobbing opportunity his way. Perriseau and his wife, Jeannine, bought two properties from owners of damaged apartment buildings for about $4.6 million. One is the notorious site of the Northridge Meadows apartment complex, which collapsed in the quake, killing 16 people. The other parcel is just to the north, next door.
For 10 years, Perriseau’s dream has been to build apartments. Financing such a project, though, has been impossible. So Perriseau, 38, a general contractor, had to content himself with drywall contracts and the occasional video store.
But after the earthquake trashed apartments across Los Angeles, city officials offered low-cost government-backed loans for quake rehabilitation. So far, Perriseau has gotten a $4-million construction loan through the Los Angeles Housing Department to build one of the apartment complexes, and hopes soon to get another loan to build one on the Northridge Meadows site.
He’s already laid the foundation for the new complex on the northern parcel--called Sophia Ridge, for the Perriseaus’ 4-month-old daughter. Completion is expected by October. Perriseau will remain the owner, and he’s confident the 112 apartments will soon fill up. Just to make sure that no psychic shadows linger, the city changed the addresses of both of Perriseau’s properties, including the former Northridge Meadows site.
And Perriseau’s good fortune has trickled down to his workers. Following city requirements tied to the loan, the couple pay their workers higher-than-standard wages and employ some women. That means a job for Rebecca Weber, a 34-year-old plumber from Huntington Beach. “How many women do you usually see on jobs like this?” said the mud-covered Weber upon emerging from a ditch. “Men don’t always think women can work.”
Others who have emerged from the quake disaster with money in their pockets are some less obvious candidates. Xactware Inc., a software company in Orem, Utah, saw sales of its program that helps estimate insurance damage claims leap 20% in the year after the quake, said the firm’s president and founder, Jim Loveland.
Loveland is a former contractor whose handwriting is so bad that he began using computers to do itemized estimates back in the 1970s. He started selling programs to insurance companies and contractors--his software programs now sell for up to a few thousand dollars. Xactware now has 102 employees and is growing, bolstered by successive waves of riots, fires, hurricanes and earthquakes. “We see some increases whenever major catastrophes occur,” Loveland said.
Peter Kalaydjian, co-owner of Recon-1, a Tarzana store that sells emergency supplies, said last year “was like no Christmas we’d ever had before.” Although demand for his safety helmets, blankets and fire extinguishers has died down, the quake left Valley residents sufficiently jittery to flock to his shop whenever tremors are reported anywhere, he said. Kalaydjian spent his extra cash by installing reinforcement beams in his shop.
But these few happy faces do not an economic boom make. Economists are left to wonder just where all that quake aid has gone. In Los Angeles County overall, construction employment last year was up a mere 4% over 1993, and retail sales also hardly budged, said Nancy Bolton, a UCLA demographer. Many business owners who expected to benefit are now calling the earthquake “a flash in the pan,” said Tom Sanders, branch manager of Mobile Modular Management Corp.
You would have thought San Lorenzo-based Mobile Modular would make a mint. The firm provided temporary offices to damaged hospitals and businesses, and it brought in 126 modular classrooms to the severely damaged campus of Cal State Northridge.
But even at its peak, earthquake-related rentals accounted for only a small fraction of the thousands of units the firm leases at any one time. And demand quickly tapered off, Sanders said. Mobile Modular’s 1994 revenues went up 10%, to $60 million, from 1993--”a nice spike,” said Sanders, but hardly a mint.
And although portable toilets labeled “Action” can be seen parked at quake repair sites all over the Valley, the man who owns them, Bill Walters, said his sales were up only 8% in 1994 from 1993, and will probably slip this year.
Walters, whose firm is Action Mobile Office Rentals in Long Beach, said he’s done well with earthquake-repair projects such as the one ongoing at Olive View-UCLA Medical Center. But the overall downturn in construction this decade has hurt him so badly that all the quake helped him do was come closer to breaking even. In another year, he might even emerge from the red.
Even those with jobs still rolling in haven’t been making out like bandits. “We are dealing with bigger dollars, but bigger dollars are going out the door too,” said Greg Moynahan, president of Internet Construction Inc. in Sylmar. Moynahan’s yearly sales have quintupled to $1.1 million since the quake, and he thinks he’ll be busy for months to come doing earthquake repairs of all kinds. But his profits aren’t as much as he had hoped, and the work hasn’t been easy, he says. Acting as the liaison between clients and insurance companies to settle claims usually costs up to $3,000 of payroll time per quake-related job, he said. Insurance and accounting costs are higher, “and it’s been long hours to work,” he said.
Others complain of countless costly estimates that lead to nothing, of time spent negotiating with insurance companies for clients who take the money and then spend it on new cars, and of uncooperative insurance adjusters.
Most contractors, though, are grateful despite the hassles. The Northridge earthquake may not have made them rich, but it’s at least helped them survive the recession.
The fact is, construction employment in Los Angeles County peaked in the first few months of 1990--and no year since, including last year, has even come close. The earthquake may have added a few thousand more jobs in the county. But the average number of construction jobs in May in Los Angeles County was 108,000 compared to 140,000 five years ago, according to the U. S. Bureau of Labor Statistics.
Mark Elkadi, owner of Kadi Construction Co. in Van Nuys, doesn’t need to see the numbers. His company pulled in a healthy $1 million in revenues last year, mostly from quake repairs. That’s good, but nothing like 1989, when the company’s revenues were $5 million. “It’s just a different business,” he said.
For those who didn’t make money this time, there may be more to come. Local contractors say a second, smaller, wave of work is coming from people who want to reopen quake insurance claims.
Others may take solace in the view of attorney Dan Gruber, of Glendale-based Gruber & Kantor. Quake-related insurance disputes now take up 40% of his practice, and though they won’t last forever, he’s not worried about the future. “This is California,” he said. “There is no shortage of disasters.”
* GAINING IN THE RECOVERY: Aid program helps minority contractors reap $1.1 billion. A3
