Let’s talk business. When the Anheuser-Busch brewery in Van Nuys suffered significant damage in the 1971 Sylmar earthquake, the company invested $11 million in retrofitting structures on site to withstand the next major temblor – which came in 1994 with the Northridge earthquake. Even though the brewery was located just a few miles from the epicenter of that devastating 6.7-magnitude temblor, none of the retrofitted structures in the compound were damaged. The brewery was quickly returned to nearly full operations following minor cleanup and repairs.
Anheuser-Busch estimated it would have suffered direct and business interruption losses of about $750 million from the Northridge earthquake without the retrofits, the Seismic Safety Commission reported after the fact. This averted damage of more than 60 times the actual cost of the brewery’s retrofit program.
Businesses are extremely vulnerable to the risks presented by earthquakes — and this in turn threatens the life, livelihood, and well-being of the communities those businesses serve. Imagine if your building collapsed or was red tagged after an earthquake. You’d still be responsible for paying on your loan without any revenue coming in from tenants to cover those expenses. Liability costs would most certainly max-out your insurance deductible – and if you do not have earthquake insurance, you’d be entirely on your own. Knowing this, business leaders have joined forces with government to raise awareness of society’s shared need for building safety.
“If everyone does their part, Los Angeles will be more prepared – better equipped to emerge from any challenge, better than before,” Mayor Eric Garcetti said during a recent episode of “The Resilience Advantage,” a webinar series sponsored by Optimum Seismic that brings experts from all fields together to discuss earthquake threats and solutions. (In 2015, Garcetti signed into law what was at the time the nation’s most sweeping seismic retrofit ordinance.) “In Los Angeles, we understand that the decisions we make today are going to shape the lives of our children and grandchildren,” he said. “That’s why we’re working to build a more resilient and prepared city.”
Maria Salinas, President, and Chief Executive Officer of the Los Angeles Area Chamber of Commerce, agreed. “During the last year, as we’ve faced the challenges of the pandemic, we’ve learned much about our communities, our economies, and our institutions,” she said. “Angelenos have always known the danger of events – from wildfires to earthquakes and everything in between. And as we emerge from the pandemic, the need for greater resiliency is evident.”
The Aftershock of Economic Devastation
Media reports of the Northridge earthquake focused on the dramatic visuals —the flattened apartment buildings, collapsed freeway overpasses and grotesquely twisted steel-framed structures — all of which showcase the extent to which an earthquake can damage a structure. But these images do little to illustrate the magnitude of widespread suffering caused by the earthquake.
More than 6,000 commercial and industrial structures were damaged, and more than 36% of all businesses surveyed said the Northridge quake caused them to lose an average of $85,000 in 1994 dollars. A year and a half later, 25% of the businesses reporting damage from the quake said they never recovered. Risk analyst Barbara Stewart calls the over-arching economic impacts of a major earthquake “The Ripple Effect.” “A catastrophic earthquake will have a national impact, and there will be national damage,” she wrote in a report for the National Academies of Science. She summarized those impacts in three categories: (1) disruptions to supply lines, (2) shocks to financial markets, and (3) drain on the insurance system. “There has been very little study of these consequences for obvious, very understandable reasons,” Stewart said. “It is quite human to focus on the suffering and physical damage that occurs immediately after an earthquake. The problem is that it is unknown, other than estimates of the physical damage, just how bad the general economic damage might be — and that uncertainty is a problem in itself.”
If you own a building that you believe may be vulnerable to damage – or if you live or work in one – it’s important to educate yourself on cost-effective measures that can be taken to save lives, protect your assets and property, and preserve the well-being of the community-at-large. Call Optimum Seismic at (833) 978-7664 or visit optimumseismic.com for a free building evaluation today.
