Most of the affected businesses were small businesses, with no contingency plan and few spare resources. Many businesses were not insured against civil insurrection. The impact to business will worsen L.A.’s high recession-related unemployment and increase social service spending.
More than 5,200 fires were reported. In many cases, firefighters were blocked from reaching their destinations by angry mobs. As a result, automatic sprinkler systems were the only means of controlling these blazes, and buildings without adequate sprinkler protection suffered heavily.
According to Factory Mutual Engineering & Research (FME&R), the Los Angeles riots confirmed that adequate sprinklers can substantially reduce the severity of fire loss. Sprinklers also minimized business interruption resulting from the damage.
Ten of the reported fires affected customers of the three commercial and industrial insurance companies that direct FME&R's operations. Three of these 10 facilities were protected by automatic sprinklers.
The largest of these losses (more than $2 million) occurred at a 116,000-square-foot sprinklered department store with a detached 8,500-square-foot unsprinklered auto center. Rioters broke into the store Thursday, April 30, and looting continued into Friday. Nine separate fires were started in the store, activating 22 automatic sprinklers that extinguished all the fires. A fire set in the unprotected auto center, on the other hand, resulted in total loss of the building and contents.
Eighteen days after the rioting began, the department store held a Grand Reopening. Without automatic sprinkler protection, losses would have been five times greater and the company could not have reopened for months.
In another department store, five automatic sprinklers extinguished two separate fires; and in a supermarket, seven sprinklers put out two fires.
Like many Los Angeles businesses, Great Western Bank was forced to change the way they did business during the rioting. Although only two branch locations were damaged, Great Western was opening and closing as many as 60 branches as it was deemed safe at each location. A publicized 800 number directed customers to the branches that were open for business at any given time.
According to Steve Hawkins, a public relations representative for the bank, the major impact to bank operations was inconvenience to customers and employees. All data processing for Great Western Bank is handled at a location that was unaffected by the riots.
California State Treasurer Kathleen Brown called for an economic summit among government and business leaders. According to the San Francisco Chronicle, Brown's highest priority is an action plan for redeveloping our cities.
Yet many businesses will never recover from this destruction. Paul Warren, a former advertising executive, opened a travel agency with his wife last year. The couple had been saving for years and had taken out loans to open their own business. In an interview with the Los Angeles Times, Warren said, “It just hurts me when I think about how much time and energy it took to put this together. But you have to ask yourself, ‘What if this happens again?’ There’s no reason why it couldn’t, and what then? Do we dare risk it? I just don’t know.”
Stuart Johnson was co-editor of Disaster Recovery Journal.
This article adapted from Vol. 5 #3.