On the economic front, the power outage left a hefty toll. Losses occurred in the retail, manufacturing and travel industries, as well as numerous individual cases. Sales in the Northeast and Midwest dropped to $437 million on Aug. 14, down from $467 million on Aug. 13, said Jason Milch, a spokesman for ShopperTrak, a Chicago-based research firm.
Wal-Mart Stores Inc., the world’s largest retailer, closed about 200 stores in the affected region. Other national retailers who reported shutdowns due to the outage included Home Depot; Sears, Roebuck & Co.; and Lowe’s Stores. In addition, thousands of small businesses and homeowners suffered losses in both revenue and inventory.
The automobile manufacturing industry was especially hard hit since many of the makers’ production plants are located in the blackout region. An AP report said more than 50 assembly and other plants operated by General Motors Corp., Ford Motor Co. and DaimlerChrysler AG’s Chrysler Group were shut down by the blackout. One Honda Motor Co. plant in Canada also shut down. Most plants remained shuttered for more than a day, causing massive losses of production and revenue.
The Detroit Chamber of Commerce surveyed area retail and food service industries within a week after the outage. The survey reported that most businesses experienced outage-related losses ranging from $100 to $125,000 during the blackout. The total includes loss of sales, inventory and wages.
Across the country, 1,200 flights were canceled on Aug. 14 and 15. The aviation industry stands to lose millions of dollars of revenue from the blackout-related flight disruptions.
U.S. carriers are losing about $100 million in revenue every day that service is disrupted, said David Swierenga in a published report. He is former chief economist for the Air Travel Association and now a consultant with AeroEcon of Vienna, Va.
Other areas of the travel industry also suffered from the power outage. Subways in New York City immediately lost power and many commuters were trapped for hours until they could be directed to safe exits. Bus service was suspended after gridlocked tunnels leading in and out of NYC were closed. Train service was canceled in some areas and was delayed in others. Numerous hotels lost power. Marriott International reported 175 of its hotels in the Northeast lost power.
In Cleveland, residents were without water because the city’s four water pumps needed electricity to operate. Water is pumped from Lake Erie to the 1.5 million residents in the Cleveland area. In Detroit, the city’s water system suffered a drop in pressure and was shut down. Residents in both cities were told to boil water before use for several days following the outage.
FEMA Director Mike Brown said he was surprised to learn that many Midwest water and sewage facilities could not maintain a clean water supply.
“It is unacceptable to me that water-treatment plants, for example, don’t have backup power or that water-treatment plants are susceptible to that kind of outage,” said Brown.
Brown called for a national inventory of backup systems and vulnerabilities in the country’s infrastructure to prevent future failures. In addition, Brown said FEMA would conduct an internal survey of how many of its own facilities needed backup power.
“I think we saw in Detroit and other places that it is a vulnerability we need to address,” said the FEMA director.
For Brown and other contingency planners, the power outage served as an eye-opening experience.
“It’s a great test. You don’t get too many opportunities to test crisis response,” Phil Anderson, a homeland security expert with the Washington-based Center for Strategic and International Studies, said in an Associated Press report.
The event has shown that U.S. power grids are vulnerable to major power outages. With experts across the nation calling for an overhaul of the system, consumers and businesses will potentially experience further power disruptions in the future.
According to industry statistics, power outages are one of the most common causes of business interruptions. Nearly everyone in the United States is dependent upon power to one degree or another, and only a small percentage have adequate backup power. According to the Worldwatch Institute, electrical interruptions cost U.S. companies some $80 billion in 2000.
Many politicians are calling for an overhaul of both the administrative and the technical side of the U.S. power industry. Many are blaming the deregulation of the power industry; others are saying there is too much regulation.
While the debate over the management of the power system continues, most experts agree the power grid is strained and in need of modernization.
Suggested solutions have included:
• Updates to the monitoring and warning systems
• Constructing more transmission lines
• Increasing the capacity of existing transmission lines
• Using alternate means of carrying electricity, i.e. buried cables, direct current
In October, GridAmerica, a subsidiary of London-based National Grid Transco, will assume long-term control over the grid at the center of the blackout investigation. GridAmerica, which will also take over interstate electrical transmission for two other Midwest utilities, says it will invest $500 million in adding more capacity to the lines, building new lines or buying the lines outright.
The 2003 blackout will not be the last for the United States, but it has called to attention the need for change.
“It’s a wake-up call,” said President George W. Bush about the blackout. “The grid needs to be modernized; the delivery systems need to be modernized. We’ve got an antiquated system.”
Janette Ballman has served as an editor with Disaster Recovery Journal since 1991. She has reported on numerous disasters and business continuity issues during that time. Ballman received a journalism degree from Mississippi University for Women in 1989.