Law and Order is an update of some of the most recent federal and state legislative and regulatory issues that could potentially impact the automotive specialty-equipment industry. These include issues affecting small-business owners and their employees.

Indiana Antiques: SEMA-supported legislation to provide additional accommodations for antique vehicle owners has been introduced in the Indiana Senate. Among other things, the bill authorizes the use of blue dot taillights and provides emissions exemptions for antique vehicles without condition if they are actually manufactured, or designated by the manufacturer as a model manufactured, 25 years earlier. The measure also incorporates SEMA-model legislation to prohibit local governments from adopting zoning ordinances that restrict the hobby of automobile restoration and collection. Under the bill, inoperable vehicles, including parts cars stored on private property, would only require screening from ordinary public view.

Iowa Fenders:

		As of October 13, 2010, Iowa street rods, replicas and specially constructed vehicles are no longer required to be equipped with fenders and bumpers. Previous Iowa inspection requirements for these specialty cars specified that all vehicles were to be equipped with fenders and required a front and rear bumper. In altering the fender and bumper specifications, regulators signaled their understanding that street rods and special-interest vehicles are driven less frequently than daily drivers (about one-third the miles each year) and should, therefore, not be bound to conventional equipment requirements.

 

 

 

 

 

Nevada Emissions Exemption:

		SEMA is supporting Nevada legislation that provides an emissions inspection exemption to antiques, classic vehicles, street rods and classic rods if owners certify to the DMV that the vehicle was not driven more than 2,500 miles the previous year during the initial registration. Current law requires an initial inspection evaluation of these vehicles in order to obtain the first emissions exemption and a certification for each subsequent registration period the owner wishes to be exempt from inspection.

 

 

 

 

New York Street Rods/Customs: SEMA-model legislation to create a vehicle titling and registration classification for street rods and custom vehicles has been reintroduced in the New York State Senate. The bill defines a street rod as an altered vehicle manufactured before 1949 and a custom as an altered vehicle at least 25 years old and manufactured after 1948. Under the bill, kit cars and replica vehicles will be assigned a certificate of title bearing the same model-year designation as the production vehicle they most closely resemble. The measure also provides for a one-time registration fee of $23, creates special license plates for street rods and custom vehicles and permits the use of blue dot taillights.

Pennsylvania Registration Fees: SEMA-opposed legislation that threatened to increase fees for all vehicle owners was not considered at the end of the 2010 legislative session. Under the proposed bill, general passenger cars would face a $13 increase in their registration fee, while the one-time registration fee for antique, classic and collectible vehicles would have gone up by $27 (from $75 to $102) and the initial registration fee for street rods by $31 (from $20 to $51). Additionally, these fees would have increased again each subsequent year following enactment. This proposal could return in 2011.

Tax Cut Compromise: An agreement to extend the 2001 and 2003 tax cuts for two years reached by President Obama and Republican leaders in December was passed by Congress and signed into law. The SEMA-supported law includes a retroactive extension of the research and development tax credit through 2011, a two-year reinstatement of the estate tax at 35% after the first $5 million, a 100% write-off on capital expenses for businesses during 2011 (up from 50%), and a one-year reduction in the worker’s Social Security payroll tax from 6.2% to 4.2%.

1099 Reporting Rule:

		The last Congress failed to remove the 1099 reporting requirement which was included as a revenue-raising provision within the health care law. There was widespread support to repeal the rule during a series of votes in November, but Senators could not agree on how to fund the lost revenues. The rule will require businesses to issue 1099 reporting forms to all vendors from whom they buy more than $600 of goods or services in any year, beginning in 2012. SEMA continues to work with other organizations to repeal the provision in 2011 and key lawmakers have expressed their intent to accomplish the task.

 

 

 

 

 

Ethanol:

		SEMA asked the U.S. Environmental Protection Agency (EPA) to suspend the partial waiver issued last October to permit the sale of gasoline containing 15% ethanol (E15) for model-year ’07 and newer vehicles. While issuing the waiver, the EPA confirmed that there was insufficient test data to permit E15 to be used in model-year ’00 and older light-duty motor vehicles. SEMA has consistently voiced concern that ethanol increases water formation, which can then create formic acid and corrode metals, plastics and rubber. The agency is still gathering data for the ’01–’06 vehicles. The EPA’s ruling responded to a request from the ethanol industry to raise the ethanol content in gasoline from 10% (E10) to 15%. SEMA also opposed a proposed rule on how to label gas pumps to help prevent vehicle misfueling. If the rule were to be issued, SEMA recommended that the EPA create national labeling requirements for both E15 and E10, and that the E15 warning label be placed as close as possible to the pump’s product selection mechanism.

 

 

 

 

 

 

 

Rearview Cameras:

			The National Highway Traffic Safety Administration will soon require all new passenger cars be equipped with a rearview camera system. The equipment is intended to prevent back-over accidents by alerting drivers when pedestrians are behind the vehicles. Under a law passed in 2008, the National Highway Traffic Safety Administration has until early 2011 to issue a rule to be phased-in by 2014. The National Highway Traffic Safety Administration has issued a proposed rule that would set performance requirements to be achieved, but allow manufacturer discretion when selecting the video camera system. The specialty-equipment market has been at the forefront of offering cameras and sensors to address the issue.

 

 

 

 

 

Warranty Denials: The Federal Trade Commission issued a consumer alert, which confirms that the Magnuson-Moss Warranty Act makes it illegal for companies to void a warranty or deny coverage simply because the consumer used an aftermarket part. The alert outlines key provisions in the law that provides protections to car owners. As defined by the Federal Trade Commission, an “aftermarket” part is a part made by a company other than the vehicle manufacturer or the original-equipment manufacturer. The Federal Trade Commission’s reference to aftermarket parts is equally applicable to specialty parts. Under the Magnuson-Moss Warranty Act, the warranty cannot be conditioned to a specific brand of parts, services or vehicle modifications unless those parts or services are provided free of charge. The dealer/vehicle manufacturer has the right to deny a warranty repair, but they must demonstrate that the aftermarket part caused the problem. The warranty remains in effect for all other covered parts.

Wilderness Designations:

The U.S. Bureau of Land Management (BLM) unveiled a regulatory initiative to identify unspoiled backcountry, which can be designated as “wild lands.” SEMA opposes the program since it usurps the exclusive authority of Congress to designate “wilderness.” The designation is consequential to SEMA members that produce equipment intended for off-road activities and their customers since no motorized activities are allowed in “wilderness” lands. The BLM action is a back-door method to identify “wilderness study areas” (WSAs), lands that Congress may then designate as wilderness. The BLM’s authority to establish WSAs expired in 1991, but the Bureau of Land Management continued to pursue the initiative until 2003 when the Bush Administration barred such actions. The new Bureau of Land Management program will likely be challenged in court and reviewed by Congress.  

Law and Order is an update of some of the most recent federal and state legislative and regulatory issues that could potentially impact the automotive specialty-equipment industry. These include issues affecting small-business owners and their employees.

Indiana Antiques: SEMA-supported legislation to provide additional accommodations for antique vehicle owners has been introduced in the Indiana Senate. Among other things, the bill authorizes the use of blue dot taillights and provides emissions exemptions for antique vehicles without condition if they are actually manufactured, or designated by the manufacturer as a model manufactured, 25 years earlier. The measure also incorporates SEMA-model legislation to prohibit local governments from adopting zoning ordinances that restrict the hobby of automobile restoration and collection. Under the bill, inoperable vehicles, including parts cars stored on private property, would only require screening from ordinary public view.

Iowa Fenders:

		As of October 13, 2010, Iowa street rods, replicas and specially constructed vehicles are no longer required to be equipped with fenders and bumpers. Previous Iowa inspection requirements for these specialty cars specified that all vehicles were to be equipped with fenders and required a front and rear bumper. In altering the fender and bumper specifications, regulators signaled their understanding that street rods and special-interest vehicles are driven less frequently than daily drivers (about one-third the miles each year) and should, therefore, not be bound to conventional equipment requirements.

 

 

 

 

 

Nevada Emissions Exemption:

		SEMA is supporting Nevada legislation that provides an emissions inspection exemption to antiques, classic vehicles, street rods and classic rods if owners certify to the DMV that the vehicle was not driven more than 2,500 miles the previous year during the initial registration. Current law requires an initial inspection evaluation of these vehicles in order to obtain the first emissions exemption and a certification for each subsequent registration period the owner wishes to be exempt from inspection.

 

 

 

 

New York Street Rods/Customs: SEMA-model legislation to create a vehicle titling and registration classification for street rods and custom vehicles has been reintroduced in the New York State Senate. The bill defines a street rod as an altered vehicle manufactured before 1949 and a custom as an altered vehicle at least 25 years old and manufactured after 1948. Under the bill, kit cars and replica vehicles will be assigned a certificate of title bearing the same model-year designation as the production vehicle they most closely resemble. The measure also provides for a one-time registration fee of $23, creates special license plates for street rods and custom vehicles and permits the use of blue dot taillights.

Pennsylvania Registration Fees: SEMA-opposed legislation that threatened to increase fees for all vehicle owners was not considered at the end of the 2010 legislative session. Under the proposed bill, general passenger cars would face a $13 increase in their registration fee, while the one-time registration fee for antique, classic and collectible vehicles would have gone up by $27 (from $75 to $102) and the initial registration fee for street rods by $31 (from $20 to $51). Additionally, these fees would have increased again each subsequent year following enactment. This proposal could return in 2011.

Tax Cut Compromise: An agreement to extend the 2001 and 2003 tax cuts for two years reached by President Obama and Republican leaders in December was passed by Congress and signed into law. The SEMA-supported law includes a retroactive extension of the research and development tax credit through 2011, a two-year reinstatement of the estate tax at 35% after the first $5 million, a 100% write-off on capital expenses for businesses during 2011 (up from 50%), and a one-year reduction in the worker’s Social Security payroll tax from 6.2% to 4.2%.

1099 Reporting Rule:

		The last Congress failed to remove the 1099 reporting requirement which was included as a revenue-raising provision within the health care law. There was widespread support to repeal the rule during a series of votes in November, but Senators could not agree on how to fund the lost revenues. The rule will require businesses to issue 1099 reporting forms to all vendors from whom they buy more than $600 of goods or services in any year, beginning in 2012. SEMA continues to work with other organizations to repeal the provision in 2011 and key lawmakers have expressed their intent to accomplish the task.

 

 

 

 

 

Ethanol:

		SEMA asked the U.S. Environmental Protection Agency (EPA) to suspend the partial waiver issued last October to permit the sale of gasoline containing 15% ethanol (E15) for model-year ’07 and newer vehicles. While issuing the waiver, the EPA confirmed that there was insufficient test data to permit E15 to be used in model-year ’00 and older light-duty motor vehicles. SEMA has consistently voiced concern that ethanol increases water formation, which can then create formic acid and corrode metals, plastics and rubber. The agency is still gathering data for the ’01–’06 vehicles. The EPA’s ruling responded to a request from the ethanol industry to raise the ethanol content in gasoline from 10% (E10) to 15%. SEMA also opposed a proposed rule on how to label gas pumps to help prevent vehicle misfueling. If the rule were to be issued, SEMA recommended that the EPA create national labeling requirements for both E15 and E10, and that the E15 warning label be placed as close as possible to the pump’s product selection mechanism.

 

 

 

 

 

 

 

Rearview Cameras:

			The National Highway Traffic Safety Administration will soon require all new passenger cars be equipped with a rearview camera system. The equipment is intended to prevent back-over accidents by alerting drivers when pedestrians are behind the vehicles. Under a law passed in 2008, the National Highway Traffic Safety Administration has until early 2011 to issue a rule to be phased-in by 2014. The National Highway Traffic Safety Administration has issued a proposed rule that would set performance requirements to be achieved, but allow manufacturer discretion when selecting the video camera system. The specialty-equipment market has been at the forefront of offering cameras and sensors to address the issue.

 

 

 

 

 

Warranty Denials: The Federal Trade Commission issued a consumer alert, which confirms that the Magnuson-Moss Warranty Act makes it illegal for companies to void a warranty or deny coverage simply because the consumer used an aftermarket part. The alert outlines key provisions in the law that provides protections to car owners. As defined by the Federal Trade Commission, an “aftermarket” part is a part made by a company other than the vehicle manufacturer or the original-equipment manufacturer. The Federal Trade Commission’s reference to aftermarket parts is equally applicable to specialty parts. Under the Magnuson-Moss Warranty Act, the warranty cannot be conditioned to a specific brand of parts, services or vehicle modifications unless those parts or services are provided free of charge. The dealer/vehicle manufacturer has the right to deny a warranty repair, but they must demonstrate that the aftermarket part caused the problem. The warranty remains in effect for all other covered parts.

Wilderness Designations:

The U.S. Bureau of Land Management (BLM) unveiled a regulatory initiative to identify unspoiled backcountry, which can be designated as “wild lands.” SEMA opposes the program since it usurps the exclusive authority of Congress to designate “wilderness.” The designation is consequential to SEMA members that produce equipment intended for off-road activities and their customers since no motorized activities are allowed in “wilderness” lands. The BLM action is a back-door method to identify “wilderness study areas” (WSAs), lands that Congress may then designate as wilderness. The BLM’s authority to establish WSAs expired in 1991, but the Bureau of Land Management continued to pursue the initiative until 2003 when the Bush Administration barred such actions. The new Bureau of Land Management program will likely be challenged in court and reviewed by Congress.  

SEMA News—March 2011

Best Practices

	The first step in a preparedness plan is to recognize the most obvious threats. Company owners or managers probably already know whether the business location is in danger from wind events, wildfires, earthquakes or flooding, but it’s also advisable to check with local, state and federal agencies to learn about other possible threats that may not be well known. Photo Courtesy Greg Henshall/FEMA

While most business people enjoy planning for success, preparing for disaster is equally crucial. Whether bracing to endure earthquakes, floods, hurricanes and tornadoes or man-made events, such as terrorism or other crimes, including physical and cyber attacks, every company should take steps to survive, recover and resume operations in the event of catastrophe. Basic preventative measures apply to any type of disaster or business interruption, but specific measures tailored to geographic or regional conditions should also be considered.

It goes without saying that the better you prepare and organize, the less down time your company will have to endure, reducing the time it takes to spring back into profitable operation.

Recognize the Greatest Threats

The first step in a preparedness plan is to recognize the most obvious threats. Company owners or managers probably already know whether their business location is in the path of wind events, wildfires, earthquakes or flooding, but it’s also advisable to check with local, state and federal agencies to learn about other possible threats that may not be well known. In addition to local civil authorities, company officers may consult FEMA hazard maps for the area in which the business is located. The various resources listed at the end of this article also provide information about specific events and how to prepare for and survive them.

Protect People First

Executive Summary: People Come First: Take steps to protect and account for your people. An emergency walk-through with key people is a must. Anticipate Likely Scenarios: Think in advance what operations are critical to your business, and what you might do to restore them quickly. Maintain Emergency Supplies: In a worst-case scenario, you’ll need enough food, water, medical and communications supplies to hold out while the situation stabilizes. Protect Your Phone and IT Capabilities: Consider an emergency generator, a redundant server system and online backup. Train your IT team on how to restore your system ahead of time.

People are every business’ most important asset, and protecting employees should be the top priority. Emergency management experts suggest you establish a chain of command as the first step in developing the company’s crisis-management procedures. Fix responsibility for who will handle specific duties early in an emergency, but also train backups in the event that the top tier is not available. Encourage employees to learn first aid and CPR.

Set up redundant communications systems so that employees have more than one way to reach management and vice versa following an off-hours incident. Establish a calling tree, for instance, in which one person calls three others, those three call three more and so on until the entire company is covered. Base the tree on a priority calling order so that those most critical to the company’s operation are notified earliest about what has occurred and what recovery plans to implement.

The secondary communication system might consist of a group e-mail notification or a call-in voice recording that notifies employees of company status. Another option is an out-of-state contact where employees can transfer information in the event that local phone lines are tied up but long-distance lines are available. Provide employees with all of the numbers or e-mail addresses in a form that they can keep with them in a wallet or a purse.

Be sure to consider any special needs required by people with disabilities, both in providing for communications and, should it become necessary, in evacuation or other plans that require mobility. Ensure, too, that employees know the emergency plans for their childrens’ schools or after-school care facilities, and review all plans with employees at least once per year.

Evacuation or Shelter in Place

If a catastrophic event occurs during business hours, it may be necessary to either evacuate the company’s facilities or remain in place because of dangerous conditions outside. In either event, keep a log-in system for employees and visitors so that you know who is in the building at all times. Map out and post at least two exit paths from various locations in the building, and tell employees where they should congregate if they are told to exit or an alarm sounds.

Establish responsibilities for evacuation procedures with a chain of command for who calls authorities, such as police or the fire department, who shuts down and locks up the building and who performs a head count using the log-in sheet. Once outside, account for all employees and guests. Also establish who determines whether it is safe to re-enter a facility or if employees and guests should seek shelter elsewhere or go home.

If the facility is intact but dangerous conditions exist outside, it may be necessary to take shelter in place. Plan ahead for this contingency by stockpiling emergency supplies and assigning duties to those who will be charged with directing employees and conducting a head count using the log-in sheet. Plan and practice both evacuation and seeking shelter within the facility.

Emergency Supplies

	Stockpile a water supply that consists of at least one gallon per person per day for drinking and sanitation, and store it in transportable containers. Photo Courtesy David Fine/FEMA

Sufficient food and water are the most obvious needs for people forced to take refuge at some place other than their homes. Stockpile a water supply that consists of at least one gallon per person per day for drinking and sanitation, and store it in transportable containers. The food stocks should include a three-day-per-person nonperishable supply that may include canned or dried goods. Be sure to include a manual can opener if canned goods are included.

Communications devices should be included with the emergency rations. If electric power is lost, phones that plug into a power outlet will be useless. Phone companies generally maintain their own emergency power sources, though, so keep an old-fashioned telephone on hand—the type that uses a handset wired directly to the base station and connects to the phone lines through a wall jack. Also keep a battery-powered AM/FM radio and extra batteries as well as a National Oceanic and Atmospheric Administration (NOAA) weather radio if a station broadcasts in the area. NOAA stations transmit National Weather Service hazard information 24 hours a day in addition to non-weather emergency alerts, including those for national security and public safety.

Emergency stores should also include common-sense items, such as flashlights with extra batteries, a first-aid kit, tissues, paper plates, paper towels, toilet paper and an assortment of tools, including an adjustable wrench for turning off utilities, a hammer, shovel and pry bar. Some items that are less-often considered but may become essential are a whistle with which to signal for help, dust-filter masks in the event of debris in the air, moist towelettes, garbage bags and plastic ties for sanitation and even blankets and pillows.

If there is a chemical emergency, employees may need to seek protection in a sealed room. If this is a potential risk, keep waterproof plastic sheeting and duct tape with the emergency kit, and ensure that employees are told to move to an interior room with as few windows and doors as possible as soon as the danger is discovered. Establish one room per floor in the case of multi-story buildings or one per structure for multi-building facilities. Close the business; lock the doors and windows. Turn off all ventilation systems, move everyone into the room along with the emergency stores (unless they have been contaminated) and then seal the room with the plastic sheeting and duct tape. Listen to the radio or other available sources for news and instructions, and remain inside until given the all clear.

If employees must take shelter in place, a readily available reserve of cash is also recommended in the event that travel is limited for an extended period but nearby stores are open. Credit cards are also handy to have; however, they require electricity for scanning.

Keep two copies of important records, one in a waterproof/fireproof container on the premises and a second off-site. The records should include building plans, insurance policies, employee contact lists, bank records, supplier and shipping contact lists and emergency and law-enforcement contact lists.

Almost all disaster recovery plans maintain a computer backup system in case hardware is destroyed, and most recommend a portable generator in the facility to power emergency systems.

Fire Safety

Fire is the most common type of disaster and may accompany other types, so develop and post procedures on how to alert fire services quickly from any location in the facility. Have all structures inspected for safety, and ensure that they are in compliance with codes and regulations. Install smoke detectors and extinguishers and consider more stringent measures, such as a sprinkler system, hoses and fireproof doors where necessary. Test employee warning systems periodically, ensuring that there are provisions for the hearing impaired as well as non-English speakers.

Starting Anew

Before a disaster has a chance to wreak havoc, create a plan to follow for after the danger has passed and it’s time to reopen. Determine which employees understand the company best and should, therefore, be involved in putting the plan together. Include all departments, and assess the company’s internal and external systems. Determine which staff, materials, procedures and equipment are necessary for the business to function both fully and on a low-level interim basis. Critical operations to consider include emergency payroll, financial decisions and accounting. Consult your insurance provider to ensure that the business and its employees are fully covered.

Also, decide how you would proceed if essential machinery or even buildings were damaged or destroyed. Could you borrow or rent alternatives? Make initial contact with alternative suppliers, shippers and other emergency resources you might need to call on in order to sustain operations. Develop relationships with them, establishing personal contacts. In addition, ensure that key employees have the tools they will need to run the business, including keys, codes, inventory and personnel, and establish that ever-vital chain of command in case one or more supervisors is unable to perform right away. If your business is housed in a building or complex with others, talk with their managers about their emergency preparations and train with them to develop compatible systems and procedures.

What happens in the event of an emergency is partially determined by its type and severity, but preparation can minimize the damage. Whether to go or stay, what help to seek and how to sustain operations are all dependent on forethought and planning. This article hits the main points to consider, but it is not all-inclusive. Contact the additional resources shown below to develop a thorough plan for the conditions that exist in your area, and do it now. The next disaster you hear about might be the one coming through your front door.

	Additional Resources: U.S. Department of Homeland Security www.dhs.gov www.ready.gov/business   Federal Emergency Management Agency (FEMA) www.fema.gov/business/guide   American Red Cross www.redcross.org   U.S. Small Business Administration www.sba.gov

It’s important to consider that for many of us, even small interruptions in business can be significant. Many companies today are heavily dependant on the phone, the Internet and internal IT systems to do business. Heavy winter storms or summer lightning can knock out these business tools, quite possibly for days at a time. A small fire can cost weeks of productivity while you remodel. These kinds of interruptions can shut down your company’s ability to take orders, run the payroll or communicate with your customers. Data loss can impact your company revenue, reduce productivity and damage your company’s reputation. These days, with so much of our business done through electronic systems, it doesn’t take
a disaster of biblical proportions to impact the bottom line.

Business owners may already have property insurance, but a more specific type of policy, known as business interruption insurance, is needed to protect the profits that an owner would have seen had there been no problem. There are several types of business interruption insurance, but as a rule, the more specific types of perils covered—fire, windstorm, vandalism, earthquake, flood, etc.—the better. This kind of coverage is usually available through the same companies that offer property insurance. Typically, they are written to allow recovery of a percentage, say 80%, of your losses.

Experts say that in order to make a claim to restore your lost profits, you’ll likely need to have financial records and business documents available fairly quickly to establish the value of your claim. For that reason, off-site storage, IT backup plans and/or an electronic archive system hosted by a remote server might be the most important disaster preparations you can make. —JS

SEMA News—March 2011

Best Practices

	The first step in a preparedness plan is to recognize the most obvious threats. Company owners or managers probably already know whether the business location is in danger from wind events, wildfires, earthquakes or flooding, but it’s also advisable to check with local, state and federal agencies to learn about other possible threats that may not be well known. Photo Courtesy Greg Henshall/FEMA

While most business people enjoy planning for success, preparing for disaster is equally crucial. Whether bracing to endure earthquakes, floods, hurricanes and tornadoes or man-made events, such as terrorism or other crimes, including physical and cyber attacks, every company should take steps to survive, recover and resume operations in the event of catastrophe. Basic preventative measures apply to any type of disaster or business interruption, but specific measures tailored to geographic or regional conditions should also be considered.

It goes without saying that the better you prepare and organize, the less down time your company will have to endure, reducing the time it takes to spring back into profitable operation.

Recognize the Greatest Threats

The first step in a preparedness plan is to recognize the most obvious threats. Company owners or managers probably already know whether their business location is in the path of wind events, wildfires, earthquakes or flooding, but it’s also advisable to check with local, state and federal agencies to learn about other possible threats that may not be well known. In addition to local civil authorities, company officers may consult FEMA hazard maps for the area in which the business is located. The various resources listed at the end of this article also provide information about specific events and how to prepare for and survive them.

Protect People First

Executive Summary: People Come First: Take steps to protect and account for your people. An emergency walk-through with key people is a must. Anticipate Likely Scenarios: Think in advance what operations are critical to your business, and what you might do to restore them quickly. Maintain Emergency Supplies: In a worst-case scenario, you’ll need enough food, water, medical and communications supplies to hold out while the situation stabilizes. Protect Your Phone and IT Capabilities: Consider an emergency generator, a redundant server system and online backup. Train your IT team on how to restore your system ahead of time.

People are every business’ most important asset, and protecting employees should be the top priority. Emergency management experts suggest you establish a chain of command as the first step in developing the company’s crisis-management procedures. Fix responsibility for who will handle specific duties early in an emergency, but also train backups in the event that the top tier is not available. Encourage employees to learn first aid and CPR.

Set up redundant communications systems so that employees have more than one way to reach management and vice versa following an off-hours incident. Establish a calling tree, for instance, in which one person calls three others, those three call three more and so on until the entire company is covered. Base the tree on a priority calling order so that those most critical to the company’s operation are notified earliest about what has occurred and what recovery plans to implement.

The secondary communication system might consist of a group e-mail notification or a call-in voice recording that notifies employees of company status. Another option is an out-of-state contact where employees can transfer information in the event that local phone lines are tied up but long-distance lines are available. Provide employees with all of the numbers or e-mail addresses in a form that they can keep with them in a wallet or a purse.

Be sure to consider any special needs required by people with disabilities, both in providing for communications and, should it become necessary, in evacuation or other plans that require mobility. Ensure, too, that employees know the emergency plans for their childrens’ schools or after-school care facilities, and review all plans with employees at least once per year.

Evacuation or Shelter in Place

If a catastrophic event occurs during business hours, it may be necessary to either evacuate the company’s facilities or remain in place because of dangerous conditions outside. In either event, keep a log-in system for employees and visitors so that you know who is in the building at all times. Map out and post at least two exit paths from various locations in the building, and tell employees where they should congregate if they are told to exit or an alarm sounds.

Establish responsibilities for evacuation procedures with a chain of command for who calls authorities, such as police or the fire department, who shuts down and locks up the building and who performs a head count using the log-in sheet. Once outside, account for all employees and guests. Also establish who determines whether it is safe to re-enter a facility or if employees and guests should seek shelter elsewhere or go home.

If the facility is intact but dangerous conditions exist outside, it may be necessary to take shelter in place. Plan ahead for this contingency by stockpiling emergency supplies and assigning duties to those who will be charged with directing employees and conducting a head count using the log-in sheet. Plan and practice both evacuation and seeking shelter within the facility.

Emergency Supplies

	Stockpile a water supply that consists of at least one gallon per person per day for drinking and sanitation, and store it in transportable containers. Photo Courtesy David Fine/FEMA

Sufficient food and water are the most obvious needs for people forced to take refuge at some place other than their homes. Stockpile a water supply that consists of at least one gallon per person per day for drinking and sanitation, and store it in transportable containers. The food stocks should include a three-day-per-person nonperishable supply that may include canned or dried goods. Be sure to include a manual can opener if canned goods are included.

Communications devices should be included with the emergency rations. If electric power is lost, phones that plug into a power outlet will be useless. Phone companies generally maintain their own emergency power sources, though, so keep an old-fashioned telephone on hand—the type that uses a handset wired directly to the base station and connects to the phone lines through a wall jack. Also keep a battery-powered AM/FM radio and extra batteries as well as a National Oceanic and Atmospheric Administration (NOAA) weather radio if a station broadcasts in the area. NOAA stations transmit National Weather Service hazard information 24 hours a day in addition to non-weather emergency alerts, including those for national security and public safety.

Emergency stores should also include common-sense items, such as flashlights with extra batteries, a first-aid kit, tissues, paper plates, paper towels, toilet paper and an assortment of tools, including an adjustable wrench for turning off utilities, a hammer, shovel and pry bar. Some items that are less-often considered but may become essential are a whistle with which to signal for help, dust-filter masks in the event of debris in the air, moist towelettes, garbage bags and plastic ties for sanitation and even blankets and pillows.

If there is a chemical emergency, employees may need to seek protection in a sealed room. If this is a potential risk, keep waterproof plastic sheeting and duct tape with the emergency kit, and ensure that employees are told to move to an interior room with as few windows and doors as possible as soon as the danger is discovered. Establish one room per floor in the case of multi-story buildings or one per structure for multi-building facilities. Close the business; lock the doors and windows. Turn off all ventilation systems, move everyone into the room along with the emergency stores (unless they have been contaminated) and then seal the room with the plastic sheeting and duct tape. Listen to the radio or other available sources for news and instructions, and remain inside until given the all clear.

If employees must take shelter in place, a readily available reserve of cash is also recommended in the event that travel is limited for an extended period but nearby stores are open. Credit cards are also handy to have; however, they require electricity for scanning.

Keep two copies of important records, one in a waterproof/fireproof container on the premises and a second off-site. The records should include building plans, insurance policies, employee contact lists, bank records, supplier and shipping contact lists and emergency and law-enforcement contact lists.

Almost all disaster recovery plans maintain a computer backup system in case hardware is destroyed, and most recommend a portable generator in the facility to power emergency systems.

Fire Safety

Fire is the most common type of disaster and may accompany other types, so develop and post procedures on how to alert fire services quickly from any location in the facility. Have all structures inspected for safety, and ensure that they are in compliance with codes and regulations. Install smoke detectors and extinguishers and consider more stringent measures, such as a sprinkler system, hoses and fireproof doors where necessary. Test employee warning systems periodically, ensuring that there are provisions for the hearing impaired as well as non-English speakers.

Starting Anew

Before a disaster has a chance to wreak havoc, create a plan to follow for after the danger has passed and it’s time to reopen. Determine which employees understand the company best and should, therefore, be involved in putting the plan together. Include all departments, and assess the company’s internal and external systems. Determine which staff, materials, procedures and equipment are necessary for the business to function both fully and on a low-level interim basis. Critical operations to consider include emergency payroll, financial decisions and accounting. Consult your insurance provider to ensure that the business and its employees are fully covered.

Also, decide how you would proceed if essential machinery or even buildings were damaged or destroyed. Could you borrow or rent alternatives? Make initial contact with alternative suppliers, shippers and other emergency resources you might need to call on in order to sustain operations. Develop relationships with them, establishing personal contacts. In addition, ensure that key employees have the tools they will need to run the business, including keys, codes, inventory and personnel, and establish that ever-vital chain of command in case one or more supervisors is unable to perform right away. If your business is housed in a building or complex with others, talk with their managers about their emergency preparations and train with them to develop compatible systems and procedures.

What happens in the event of an emergency is partially determined by its type and severity, but preparation can minimize the damage. Whether to go or stay, what help to seek and how to sustain operations are all dependent on forethought and planning. This article hits the main points to consider, but it is not all-inclusive. Contact the additional resources shown below to develop a thorough plan for the conditions that exist in your area, and do it now. The next disaster you hear about might be the one coming through your front door.

	Additional Resources: U.S. Department of Homeland Security www.dhs.gov www.ready.gov/business   Federal Emergency Management Agency (FEMA) www.fema.gov/business/guide   American Red Cross www.redcross.org   U.S. Small Business Administration www.sba.gov

It’s important to consider that for many of us, even small interruptions in business can be significant. Many companies today are heavily dependant on the phone, the Internet and internal IT systems to do business. Heavy winter storms or summer lightning can knock out these business tools, quite possibly for days at a time. A small fire can cost weeks of productivity while you remodel. These kinds of interruptions can shut down your company’s ability to take orders, run the payroll or communicate with your customers. Data loss can impact your company revenue, reduce productivity and damage your company’s reputation. These days, with so much of our business done through electronic systems, it doesn’t take
a disaster of biblical proportions to impact the bottom line.

Business owners may already have property insurance, but a more specific type of policy, known as business interruption insurance, is needed to protect the profits that an owner would have seen had there been no problem. There are several types of business interruption insurance, but as a rule, the more specific types of perils covered—fire, windstorm, vandalism, earthquake, flood, etc.—the better. This kind of coverage is usually available through the same companies that offer property insurance. Typically, they are written to allow recovery of a percentage, say 80%, of your losses.

Experts say that in order to make a claim to restore your lost profits, you’ll likely need to have financial records and business documents available fairly quickly to establish the value of your claim. For that reason, off-site storage, IT backup plans and/or an electronic archive system hosted by a remote server might be the most important disaster preparations you can make. —JS