SEMA eNews Vol. 14, No. 51, December 22, 2011

Disaster Recovery: SEMA Member Shares a Hard-Learned Lesson

SEMA News—December 2011

Disaster Recovery Part II

A SEMA-Member Company Shares a Hard-Learned Lesson
By Mike Imlay

 
Just past midnight on February 8, 2011, an electrical fire engulfed ATC Composite’s main production facility, leaving it and the company’s core business gutted. The incident is a reminder of how important a written disaster plan can be to business survival.
   
 
For almost a year, ATC manufacturing made do with an expanded storage building on its existing site while this new production plant was constructed about 25 miles up the road.
   
 
Sadly, ATC had to reduce its sizable staff in the fire’s aftermath. However, with the new digs being readied, the company is again in a hiring mode.

They say that hindsight is 20/20. The March 2011 issue of SEMA News featured a Best Practices article on the how and why of disaster planning, calling special attention to acts of God and other sudden business interruptions (see callout box). Now, several months later, ATC Composites COO Chris Ripper strongly encourages SEMA News readers to revisit that article—and with good reason.

Based in Kansas City, Missouri, ATC Composites is a longstanding SEMA-member company, positioning itself as a value leader in fiberglass truck caps, tonneau covers and bedliners since its founding in the mid-’80s. But last February 8, just after midnight, an electrical fire erupted in ATC’s 67,000-sq.-ft. main production facility. Although the building’s emergency fire door worked perfectly—and three other offices for the company’s administrative, maintenance and storage operations were spared—ATC’s truck cap and lid manufacturing core was left in ashes.

“We lost about 100 molds in all, which had the most value of anything in the plant, other than human lives, of course,” said Ripper, adding that, fortunately, no one was on-site at the time.

Not so fortunate was the fact that ATC, like many SEMA-member businesses, lacked any sort of advance disaster preparedness and/or business recovery plan. To keep its doors open, the company was forced to improvise—and fast.

“We quickly assessed our immediate options and decided that since we still had existing permits to revamp our old 12,000-sq.-ft. tooling shop, we could convert it to a very limited-production building,” said Ripper. The staff then shifted its focus to combatting industry rumors that ATC was gone for good. “We called our customers and explained the real situation. We had to stay in continual contact with them during this time to reassure them that we were rebuilding.”

With its core business gutted and a long period of rebuilding ahead, ATC relied on ancillary manufacturing to stay in the game.

“Like any good company, we’d diversified enough in recent years in this economy to not be as dependent on new-truck sales,” Ripper explained. “We had orders for waterslides, and we kept producing those on a limited basis.”

After nearly a year and millions of dollars in damage recovery and building costs, ATC now reports that it is only weeks away from producing all of its truck products at a new plant constructed about 25 miles from the company’s current site. With an additional 22,000 sq. ft. of manufacturing space and 12,000 more sq. ft. of covered loading space at the new location, all major equipment is either in place or on the verge of installation. Jigs, molds and templates have all been painstakingly rebuilt, and the company is now hiring again.

However, Ripper believes that only sheer luck saved the business and, in retrospect, ATC should have paid more attention to a formal disaster plan before the fire struck.

“People had talked about it, everybody thought ‘well, here’s what we do,’ but it was not written,” Ripper said. “That was the biggest mistake we made.” He added that the company could have also done more to protect molds, equipment items and other assets by distributing or storing them in separate locations throughout the plant.

For ATC, disaster came in the form of fire. As Ripper pointed out, however, there are many tragedies that can destroy a company overnight if it’s not prepared: floods, lightning strikes, tornados, earthquakes, industrial accidents—the list is endless.

“We were blessed by luck,” Ripper said. “I’d like to say we’re the perfect role model for what to do in a disaster, but that couldn’t be further from the truth. Don’t underestimate how long it takes you to get back into business.”

 
Learning From Experience

In addition to a written disaster recovery plan, Ripper advised that spending a little time on the following precautions beforehand can save weeks of worry after catastrophe strikes.

  • Do an annual facility walkthrough with a video camera, capturing and properly identifying all equipment, tools, etc. Use that video to create a list of property and replacement costs for proper insurance coverage.
  • Perform an annual review with your insurance agent to ensure appropriate coverage updates, especially for your business interruption policy.
  • Keep (and back up off-site) e-mail addresses for each contact at every customer location. Monthly e-blasts or newsletters with images that show progress after an incident will reinforce the promise that you’ll be back in business soon.
  • Be realistic and truthful about your recovery after a disaster. In your eagerness to bounce back, don’t accept business or make promises you can’t deliver on.

Above all, buy all the insurance you can afford. ATC was a fortunate survivor, thanks mainly to its extensive coverage.

Read the original article written by Steve Campbell, “When Disaster Strikes: Preparing Your Business to Survive” which appeared in the March 2011 issue of SEMA News. For a digital version of the article, go to www.sema.org/whendisasterstrikes.

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