Hurricane Harvey and the effects on the Houston market

The damage resulting from Hurricane Harvey will be among the most costly tied to a natural disaster in U.S. history.

Joel Myers, founder, president and chairman of AccuWeather, predicts the hurricane to go down as the worst natural disaster in American history. The economic effect of Harvey will be greater than the combined impact of Hurricanes Katrina and Sandy, according to Myers.

Aggregate producers in the Houston area are obviously among those affected.

“Operationally, a lot of people can’t get into their operations,” says Rich Szecsy, president of the Texas Aggregates & Concrete Association (TACA). “In Houston, there is no hard rock. It’s sand and gravel. And the majority of the sand-and-gravel operations operate along the rivers.”

The nature of Houston’s aggregate operations translates to flooded riverbanks, equipment under water and washed-away inventories. And whatever construction materials remain in place are unlikely to meet quality specs once operations resume.

The cleanup effort will be unlike one the nation has experienced before, and a return to normalcy in Houston is likely months, if not years, away for the residents of the fourth-largest city in the United States.

For Houston-area aggregate producers, the work ahead is unprecedented.

“Our operations in the Greater Houston area remain closed as a result of flooding or the potential for flooding in the coming days,” says Jeff Sieg, director of corporate communications at Lehigh Hanson, in an Aug. 29 statement. “It is still too early to determine when operations will resume, but we are prepared to begin the recovery process as soon as conditions permit.”

Safety minded

While the devastation Harvey wreaked breaks hearts, the reaction of first responders and ordinary citizens has been an uplifting takeaway. Count our industry’s employers among those who’ve stepped up to ensure the well-being of their people.

“We remain committed to keeping in touch with our employees in the impacted region to ensure they are safe and have the assistance and support they need,” Sieg says.

Lehigh Hanson’s response is indicative of how other area producers are responding, Szecsy adds.

“Right now, our industry is still working to make sure their employees are safe,” Szecsy says. “That’s still kind of an issue, and I think that will be going on for at least the next week to make sure people are accounted for and safe. That is the first priority for several of our member companies.”

Still, the safety-first response of this industry to Harvey shouldn’t come as a surprise.

“Our industry embraces safety operationally, and it’s a nice thing to see how that behavior and culture have translated beyond the borders of operations and extended to employees and their homes,” Szecsy says.

The road ahead

Just a couple of weeks ago, industry colleagues were asking Szecsy to offer a forecast for the remainder of 2017 and an outlook for 2018 in Texas. Needless to say, Szecsy has revised his industry outlook dramatically in the wake of Harvey.

“Two weeks ago, I thought we would finish the year flat – hold stable but no loss,” he says. “Now, I think the state of Texas is going to finish up 2017 lower than it did in 2016 because the Houston market is going to be shut down for the next three months.”

New construction will undoubtedly come, Szecsy adds. But the rebuild won’t necessarily benefit the construction materials industry first.

“It’s timber, sheet rock, plywood,” he says. “None of the foundations are compromised. Any municipal work will come to a halt in favor of emergency municipal work. Bridges and highways (jobs) will screech to a halt in favor of things that were damaged.”

Editor’s note: For additional Pit & Quarry coverage of Hurricane Harvey, read our blog post on River Aggregates’ experience in the Houston area, as well as our article on Harvey’s potential impact on 2018 industry events.