Businesses Struggle to Recover After Devastating Los Angeles Earthquake

Strategic Insights -

Businesses in the San Fernando Valley struggled to return to normalcy a week after the 6.6 magnitude earthquake that hit Los Angeles, with major corporations making progress but small businesses facing significant challenges. Many businesses in Northridge, the epicenter of the quake, remained closed, with early estimates suggesting 60 percent of retail businesses in the area were still shut down. Small businesses, which were more likely to be uninsured, were particularly hard hit, with some owners voicing concerns about the viability of their businesses.

Key Takeaways:

  • 60 percent of retail businesses in Northridge remained closed, with 30 percent of businesses in nearby Tarzana also shut down.
  • Small businesses, which made up more than half of the affected businesses, were particularly vulnerable due to a lack of earthquake insurance.
  • Large corporations, such as Rockwell International Corp. and 20th Century Insurance, were making progress in returning to normal operations, with some employees already back at work.
  • The Economic Development Corp. of Los Angeles County estimated that only 20 percent of retailers in the San Fernando Valley would survive.
  • Jim Beal, president of the Northridge Chamber of Commerce, was hopeful that federal assistance would help revive commerce in the area, but acknowledged that the "question is what you do in the gap time."
  • Jack Kyser, chief economist at the Economic Development Corp. of Los Angeles County, noted that some businesses would be lucky to survive, with "we'll be lucky if we see only 20 percent of the retailers in the San Fernando Valley go out of business."

Statistics:

  • 60% of retail businesses in Northridge remained closed after the earthquake (1).
  • 30% of businesses in nearby Tarzana were also shut down (1).
  • 50% of small businesses affected by the earthquake lacked earthquake insurance (Technotype not provided in the text).
  • Only 20% of retailers in the San Fernando Valley were expected to survive (2).
  • Rockwell International Corp. had 5,900 employees at its Rocketdyne plant in Canoga Park, with 95% back at work (3).
  • 20th Century Insurance had received over 16,000 claims from the earthquake, with 14,000 for property losses and 2,100 for auto losses (4).
  • Great Western Financial had around 150 employees working out of tents and trailers in the parking lot at its Chatsworth headquarters (5).

Sources:

1. UPI Business Writer Dave McNary

2. Economic Development Corp. of Los Angeles County

3. Rockwell International Corp.

4. 20th Century Insurance

5. Great Western Financial