The Bounce-Back in Miami Will Come, But Not Easily

Small businesses, heart of the economy, hurting badly

AS residents of south Florida dig out from the rubble left by Hurricane Andrew, they're starting to peek beyond their own battered walls.

What they're seeing is an economy in tatters. Monday's hurricane didn't just make people homeless, it made them jobless and business-less as well.

Mario Capone stands on a parking lot, surveying one of his three dry-cleaning stores.

The decisions are easy for him. His stores weren't heavily damaged by the storm. There's been no looting. As soon as electric power is restored to South Miami, he plans to reopen.

His mood is downbeat, however.

"We've lost three days of work so far [and] it looks like the whole week" is lost, he says. Lost business hurts him and his 27 employees.

"It's had an impact on them too," he says. "They're looking to be paid."

Small businessmen and women are playing a key role in the aftermath of one of Florida's worst natural disasters. They create most of the jobs in the region. Whether they rebuild - and how quickly they do it - will set the pace of south Florida's recovery.

Some businessmen are discouraged. Others are upbeat. Around the corner from Mario's Dry Cleaners, someone has drawn a bulls-eye on the boarded-up windows of the Peter Glenn of Vermont ski shop. A message is printed in red letters: "We Shall Return."

Businessmen who have already returned tend toward optimism.

"We're back in business, so we can't complain," says Jim O'Neil, manager of a Shell Station in Miami. He reopened Wednesday afternoon, two days after the storm hit. The wind destroyed an $80,000 car-washing machine and one of his six gasoline pumps. An electric generator substitutes for the electric power that's still knocked out. "I am going to come back," Mr. O'Neil says.

One of his suppliers, who runs a milk delivery service, isn't so fortunate. He estimates it will take six months before his customer base is back to normal.

"Basically, small business operations go month-to-month," says Steven Ullmann, professor of management and economics at the University of Miami. If they aren't open and their insurance doesn't cover lost income, many small businesses in south Florida could fail.

"Those are the ones who have been hit the hardest," Professor Ullmann says.

Adds Thomas Keon, associate dean at Florida Atlantic University's College of Business: "Smaller businesses and shopping malls are going to be much slower to recover" than, say, construction.

Construction, in fact, will boom, these economists say.

That's certainly what happened in South Carolina after Hurricane Hugo slammed into Charleston. First, residential and nonresidential building picked up, then infrastructure construction and even durable-goods manufacturing.

If Dade County follows the Charleston model, these industries could see a lift during the next eight quarters, says Thomas Fullerton, senior economist with the Bureau of Economic and Business Research at the University of Florida in Gainesville.

Using preliminary analysis of Hugo's impact on Charleston, Mr. Fullerton predicts that, on balance, Hurricane Andrew will slow the already weak Miami economy.

Charleston saw a sharp quarterly drop in personal income after Hugo. Fullerton suggests the same will happen to Miami (down $1.7 billion or 4.5 percent in the third quarter) and Naples (down $200 million).

Income will jump up in the fourth quarter, but the region won't catch up very quickly. Insurance payments and disaster aid only covered about half of Charleston's loss from Hugo. Fullerton expects the same will hold true for south Florida. So far, damage estimates run anywhere from $6 billion to $20 billion.

Charleston aggressively promoted its tourist industry after Hugo. If south Florida does the same, Fullerton expects few problems for this important regional industry.

One uncertainty is the future of the Homestead Air Force Base south of Miami. Hurricane Andrew leveled it, which means the Air Force will either have to rebuild it from scratch or abandon it. Closing the base would eliminate a few thousand jobs directly and thousands more indirectly, especially in the Homestead area. This rural area south of the city is already suffering from hurricane damage to its high-value crops, such as limes, avocadoes, and nursery trees. A base closure would be a big blow.

"That's noticeable, even in an economy as large as Miami's," says David Denslow, an economics professor at the University of Miami. But in the long history of Florida hurricanes, cities and regions have always bounced back, he adds.

The Associated Press reported Thursday that at least 250,000 people were homeless in Florida as a result of the hurricane, which wrecked some 63,000 dwellilngs. It is also estimated that it was the costliest natural disaster in US history, at more than $15 billion in Florida alone. Damage estimates in Louisiana are less, although serious.

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