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When Rita Came Calling

By Sarah Lacy SBC Communications (SBC) Chief Operating Officer Randall Stephenson had just finished a presentation at an investors' conference in New York City. With Hurricane Rita headed ever closer to the coast of Texas, SBC's home state, Stephenson cancelled afternoon meetings and rushed back to headquarters in San Antonio to prepare for a disaster.

Weeks earlier, Hurricane Katrina had affected more than 800,000 lines served by BellSouth (BLS), the main local-telephone carrier in the Southeast, and inflicted as much as $600 million in damage. SBC was doing everything it could to protect both employees and operations as Rita homed in.

Across parts of Texas and Louisiana, companies big and small raced late last week to relocate workers, batten down operations, and ready plans for getting back to business after the storm passes. With the devastation wrought by Katrina fresh in memory, many companies were being especially vigilant, taking extra pains to ensure that employees in the affected region were moved out of harm's way.

SECURING SWITCHES. SBC, the No. 2 U.S. phone company, began tracking the storm more than a week in advance, says spokesman Michael Coe. Days before the projected landfall, it encouraged 2,000 Houston-area employees to evacuate, setting up an Intranet site where they could link with host families elsewhere in the company.

The second step was securing SBC's 65 central offices, where the main network-switching equipment is housed. Workers locked down the buildings, sealed windows with caulk, and piled sandbags outside. Since SBC provides critical phone infrastructure, it's well-versed in disaster management. But the last time it had to waterproof a building was some 15 years ago, when another tropical storm threatened the Texas coast, says Coe.

SBC won't speculate about potential damage or how quickly it will be able to get up and running. "All we can do is prepare for the worst and hope for the best," Coe says.

CARE WITH CLOSINGS. Dallas-based Texas Instruments' headquarters (TXN) is far from the Rita's expected path, but the outfit does have a manufacturing plant in Houston. Like SBC, TI encouraged employees to leave, and its workers in Dallas offered couches and spare bedrooms to 1,700 of their colleagues, says TI spokeswoman Sharon Hampton. As of Friday, Sept. 23, the company was trying to decide when to shut down the Houston plant, used for etching silicon, and how to do it in the safest and most cost-effective way.

Shutting down a multi-step process means a systematic approach. Too sudden, and chips midway through the process would have to be thrown away. Friday's controlled shutdown helped hold down costs due to the hurricane. TI was planning to bring the plant back up on Saturday evening.

In Houston, too, Coca Cola's (KO) Minute Maid division closed shop at noon on Thursday, Sept. 22. All of the 500 employees got two cases of water as they departed, since supplies were scarce at area stores, says Coca Cola spokesman Dan Schafer. Coca Cola set up a toll-free number that employees could use to report in.

LIFT FOR THE LOCALS. "Everyone is still just waiting to see what's going to happen," Schafer says. Meanwhile, Coca Cola is in contact with the state authorities and the Federal Emergency Management Agency (FEMA) to ship water to affected areas.

Airlines with Texas hubs also were on high alert. Southwest Airlines (LUV) is the largest carrier at one of Houston's two airports, William P. Hobby Airport. It typically operates 141 flights a day. On Sept. 22, it added to that schedule in order to evacuate 17,440 people from the area.

The following day, Southwest operated 57 additional flights, and then flew in two jets to pick up employees who stayed behind to help. Most volunteered to come in from other parts of the country, enabling Houston residents to evacuate with their families, says Southwest spokeswoman Ginger Hardage. More than 100 employees volunteered. The company's roughly 3,000 employees in the area started evacuating earlier in the week.

THE NET'S HELP. Rita was threatening another blow for Southwest, which is also the largest airline in New Orleans. This time around, the airline has been more aggressive in urging employees to evacuate and is doing a better job keeping tabs, so it can contact them when the storm passes, says Hardage. For those left in the Houston command center, Southwest has sent satellite phones and cell phones with a non-Houston area code so they will have a better chance of maintaining contact.

As of Friday, Sept. 23, the plan was to start flying again midmorning on Sunday, but for that to happen, Southwest employees would have to fly back to Houston and assess any damage to runways and equipment. Says Hardage: "There's a lot of moving parts to an airline."

The Internet is proving a huge advantage in keeping customers apprised of flight schedules, Hardage says. "That's a big difference between now and 5 or 10 years ago," she says.

KEY LESSONS. American Airlines, too, was helping evacuees, adding a flight on Sept. 22, and bringing in extra-wide planes. Every seat was taken, American spokesman Tim Smith says. "It would have been impossible to meet all the demand," Smith says.

American's employees were on many of those flights. The airline already had a toll-free hotline devoted to Katrina, and now it will field calls from employees displaced from Hurricane Rita as well. Smith says the experience of Katrina has made the company more aware of the importance of tracking employees and staying in touch with them.

The carrier made another move after Katrina, one that was paying off -- stockpiling jet fuel. "That decision is serving us well just a few weeks later," Smith says. And for the thousands of other Gulf Coast residents who made it out in time, the lessons learned from past disasters were no less valuable.

With Steve Rosenbush in New York

Lacy is a reporter for BusinessWeek Online in the Silicon Valley bureau

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