Businesses Profit from the BP CleanupBy
Michigan's depressed economy nearly toppled Grand Rapids-based awning maker Prestige Products. Then in April, the company's fortunes changed dramatically when executive Brian Rickel got a phone call from an old contact at BP (BP). It was 10 days after BP's Deepwater Horizon rig had exploded, and BP needed help containing the gush of oil. Six weeks later, Prestige has rented a factory, filled it with millions of dollars of new equipment, and hired 74 workers (it employed only six as of April). Using material similar to the vinyl in awnings, Prestige is churning out 12,000 feet a day of booms, the floating barriers that help contain oil slicks. Prestige hopes to double its output—if it can hire 50 additional workers.
"We're in Michigan. The economy has been horrible for everybody here," Rickel said in an interview. "But the expertise is here and we cashed in on it."
The spill in the Gulf of Mexico will inflict billions of dollars' worth of damage on the economies of Louisiana, Alabama, Mississippi, and Florida by destroying fisheries, halting oil drilling, and scaring off tourists. But for scores of businesses—from small fry like Prestige to big operators like construction giant Fluor (FLR)—there's money to be made in the aftermath of the worst oil spill in U.S. history.
It's a dichotomy present across the Gulf region. A sign on a shuttered seafood shop in Grand Isle, La., blames BP and President Barack Obama for its woes. Nearby motels and repair shops display Help Wanted signs for maids and mechanics to help with the crush of cleanup activity. Local caterers are aggressively advertising, trying to persuade BP to hire them to feed the cleanup crews gathering on the coast.
Rene Vegas, owner of Bridge Side Cabins & Marina, also in Grand Isle, says his summer sport fishing season is lost thanks to the fast-expanding oil slick. So, like many area businessmen, he's shifting his focus from tourism to the cleanup effort. Vegas has begun stocking rubber boots, hard hats, and ropes to sell to cleanup crews.
Troy Petrovich, co-owner of T+T Boat Rentals in Buras, La., has seen demand for his marine-related services spike. Before the spill, "I kept calling, putting out more phone calls" in search of oil company customers, says Petrovich. "Now my phone is ringing pretty steady; everybody is looking for boats." T+T has rented out all 10 of its boats to oil companies and raised the daily rate to $450 from $325.
Plenty of other businesses aren't waiting for business to come to them. Shortly after the spill began, MOP Environmental Solutions, a Bath (N.H)-based maker of a substance it claims absorbs up to 30 times its weight in oil, sent four employees to the Gulf to conduct demonstrations for cleanup officials. The MOP workers came armed with fish tanks, oil, water, and the absorbing material in the trunks of their cars. Some of the company's shareholders hired a local pilot to fly around the region with a banner reading, "We mop up oil." After weeks of being pestered, BP purchased its first three truckloads of the oil-absorbent material for $155,000, says MOP President Charles Diamond.
The company didn't have to wait as long to get a full hearing as actor Kevin Costner. Costner's company, Ocean Therapy Solutions, uses barge-based turbines to separate water from oil. He first demonstrated the centrifuges to BP officials at a technology conference 10 years ago, but wasn't given the go-ahead to test the gear in open water until earlier this month. Now Ocean Therapy says it has sold 32 of the centrifuges to BP.
Another notable beneficiary of the cleanup has been Nalco Holding (NLC). More than 1 million gallons of Nalco's chemical dispersant Corexit, which breaks up oil slicks, have been used in the Gulf. The chemical company sold $40 million of Corexit to BP for the cleanup effort through the week of May 15, according to spokesman Charlie Pajor.
Some faraway businesses are profiting from producing or deploying equipment to get rid of the oil residue. The Slickbar Products division of Finland's Lamor sent employees to Mississippi to help install its skimmers, which collect oil from the water, onto shrimp boats. Its oil boom plant in Seymour, Conn., is operating at a pace not seen since the Exxon Valdez spill in 1989. Slickbar has made more booms in the past month than it had in the previous 12 months, says CEO Stephen Reilly.
There's plenty of cleanup activity on land as well. Fluor, the big construction company, has a contract to supply BP with workers to clean up tar on Alabama and Florida beaches. So far it has hired 1,200 workers in Alabama and 2,400 in Florida, all of them off unemployment rolls in those states, says spokesman Brian Mershon. Fluor plans to increase its Florida workforce to 4,100.
The cleanup rush isn't generating just blue-collar work. The Pensacola (Fla.) law firm of Levin Papantonio Thomas Mitchell Echsner Rafferty & Proctor has hired an airplane to fly a banner over beaches reading "Prosecute BP" and is offering free claims evaluations. "There are probably hundreds of lawyers who are working to generate claims on the BP spill," says Fredric Levin, a partner in the firm. Washington's K Street crowd also stands to benefit as federal regulators crack down on drillers. Transocean (RIG), owner of the troubled Deepwater Horizon rig, has hired former congressman Bill Brewster's lobbying firm, Capitol Hill Consulting Group, to represent its interests, according to a regulatory filing on May 10. The Shaw Group, which has a $360 million contract to build barrier islands along the Gulf Coast, is hiring staffers to count birds on nearby islands and map shipwrecks.
Litigation or legislative changes may generate years of billings. For now, many small businesses in the affected area are taking advantage of the spill work while they can. Marina owner Vegas, for one, says he has as many as 60 BP employees and contractors staying at his marina, which normally caters to sport fishermen and beachgoing families. "The motel is booked, the motel is doing fine," he said. "But when they leave in January or December, we're in trouble."
The bottom line: Although the BP spill is disrupting tourism and fishing activities along the Gulf, it has been a short-term boon to many businesses.