One year after BP's Deepwater Horizon oil spill in the Gulf of Mexico, business owners along the coast in Texas, Louisiana, Mississippi, Alabama, and Florida are still reeling. Having weathered Hurricane Katrina and the Great Recession, they report they are finding it harder to rebound from the BP (BP) spill —the world's largest-ever accidental oil release into marine waters. Many who depend on tourists or seafood buyers, such as Frank Randol, who owns a 70-employee seafood processing plant and restaurant in Lafayette, La., say the Gulf Coast's image is their biggest stumbling block. Others, including Brandy Moore, who owns a five-employee tour boat operator in Biloxi, Miss., say they are challenged by a lack of transparency in the $20 billion compensation fund. Flip through this slide show for snapshots of 15 small businesses that have struggled along the Gulf Coast.
Delores Martin, a wedding planner in Cantonment, Fla., normally has 10 weddings booked by spring. She has just two this year. Clients—who predominantly hail from outside the state—think her beaches are unclean, so year-on-year revenue was down by more than 50 percent last year, she says. A $25,000 payment from a claim she filed with BP is keeping her afloat, says Martin, 75, who doesn't expect business to turn around until perceptions change.
This tour boat operator usually caters to about 30,000 visitors in a "slow" year, according to owner Brandy Moore, 38. After the spill, she says it entertained a mere 10,000 in 2010. "The biggest problem was media perception," says Moore, who bought the business four years ago with her husband. "That's what killed us in the long run. I never saw oil where we are. But we couldn't get the people to come down." Moore was advised to file three individual claims for loss compensation—only two of which were successful. She used the funds to keep paying her staff, invest in print advertising, and upgrade her website, adding video display. As a result, Moore says, business has been bouncing back "tremendously."
Business for recreational-boat builder Caribiana Sea Skiffs plummeted during the Great Recession, says owner Curse Morse, with orders altogether drying up midway through 2009. Morse grew hopeful that an economic recovery was underway when he landed two orders in early April 2010, only to see them canceled after the Deepwater Horizon rig exploded on Apr. 20. "I couldn't give a boat away," says Morse, 48. "Nobody knew what the extent of the damage would be to the Gulf Coast." Morse says he's seen an uptick in customer interest recently, although it hasn't offset last year's $100,000 loss.
Robert Bennett expected 2010 to be his 24-year-old hotel's first breakout year since Hurricane Katrina wreaked havoc in 2005. In the month prior to the BP spill, the 65-unit destination was bustling, with four consecutive sold-out weekends. The boomlet evaporated after the spill, with customers canceling almost $18,000 worth of weddings, retreats, and beach vacations. "When the image pops into a [potential guest's] head of a pelican covered in oil, that turns them off," says Bennett, 70. His 2010 revenue dropped to $550,000, nearly 27 percent less than he had projected on his liability insurance. He says his claim with BP was denied, so he has cut rates by almost half to lure a greater number of tourists and BP contractors. By cutting work hours, Bennett says he has managed to keep his staff employed.
In early 2010 business for recession-stricken Frederick's Machine and Tool Shop, a 102-employee machining and manufacturing company, was beginning to pick up. Then the BP spill started gushing. Frederick's deep-sea drilling manufacturing division—one-third of its business—"just dried up," says controller Ovide Mercure. To survive, the 46-year-old company converted that space to conduct repair work. It also delayed purchases of new machinery, altered its inventory management, and sought new customers. Although the company was eligible to file a claim for lost revenue, Frederick's didn't. "We don't want to make enemies of the oil industry," says Mercure, 64. "And we don't think we should take money from other businesses that really need it." He expects business to pick up in the next six months.
Based: Mexico Beach, Fla. Employees: 11
This grocery and gift shop depends on tourists for the bulk of its revenue, so sales were down a little more than 10 percent for the year, says owner Ike Godwin. That's better than he expected initially because Godwin says he managed to make up some of the difference by cutting prices last fall. Godwin, 66, also received a loss payment of about $50,000 from BP, which he anticipates will be renewed this year. He notes that his business had been growing about 5 percent to 10 percent annually since he bought the store four years ago.
After the Obama Administration issued its deepwater-drilling moratorium in May 2010, the Hot Shot Delivery courier service had to scramble. Most of its clients belong to, or service, the energy sector, whose oil and gas companies cut back drastically, says President Eric Donaldson. "The moratorium may have appeared to be aimed at the big oil companies, but many small businesses all the way down the line felt the effects of the activity coming to a halt," he says. Donaldson, 34, who took over from his father as president of the 33-year-old business in 2006, filled the gap by delivering secure documents to New Orleans. Now business is picking up, he says. "You can't just sit on your hands—you either grow or you go."
Nick Gutierrez says there are few problems with fishing in local waters, but his market was hit hard last year because prices on shrimp and oysters skyrocketed after the spill. Gutierrez went from paying $5.85 per pound of jumbo shrimp in May 2009 to putting out $7.50 last May. "At first, there was a lot of concern with people asking about the quality of the seafood," says Gutierrez, 28, who took over the 12-year-old business from his parents in 1999. "But I did not see a decrease in my sales."
The Looking Glass
Based: Foley, Ala. Employees: 2
Owner Gloria Dekle says 2010 was the worst-ever year for her 12-year-old custom framing business. Dekle, 47, says her clients—mostly condo owners—simply stopped coming in. "I'm taking it one day at a time, one bill at a time," she says. Dekle worked with her landlord to temporarily reduce her rent, stopped advertising, and cut such "unnecessary" expenses as her office water cooler. It's "survival mode," she says, until people resume building homes and redecorating.
<strong>Based:</strong> Houma, La. <br>
After the spill, this 40-year-old seafood processor's business dropped by about 60 percent, compared to 2009, says owner Mike Voisin. Now "the biggest challenge is the brand," he says. "We need people to see our product is safe." Prior to the spill, Motivatit Seafoods sold 80,000 pounds of oysters a week to the Los Angeles and Las Vegas areas, says Voisin, 58. Weekly shipments to those cities are closer to 20,000 pounds now, at discounted rates. Motivatit filed a claim with the Gulf Coast Claims Facility in November 2010 and will be filing an interim claim soon. Voisin hopes that the $48 million BP put up for seafood testing and marketing in Louisiana will help Gulf oysters' image recover within the next five years.<br>
Julie Martin had just opened a second real estate office in Gulf Shores, Ala., when the oil spill obliterated interest in waterfront property. "When a hurricane hits, it hits, and then you assess the damage," says Martin, 52. "With the spill, there was just so much uncertainty all summer long, and we still don't know what the effects will be for years to come." She filed a claim to help keep the business afloat, but says it was difficult to quantify because losses were based on commissions people might have made, but did not. Martin expanded her foreclosure department, increased her online presence, and began targeting second-home buyers and investors looking to buy inexpensive property.
The fallout from the BP oil spill differed from previous setbacks in the seafood-processing and restaurant sectors along the Gulf Coast, says Frank Randol, who owns Randol's Restaurant and seafood processing plant. Even when the 40-year-old business could obtain seafood, it couldn't always sell it because of health concerns. In July 2010, his business began helping its employees file for claims with BP, most of which were approved. "Our processing was interrupted, our costs went through the roof, and our margins were not there any more," says Randol, 65. "We were hand-to-mouth. We are still in that mode." He says the business lost more than $500,000 in 2010 and is awaiting payment because its loss claim was delayed.
Business was just beginning to pick up for Rock Enterprises Construction when the oil spill stopped it cold. Its two main projects were postponed, then canceled, as developers decided that long-term concerns about the Gulf's welfare made them undesirable, says owner Damion Jeanpiere. He estimates that he lost $3 million to $4 million dollars in 2010. "It put us back almost 10 years, to the start of the business," says Jeanpiere, 40. His business got a boost via a loan from nonprofit microlender Accion Texas-Louisiana, but still had to lay off 17 of 20 employees. His biggest concern now is that contractors from outside the region will be drawn to cut-price properties.
Since the mid-1990s, surfboard maker James Fulbright has been taking friends and acquaintances into the Gulf of Mexico to surf waves created by oil tankers. In 2010, persuaded that visitors would pay for the thrill, he turned the trips into a business. After the spill, three-quarters of his bookings canceled, despite what Fulbright, 53, describes as a "minuscule" amount of oil in the Galveston region. Board and equipment sales, which account for 60 percent of his revenue, remained steady throughout 2010. Now the surfers are coming back, Fulbright says, and he has booked about two charters a week from May through September.
After last year's oil spill, the fishing charter's revenue was down about 50 percent, compared to the previous year. Captain Thomas Becker expects 2011 to be similarly disappointing, notwithstanding T & D Charters' offer of an eight-hour trip for only about $150. "We're trying to keep prices as low as we can," says Becker, 69. "We're trying to hang in there and do advertising." Becker and his son managed to keep working last year, relying on a government contract to help with the oil cleanup. Becker says he received an emergency payment of $13,000 from BP and a further $43,000 from the Gulf Coast Claims Facility. He says he won't apply for what the loss fund calls a "final payment" until he knows the full extent of losses.