Natural disasters cost insurers $42 billion last year making 2004 the costliest ever for the industry, according to the Insurance Information Institute.
Location executives need to factor in weather and other natural hazards when evaluating a site.
“Frequency of natural disasters is a critical criteria for anyone looking for a manufacturing plant site,” said Kristian D. Bjorson, director of the Logistics Practice Group for The Staubach Co.
The Staubach Co. screens sites using a variety of criteria. For instance, sites west of the Mississippi River must meet three to five criteria.
“These are essential criteria, and they include frequency of natural disasters, dependable and uninterrupted operations, and stable, uninterrupted power supply,” Bjorson said.
Businesses contemplating an expansion need to plan for precipitation and temperature extremes, said Rodger R. Getz, president and CEO of AWIS Weather Services Inc. of Auburn, Ala.
“Some people look at the climatology going back five years, but we really recommend that you look back further,” he pointed out.
Getz urged executives to look beyond just average or normal readings in an area, because they don’t cover temperature, wind or precipitation extremes that an area may experience.
“It’s really best to do a full-blown analysis,” he said. “You really need to look at more detailed weather statistics to get a truer picture of a site.”
A community’s weather, Getz noted, has an impact on numerous issues, including freight delivery times, dependability of power supplies, heating and cooling bills, and facility design.
“Even something as important as the orientation of a building or facility can be based upon weather,” said Getz, adding that placement of warehouse and office facilities at a site may hinge on sunlight exposure levels at a given parcel.
Weather information can be useful for a variety of industries when selecting a new site, said Murray Armstrong, sales and business development director for CustomWeather Inc. of San Francisco.
“Weather can play a major role in associated costs such as energy usage, product sales, event attendance and even insurance policy premiums,” he said.
CustomWeather compiles daily historical weather data for about 30,000 locations around the world and can assist businesses that are considering different locations for a facility.
Businesses may find the lowest insurance premiums for floods, earthquakes and other natural perils in Utah, Montana and Iowa. Areas with the highest premiums include the District of Columbia, Connecticut and California.
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