El Nino Storms Deliver Punch to Local Firms, but Not a KO

El Nino’s deluge is testing the fortitude and creativity of many Southern California businesses, as they grapple with delays, slower sales and last-minute changes.

Home-building projects have been stalled, some restaurants have had fewer patrons, and farmers are coping with waterlogged fields. In fact, most any type of business that relies on the region’s vaunted sunshine is feeling some pain from the rain.

Despite the difficulties, however, the overall economic impact from the storms--so far, at least--is likely to be small, experts say.

Ted Gibson, chief economist at the state Department of Finance, expects that retail sales will probably be down 1% to 2% during the first quarter. But that will likely be offset by increased sales of repair items in the second quarter, he said.

“I think it’s going to rearrange spending a little bit,” Gibson said. “But I don’t know if, when all is said and done, we’ll see any long-term economic damage.”

Before the last set of storms, the state estimated that El Nino had cost $65 million in crop losses. But such figures can be misleading, Gibson noted, because the remaining crops might sell for much higher prices.

Nationally, El Nino rates “only a footnote in economic history so far,” said Mark Zandi, chief economist at Regional Financial Associates in West Chester, Pa. And while California has fared worse than most other regions, said Zandi, who tracks the state’s economy, he still sees little lasting impact.

Total damage estimates for El Nino, at $500 million to $600 million currently, are just a drop in the bucket compared with the Northridge earthquake, which is now estimated to have cost $30 billion. There’s even evidence that this El Nino has been less disruptive to businesses than previous ones because there has been less flooding in urban areas, Gibson said.

The biggest difference between the current El Nino and past natural disasters such as the 1994 quake and Florida’s Hurricane Andrew, economists say, is that business activity has only been delayed--not shut down. The region’s economy is now strong enough that any drop in sales will probably be offset later in the year, they say.

What’s more, experts say, it’s fortunate that the storms have come during the winter, which is traditionally the slow season for many industries. At Universal Studios, for example, “obviously attendance is diminished,” said spokesman Jim Yeager, but he added that it’s much less of a concern than it would be during peak vacation time.

Nonetheless, the storms are taking a toll on many local businesses. Take Bertram McCann, who owns Filmboats Inc., a small Marina del Rey company that provides boats and marine services to movie and television producers.

Usually McCann welcomes rain, because it gives him the chance to “market and schmooze more.” But now that he’s had far more than the normal amount of down time as productions delay or rearrange filming schedules, he’s ready for some clear skies.

McCann has managed to slip in a few commercial jobs, which involve one or two days of filming. But big projects such as “Lethal Weapon 4” have been postponed, he said, leaving him with far too much time on his hands. He’s trying to get a loan to tide him through.

“Hopefully, the people who financed my house will decide it’s gone up enough in the year since I bought it,” he said.

The recent downpours have played havoc throughout the motion picture business. “Everyone is scrambling for interior locations,” said Michael Bobenko, senior vice president of operations at Entertainment Industry Development Corp.’s Los Angeles film office.

But Bobenko said the industry is working through the inconveniences, by moving outdoor scenes to studios, or by juggling schedules. When the final numbers on local productions are tallied, he said, “I think our levels will be at least as high as last year and maybe even a little higher.”

In the construction trade, El Nino has put a damper on what is otherwise the best season it’s seen in years. Economists predict that when the state releases employment figures for January and February, they’ll likely show a drop in construction-related jobs.

“Rain that comes every three or four days is a real pain for the building industry,” said Terry Neale, vice president of land acquisition at Laing Homes in Irvine.

The soggy weather makes it impossible to pour any form of concrete, causing delays in every link in the building chain, he said.

“That hurts subcontractors, it hurts us, and it means there will be [fewer] houses on the market available for home buyers to close.”

Times staff writers John O’Dell and E. Scott Reckard and correspondent Leslie Earnest contributed to this report.