After Ondoy, businesses more flood-ready

MANILA, Philippines – The torrential rain brought in early August by southwest monsoon and enhanced by tropical storm ‘Haikui’, poured down over Manila and Luzon from August 6 to August 8, hitting leading retail, fast food and telecommunication businesses.

But most reported that damage was not severe because they were prepared after Typhoon Ondoy devastated Manila in 2009.

Sy-led SM Prime Holdings, for example, made one of their malls more flood-resistant by adding in a catchment facility. Meanwhile, Philippine Long Distance Telephone Company (PLDT) elevated some of their infrastructure so it would not be covered by rising flood water. At the same time, Globe Telecom enacted its own internal alert system to trigger early deployment of personel to affected areas.

More rain poured down in the first 24 hours of this August monsoon rain than the first 24 hours of accumulated rainfall during tropical storm Ondoy, known internationally as Ketsana — yet businesses were not as badly damaged.

Below are several of the top businesses in the country that learned from the severe floods 3 years ago and have taken steps not to relive the damage or at least insure themselves for them.

• SM Prime Holdings, the Philippines’ largest mall operator  

Learning from the devastation of the Ondoy floods, Sy-led SM Prime Holdings focused on reengineering malls in flood prone areas, building new developments in strategic locations, focusing on safe design, and making sure their insurance was even more compressive.

This recent heavy rain flooded the basement of SM City Santa Mesa, situated in an affected area at the boundary of Quezon City and San Juan City. 

“[SM] Santa Mesa is now closed in the basement because of the flooding and it will take us about 45 days to get that back into business but the ground and the 2nd floor will be open,” said Jeffrey C. Lim, Executive Vice President and CFO for SM Prime Holdings at a briefing on August 15.

The lower level of the mall with a Hypermarket outlet is not expected to reopen until the end of September, causing company executives to worry about its impact on their bottom line.

“Even with the ‘not opening for 45 days,’ we will be able to actually claim for business interruption,” Lim said, referring to their insurance coverage for these incidents.

He explained that all of SM Prime’s “developments and shopping centers are insured against all risk, including acts of god, like typhoons [and] earthquakes.”

Their comprehensive insurance coverage may also allow the retailer to claim the money it lost from its tenants for the period. Lim said “7,207 tenants were not able to open because of problems like accessibility.” He said their policy was not to penalize them for the period.

“Apart from ensuring that the malls are strategically located, the engineering group of SM prime actually carefully stud[ied] the location of each and every mall and we try to make sure the design and the structure are compliant,” said Lim.

He also cited SM City Masinag in Antipolo City, which experienced minimal flooding during the recent monsoon rain. It was heavily flooded during past storms, prompting the company to spend P25 million to P30 million to “build a rain catchment facility that can actually store about 17 million liters of water.”

Through this catchment facility, the mall structure slowly release the built up water after the storms so the surrounding community doesn’t experience flooding.

In SM Marikina, which is located in an area often hit by floods, Lim said their mall was built on stilts to allow water to flow beneath it and empty into the nearby river.  

• Jollibee, the largest fast food chain in the country

In the case of Jollibee Foods Corp, the flood-related damage in stores “represented about 1% of the national store network,” the fast-food giant said in an August 14 disclosure to the local stock exchange.

Based on Rappler’s estimates, that translates to almost 20 stores and nearly P150 million in sales.

The homegrown fast food giant has a vast network of 2,022 stores nationwide that generated sales of P44.50 billion in the first 6 months of the year.

Meanwhile, Jollibee reported that “the impact of combined disruptions in customer visits and store operations is estimated at about -2.0% on the normal national sales in the month of August, mostly coming from Metro Manila and North Luzon.”

So far this year, the fast food chain has averaged P7.4 billion a month in system wide sales meaning a 2% drop in sales would equate to P148 million in lost profits.

In Rappler’s estimates, that is equivalent to unsold yum value meals totalling an estimated over two million.

• PLDT, country’s largest telecommunications company

With one of the oldest and largest phone networks in the country, Philippine Long Distance Telephone Company (PLDT) has extensive landline cables. They decided to protect sensitive sections of their landline services after the extensive flooding in 2009.

“PLDT has learned from Ondoy in 2009 and we have elevated most of our street cabinets,” said Smart’s head of public affairs Ramon Isberto in an interview with Rappler on August 7.  

He explained that the street cabinets mounted on telephone poles act as a distribution point. “If the cabinet is submerged in water that will knock you out for awhile, if the batteries run out that power those cabinets that will also knock out the services.”

He explained that in some areas, such as Marikina, the floods rose so high this August they still submerged the cabinets and cut off landline service. However, he said their mobile service functioned normally despite the rain.

“In our case we’re on full alert. People are on standby and people are deployed, and facilities are made ready,” said Isberto. “We had to learn hard lessons from previous storms.”

• Globe, the second largest telecommunications company in the Philippines  

After their experience with typhoon Ondoy, Globe Telecom put in place systems to monitor the weather independently, deploy early response teams and fortify operations centers in critical areas.

“For every disaster that hits the country we conduct a post-mortem meeting to determine all the gaps and address those gaps. In 2009 when Ondoy hit Metro Manila, there are some gaps and we addressed them in terms of processes technology and even in terms of interdependencies,” said Globe’s Enterprise and Business Continuity Director Edgar Hapa in an interview with Rappler on August 7.

“Of course some of them are part of a road map to make our network more resilient…As you know Ondoy was supposed to be a signal 1 weather disturbance. What we did was make sure a lot of our people know how to read weather reports so we can anticipate any changes in the weather patterns,” he added.

Hapa pointed out that with early detection, they can deploy resources and personnel to likely flood sites before the worst of the rain. He explained that once an area is severely flooded, it may be difficult or unsafe to move in equipment and employees.

Globe also has its own internal alert system, in which each level sets off a system of responses. Hapa said they designated the recent monsoon rain a “red level” threat, which “doesn’t mean we were hit. It means the threat is here in the network area so be on guard to immediately respond to any incident.”

He said, during this storm, employees in critical cell sites were notified that they would be on 24/7 duty.

He added that they reinforced critical areas in their network after Ondoy hit to make sure there were less service interruptions. Cell sites on wheels were even readied this time incase emergency service was needed. – Rappler.com