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Texas Manufacturing Outlook Survey

Special Questions

September 25, 2017

Texas Business Outlook Surveys

Results below include responses from participants of all three surveys: Texas Manufacturing Outlook Survey (TMOS), Texas Service Sector Outlook Survey (TSSOS) and Texas Retail Outlook Survey (TROS).

Data were collected Sep. 12–20, and 390 Texas business executives responded to the surveys. Among responding firms, 78 are located along the Gulf Coast*.

  1. What has been Hurricane Harvey’s net impact to your firm’s revenue/production?
    Gulf Coast
    (percent)
    Rest of Texas
    (percent)
    All Firms
    (percent)
    Negative
    77
    31
    41
    No impact
    10
    60
    50
    Positive
    13
    8
    9
  2. What do you expect the hurricane’s net impact to your firm’s revenue/production will be over the next six months?
    Gulf Coast
    (percent)
    Rest of Texas
    (percent)
    All Firms
    (percent)
    Significant decrease
    16
    3
    6
    Slight decrease
    37
    24
    27
    No change on net
    21
    52
    46
    Slight increase
    17
    16
    17
    Significant increase
    8
    4
    5
  3. Because of Hurricane Harvey, how do you expect your firm’s ability to find and hire workers to change over the next six months?
    Gulf Coast
    (percent)
    Rest of Texas
    (percent)
    All Firms
    (percent)
    Become significantly more difficult
    13
    6
    7
    Become slightly more difficult
    32
    17
    20
    No change on net
    52
    73
    69
    Become slightly easier
    3
    4
    4
    Become significantly easier
    0
    0
    0

The following three questions were posed only to firms that noted a negative net impact from Hurricane Harvey.

  1. Due to Hurricane Harvey, for how many days, if any, did your establishment experience…
    A Complete Shutdown A Reduction in Revenue/Production
    Gulf Coast
    (percent)
    Rest of Texas
    (percent)
    All Firms
    (percent)
    Gulf Coast
    (percent)
    Rest of Texas
    (percent)
    All Firms
    (percent)
    None
    6
    59
    33
    2
    17
    11
    One to five days
    67
    30
    48
    34
    43
    39
    More than five days
    27
    11
    19
    64
    40
    50
    Average number of days
    5.1
    2.3
    3.7
    10.3
    6.8
    8.3
    Average number of nonzero days
    5.4
    5.7
    5.5
    10.5
    8.3
    9.2
    Note: Of the firms who experienced a reduction in revenue/production, 59 percent noted that it is still ongoing.
  2. Because of Hurricane Harvey, to what extent will the following impede your firm getting back to business as usual over the next six months?
    For each disruption, firms reported whether it will be a major or minor disruption or none at all.
    Major Extent
    (percent)
    Minor Extent
    (percent)
    Not at All
    (percent)
    Personnel disruptions
    19
    46
    35
    Loss of customer base
    17
    50
    33
    Transportation and/or supply chain disruptions
    14
    51
    36
    Repair of facility
    10
    31
    58
    Repair/replacement of other capital (inventory/equipment)
    7
    24
    68
    Restoration of utilities (power/water/gas)
    7
    24
    69
    Ability to hire workers
    5
    27
    68
    Other
    8
    5
    86
    Note: This question was posed only to firms that expect the hurricane’s net impact to be a decrease in revenue/production over the next six months.
  3. To what extent will your firm’s damages and/or losses due to Hurricane Harvey be covered by insurance (if applicable)?
    Physical capital losses
    (percent)
    Revenue/ Production losses
    (percent)
    Not at All
    58
    74
    Somewhat
    27
    18
    Mostly
    14
    8

*For our analysis, Gulf Coast includes the metropolitan statistical areas of Houston, Beaumont-Port Arthur, Corpus Christi and Victoria.

Texas Manufacturing Outlook Survey

Data were collected Sep. 12–20, and 108 Texas manufacturers responded to the survey. Among responding firms, 23 are located along the Gulf Coast*.

  1. What has been Hurricane Harvey’s net impact to your firm’s revenue/production?
    Gulf Coast
    (percent)
    Rest of Texas
    (percent)
    All Firms
    (percent)
    Negative
    83
    28
    40
    No impact
    9
    64
    52
    Positive
    9
    8
    8
  2. What do you expect the hurricane’s net impact to your firm’s revenue/production will be over the next six months?
    Gulf Coast
    (percent)
    Rest of Texas
    (percent)
    All Firms
    (percent)
    Significant decrease
    18
    5
    8
    Slight decrease
    32
    17
    20
    No change on net
    27
    52
    47
    Slight increase
    14
    21
    19
    Significant increase
    9
    5
    6
  3. Because of Hurricane Harvey, how do you expect your firm’s ability to find and hire workers to change over the next six months?
    Gulf Coast
    (percent)
    Rest of Texas
    (percent)
    All Firms
    (percent)
    Become significantly more difficult
    25
    6
    10
    Become slightly more difficult
    35
    19
    22
    No change on net
    35
    68
    61
    Become slightly easier
    5
    8
    7
    Become significantly easier
    0
    0
    0

The following three questions were posed only to firms that noted a negative net impact from Hurricane Harvey.

  1. Due to Hurricane Harvey, for how many days, if any, did your establishment experience…
    A Complete Shutdown A Reduction in Revenue/Production
    Gulf Coast
    (percent)
    Rest of Texas
    (percent)
    All Firms
    (percent)
    Gulf Coast
    (percent)
    Rest of Texas
    (percent)
    All Firms
    (percent)
    None
    6
    83
    39
    0
    21
    11
    One to five days
    50
    8
    32
    31
    42
    37
    More than five days
    44
    8
    29
    69
    37
    51
    Average number of days
    6.1
    0.9
    3.9
    10.8
    8.4
    9.5
    Average number of nonzero days
    6.5
    5.5
    6.4
    10.8
    10.6
    10.7
    Note: Of the firms who experienced a reduction in revenue/production, 48 percent noted that it is still ongoing.
  2. Because of Hurricane Harvey, to what extent will the following impede your firm getting back to business as usual over the next six months?
    For each disruption, firms reported whether it will be a major or minor disruption or none at all.
    Major Extent
    (percent)
    Minor Extent
    (percent)
    Not at All
    (percent)
    Personnel disruptions
    14
    38
    48
    Transportation and/or supply chain disruptions
    14
    57
    29
    Loss of customer base
    10
    45
    45
    Repair of facility
    10
    24
    67
    Repair/replacement of other capital (inventory/equipment)
    5
    24
    71
    Restoration of utilities (power/water/gas)
    5
    19
    76
    Ability to hire workers
    0
    33
    67
    Other
    0
    0
    100
    Note: This question was posed only to firms that expect the hurricane’s net impact to be a decrease in revenue/production over the next six months.
  3. To what extent will your firm’s damages and/or losses due to Hurricane Harvey be covered by insurance (if applicable)?
    Physical capital losses
    (percent)
    Revenue/ Production losses
    (percent)
    Not at All
    68
    81
    Somewhat
    21
    15
    Mostly
    11
    4

*For our analysis, Gulf Coast includes the metropolitan statistical areas of Houston, Beaumont-Port Arthur, Corpus Christi and Victoria.

Special Questions Comments

These comments have been edited for publication.

Chemical Manufacturing

  • Hurricane Harvey, while it did not have a direct effect on our revenue or production times, is going to decrease our profitability due to our increased raw material costs (price increases are coming quicker than we can raise prices) and will reduce our cash flow due to higher inventory requirements.

Primary Metal Manufacturing

  • Technical people will become more in-demand in the regions of the hurricanes, making them harder to find for normal business.

Fabricated Metal Product Manufacturing

  • We have two significant production equipment machines that we are still trying to troubleshoot to repair/restore electrical systems. The machines are too expensive to replace, and flood insurance only covers depreciated value, so we may be out of production longer than anticipated.
  • Shipments to Southeast Texas customers were delayed a few days following Hurricane Harvey, but we have not seen any other impact to date.
  • We haven’t been able to hire employees all year. Houston is at full employment.

Machinery Manufacturing

  • Though our facility did not have any physical damage (even inside Houston), many of our employees were unable to come to work due to blocked roads, damage to their homes or damage to their relatives’ homes. This caused our office to be shut down for several days.

Transportation Equipment Manufacturing

  • We are about to begin hiring again in earnest. Our guess is that it may be easier to find workers since some may have been displaced from businesses that experienced major or total losses due to Hurricane Harvey. But we haven’t yet started that process, so we really won’t know for a month or two.

Furniture and Related Product Manufacturing

  • There has been a labor shortage of skilled trades for installation of our product for a while already. Hurricane Harvey may cause that to increase, which, if it does, will force lower construction rates in other areas where that labor was pulled from.

Food Manufacturing

  • We were not affected by the storm, but many customers in areas hard-hit have lost facilities or are now producing less due to their demand decreasing.

Printing and Related Support Activities

  • We were not impacted at all, but many of our Houston-area customers were, and we lost a very nice quick-turn job that was going to be produced in Houston. But because they couldn’t find truckers to bring printed materials into Texas amid worries about fuel shortages and closed roads, the job went to a different part of the country. It was worth 10 percent of our monthly billing.

Miscellaneous Manufacturing

  • I feel that construction pay increases in Houston will cause Central Texas workers to migrate that way, thus exacerbating the current labor shortage and wage increases we have been facing.

Texas Service Sector Outlook Survey

Data were collected Sep. 12–20, and 282 Texas business executives responded to the survey. Among responding firms, 55 are located along the Gulf Coast*.

  1. What has been Hurricane Harvey’s net impact to your firm’s revenue/production?
    Gulf Coast
    (percent)
    Rest of Texas
    (percent)
    All Firms
    (percent)
    Negative
    75
    33
    41
    No impact
    11
    59
    50
    Positive
    15
    8
    10
  2. What do you expect the hurricane’s net impact to your firm’s revenue/production will be over the next six months?
    Gulf Coast
    (percent)
    Rest of Texas
    (percent)
    All Firms
    (percent)
    Significant decrease
    15
    3
    5
    Slight decrease
    40
    27
    29
    No change on net
    19
    52
    45
    Slight increase
    19
    15
    16
    Significant increase
    8
    4
    5
  3. Because of Hurricane Harvey, how do you expect your firm’s ability to find and hire workers to change over the next six months?
    Gulf Coast
    (percent)
    Rest of Texas
    (percent)
    All Firms
    (percent)
    Become significantly more difficult
    8
    5
    6
    Become slightly more difficult
    31
    17
    19
    No change on net
    59
    76
    73
    Become slightly easier
    2
    2
    2
    Become significantly easier
    0
    0
    0

The following three questions were posed only to firms that noted a negative net impact from Hurricane Harvey.

  1. Due to Hurricane Harvey, for how many days, if any, did your establishment experience…
    A Complete Shutdown A Reduction in Revenue/Production
    Gulf Coast
    (percent)
    Rest of Texas
    (percent)
    All Firms
    (percent)
    Gulf Coast
    (percent)
    Rest of Texas
    (percent)
    All Firms
    (percent)
    None
    6
    52
    31
    3
    15
    10
    One to five days
    75
    36
    54
    35
    43
    40
    More than five days
    19
    12
    15
    62
    42
    49
    Average number of days
    4.7
    2.7
    3.6
    10.1
    6.3
    7.8
    Average number of nonzero days
    5.0
    5.7
    5.3
    10.4
    7.4
    8.7
    Note: Of the firms who experienced a reduction in revenue/production, 64 percent noted that it is still ongoing.
  2. Because of Hurricane Harvey, to what extent will the following impede your firm getting back to business as usual over the next six months?
    For each disruption, firms reported whether it will be a major or minor disruption or none at all.
    Major Extent
    (percent)
    Minor Extent
    (percent)
    Not at All
    (percent)
    Personnel disruptions
    20
    49
    31
    Loss of customer base
    19
    51
    30
    Transportation and/or supply chain disruptions
    14
    49
    38
    Repair of facility
    11
    33
    56
    Repair/replacement of other capital (inventory/equipment)
    8
    24
    68
    Restoration of utilities (power/water/gas)
    8
    25
    67
    Ability to hire workers
    7
    25
    68
    Other
    10
    7
    83
    Note: This question was posed only to firms that expect the hurricane’s net impact to be a decrease in revenue/production over the next six months.
  3. To what extent will your firm’s damages and/or losses due to Hurricane Harvey be covered by insurance (if applicable)?
    Physical capital losses
    (percent)
    Revenue/ Production losses
    (percent)
    Not at All
    56
    72
    Somewhat
    29
    19
    Mostly
    15
    10

*For our analysis, Gulf Coast includes the metropolitan statistical areas of Houston, Beaumont-Port Arthur, Corpus Christi and Victoria.

Special Questions Comments

These comments have been edited for publication.

Credit Intermediation and Related Activities

  • We are waiting to determine what delayed impacts the hurricane will have on our market areas. We have a low percentage of our loan portfolio in the affected areas and are waiting on assessments of those credits. We anticipate we will see the increased cost for gas continue and building materials as well. Our community saw an increase in occupation rates at hotels and provided sanctuary for a number of people in available facilities but expect that to be short term.
  • Our employees and physical facilities were not impacted, but we had several prospects about to sign a contract with us that had to delay their decision-making due to Hurricane Harvey. We believe they will sign at some point, but this will have an impact on our sales bookings for the third and fourth quarters of 2017.
  • We are a commercial bank, and the survey questions are difficult to answer because the major impact will be determined by the impact on our customers, and it's much too early to determine that impact.

Insurance Carriers and Related Activities

  • As a managing general agent for specialty carriers underwriting wind-exposed risks along the coast and inland including Houston, we expect to see 5 to 10 percent rate increases in premiums on new and renewal business over the next 12 months. We don't expect either Hurricanes Harvey or Irma to significantly impact the underwriting availability of coverage for wind-exposed risks.
  • Our business is 300 miles inland. We have some clients who were in Hurricane Harvey's path, but most of their losses were insured (wind or flood) losses.

Real Estate

  • While we do not feel we will be directly impacted, we do recognize that any construction-related work we need in Austin, San Antonio or any of the Rio Grande Valley markets will probably be more costly and harder to accomplish due to labor or materials costs or shortages.

Rental and Leasing Services

  • I think there will be many opportunities to finance equipment to new and old customers, as many will have difficulty getting the down payment that lending firms require today. Their business has been flooded, and they don't have a cash flow right now; some will be new companies and not have sufficient credit history to meet the regulatory rules lenders require today, who will need quick, simple, easy, fast, skip payment, delayed payment, low interest rate, low down payment money available.

Professional, Scientific and Technical Services

  • We lost time in the office but a number of our lawyers can work remotely. I expect we will see increased activity in hurricane-related claims in the months ahead.
  • The economic impact of Hurricanes Harvey and Irma will have a significant impact upon the state of Texas.
  • We are a professional engineering firm. We are expecting an uptick in project work. It is still too early to see if funding will be forthcoming for infrastructure projects.
  • We were fortunate in that this was not a direct hit on the Houston metro area, and for the most part, power was maintained. This was key to us keeping folks—who were water-locked at home—engaged and working as best they could, particularly work-at-home staff, and also professionals who could work remotely. Some clients were no doubt offline. Our business continuity/disaster recovery plans worked very well, and we saw no systems disruption. The impact was isolated to Houston-based personnel and their inability to access the building for a couple of days, as folks were limited in ability to travel with widespread road flooding.
  • I expect the rebuilding activity to have a net positive effect for the economy—notwithstanding the immediate negative impact—and therefore be an indirect positive effect on the economy throughout Texas.
  • We expect significant cost increases on select building materials for our projects, possibly to the point of endangering going forward with construction on some projects. The increases are expected in drywall, metal studs and flooring materials.
  • The overall effects of Hurricane Harvey on our business will be slight. We will have slightly higher costs this month due to lost production, but that will be made up in short order. About 15 percent of our staff were effected by flooding in their homes but all have returned to work while repairs are being made.
  • We have received two small orders due to hurricane disruption but nothing significant enough to record. We cover San Antonio, Austin and South Texas and, thankfully, did not have much flooding in our footprint.

Management of Companies and Enterprises

  • We have two assessment areas. Only one was impacted to some extent. The impacted area was slightly affected, and the loss of production was due to power outage and not flooding. The impacted area is 100 percent operational. Some clients were negatively impacted but not a large segment. There has been some slowdown but minimal overall impact.   

Administrative and Support Services

  • The effect we most see with Hurricane Harvey is the shipment of customers’ parts to and from our lab.

Educational Services

  • With construction/repair increasing in the Houston and Gulf Coast area, we are concerned about construction costs rising in Texas as well as availability of workers, etc.

Hospitals

  • We are too far from the coast to be materially impacted.
  • We expect costs to increase around Texas.

Social Assistance

  • As a food bank, we have sent a significant amount of food to the areas affected by Hurricane Harvey and have been providing meals to evacuees. We have also seen increased donations and volunteers in response to the disaster.

Food Services and Drinking Places

  • We got busier for a week or so because the hotels around us (Dallas suburbs) filled up with displaced Houstonians. That said, the hurricane had a very adverse effect on our Houston stores.
  • Revenues for the recent period were down at the five stores impacted in Corpus Christi, Victoria and Houston. We were one of the first to reopen, and our sales have been very strong post-reopening. We are not sure how long this will last as other businesses get back on their feet.

Personal and Laundry Services

  • Our business has not been impacted by Hurricane Harvey.

Texas Retail Outlook Survey

Data were collected Sep. 12–20, and 61 Texas retailers responded to the survey. Among responding firms, 16 are located along the Gulf Coast*.

  1. What has been Hurricane Harvey’s net impact to your firm’s revenue/production?
    Gulf Coast
    (percent)
    Rest of Texas
    (percent)
    All Firms
    (percent)
    Negative
    63
    24
    34
    No impact
    0
    53
    39
    Positive
    38
    22
    26
  2. What do you expect the hurricane’s net impact to your firm’s revenue/production will be over the next six months?
    Gulf Coast
    (percent)
    Rest of Texas
    (percent)
    All Firms
    (percent)
    Significant decrease
    0
    0
    0
    Slight decrease
    44
    30
    33
    No change on net
    19
    34
    30
    Slight increase
    25
    25
    25
    Significant increase
    13
    11
    12
  3. Because of Hurricane Harvey, how do you expect your firm’s ability to find and hire workers to change over the next six months?
    Gulf Coast
    (percent)
    Rest of Texas
    (percent)
    All Firms
    (percent)
    Become significantly more difficult
    13
    7
    9
    Become slightly more difficult
    38
    21
    26
    No change on net
    44
    71
    64
    Become slightly easier
    6
    0
    2
    Become significantly easier
    0
    0
    0

The following three questions were posed only to firms that noted a negative net impact from Hurricane Harvey.

  1. Due to Hurricane Harvey, for how many days, if any, did your establishment experience…
    A Complete Shutdown A Reduction in Revenue/Production
    Gulf Coast
    (percent)
    Rest of Texas
    (percent)
    All Firms
    (percent)
    Gulf Coast
    (percent)
    Rest of Texas
    (percent)
    All Firms
    (percent)
    None
    0
    67
    27
    0
    0
    0
    One to five days
    89
    33
    67
    30
    71
    47
    More than five days
    11
    0
    7
    70
    29
    53
    Average number of days
    4.3
    1.2
    3.0
    9.7
    5.3
    7.9
    Average number of nonzero days
    4.3
    3.5
    4.1
    9.7
    5.3
    7.9
    Note: Of the firms who experienced a reduction in revenue/production, 70 percent noted that it is still ongoing.
  2. Because of Hurricane Harvey, to what extent will the following impede your firm getting back to business as usual over the next six months?
    For each disruption, firms reported whether it will be a major or minor disruption or none at all.
    Major Extent
    (percent)
    Minor Extent
    (percent)
    Not at All
    (percent)
    Transportation and/or supply chain disruptions
    29
    57
    14
    Loss of customer base
    13
    67
    20
    Personnel disruptions
    7
    57
    36
    Restoration of utilities (power/water/gas)
    7
    33
    60
    Repair of facility
    0
    47
    53
    Repair/replacement of other capital (inventory/equipment)
    0
    47
    53
    Ability to hire workers
    0
    33
    67
    Other
    0
    0
    100
    Note: This question was posed only to firms that expect the hurricane’s net impact to be a decrease in revenue/production over the next six months.
  3. To what extent will your firm’s damages and/or losses due to Hurricane Harvey be covered by insurance (if applicable)?
    Physical capital losses
    (percent)
    Revenue/ Production losses
    (percent)
    Not at All
    63
    63
    Somewhat
    25
    25
    Mostly
    13
    13

*For our analysis, Gulf Coast includes the metropolitan statistical areas of Houston, Beaumont-Port Arthur, Corpus Christi and Victoria.

Special Questions Comments

These comments have been edited for publication.

Merchant Wholesalers, Durable Goods

  • We have done business in Houston for over 35 years; we are serving and responding to our customer's needs for gypsum, insulation, roofing, doors, moulding and other related products as homeowners begin to repair their homes.

Motor Vehicle and Parts Dealers

  • We are in the marine business and expect some revenue from repair or replacement of damaged boats, motors and equipment.
  • We will experience a slight increase as a result of the number of vehicles being totaled. We aren't close enough to experience a major impact. Generally, the dealers in the impacted area will see a big increase in their overall business (new, preowned, certified preowned, rental, service loaner, parts, and service and collision centers).

Clothing and Clothing Accessories Stores

  • Our corporate headquarters recovery took about a week; most stores took about five days to recover, but 10 stores had damage that will keep them closed until approximately Thanksgiving. 

General Merchandise Stores

  • We have eight locations in Houston. One was flooded and will be closed for up to a couple of months.

Nonstore Retailers

  • I expect our ability to hire personnel may be impacted to a minor extent but could be major. I expect the cleanup, repair and rebuild efforts will absorb a great deal of the workforce we would typically draw from, although I don't know to what extent this may be offset by companies and individuals from outside Houston coming in to assist/benefit from these efforts. I see this driving wages higher in the area.

Questions regarding the Texas Manufacturing Outlook Survey can be addressed to Emily Kerr at emily.kerr@dal.frb.org, and questions regarding the Texas Service Sector Outlook Survey or the Texas Retail Outlook Survey can be addressed to Amy Jordan at amy.jordan@dal.frb.org.

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