Let's Get It Rolling Again

NEW ORLEANS George Maurcele, parts manager at Toyota of New Orleans, arrived at the dealership by motorboat 13 days after Hurricane Katrina hit.

NEW ORLEANS — George Maurcele, parts manager at Toyota of New Orleans, arrived at the dealership by motorboat 13 days after Hurricane Katrina hit.

He was called by his boss, Troy Duhon, to assess damage and recover any surviving computer records at the hurricane-wrecked store, still partly under water.

Duhon, owner of the Premier Automotive import group, holds the dubious distinction of having the most Katrina-stricken dealerships.

Four of his five stores were submerged in six to 10 ft. of water. The stores are in the Orleans parish area, one of New Orleans' most devastated regions.

“It was sad because I'd worked so hard for so many years to create the business and then saw the storm, in a blink of an eye, wipe it out,” Duhon says.

The effect was widespread, he recalls. “Employees were dealing with missing homes, lost loved ones.”

Katrina struck Aug. 29, 2005. That date is emblazoned in hearts and minds as a life-altering event for Gulf Coast residents.

“The nation saw it on TV, but people who come back here 14 months later are shocked to see it,” says Marshall Soullier, general manager at storm-ravaged Banner Chevrolet. “It was a total nightmare. It was pure survival.”

New Orleans dealers still are recovering from the most deadly and costly natural disaster in U.S. history.

Dealers are investing millions into rebuilding, using private money, loans and insurance proceeds. In many cases, 70%-80% of records were destroyed, making it difficult to prove losses.

About 280,000 consumer vehicles and 18,000 dealer vehicles were damaged in the New Orleans parish areas, according to the Louisiana Automobile Dealers Assn. More than 90% of area homes had extensive damage, driving residents away.

Estimates vary on how much business is back, especially in the ravaged New Orleans eastern coastal area. Most dealers peg it at 20%-25% since the Category 5 hurricane hit.

Duhon figures Premier's product loss at more than $20 million and building damage at $2 million to $3 million. In his stores, vehicle sales are about 60% back, service about 45%.

His Premier Honda, Toyota and Mitsubishi stores along with three other dealerships are on the I-10 service road, where hurricane conditions converged to create a wall of water.

Premier Nissan in nearby Metairie and Premier Kia of Kenner sustained less damage. The decimated Mitsubishi store closed indefinitely “until the market repopulates itself,” Duhon said.

“The lesson learned?” Duhon asks. “Emotional management is being able to sympathize and show empathy regardless of your own personal situation. “You try to key in on others' tragic situations and reassure them things would be OK. In the end it would be for the good.”

The hard part is finding good in the catastrophe.

New Orleans East includes the hardest hit parish areas of Orleans' lower 9th Ward, St. Bernard, St. Tammany and Jefferson.

Bullard Ave., a once-bustling business strip, is located off the I-10 service drive, home to Advantage Ford, Lamarque Nissan, Premier's Toyota and Honda stores and Orleans Chrysler Dodge Jeep.

Dealers are still digging out and rebuilding. Some just gave up. Conversely, Lamarque is now owned by Eric Hill, an ex-NFL football star who sees hope. The I-10 business strip is bounded by the levee-breached Lake Pontchartrain, Industrial Canal and Mississippi River Gulf Outlet.

Banner Chevrolet: the First Back

Banner Chevrolet in Orleans parish was the first business to re-open in New Orleans East, according to dealer Rick Flick. He estimates losses at more than $17 million in products; $4 million in facility and $1 million-$2 million in parts and service. He says 650 new cars, 120 used and 80 customer cars were lost.

An overarching desire was in place. “Ours was: Let's get back, let's get in touch with (missing people), let's get it rolling again,” Flick says.

The 34-year-old Banner store, about five miles west of the I-10 service road, reportedly had the most damage and loss of any single-point dealership. The facility was under 4-to-7 feet of water. Looting was prevalent.

Flick started rebuilding with private funds and loans as insurance money came in. Walls were stripped down to metal studs. The main parts of the dealership reopened in about six weeks.

But the once $1-million grossing parts department is still being renovated. One section bears a visible sign of a seven-foot-high watermark. The main sales facility was rebuilt last June.

Flick, a fifth-generation dealer, had to push buttons to get services and contractors in place. Staff used cell phones, wireless computers and temporary connections for months.

Banner, the city's largest Chevrolet dealership and state's third highest volume store, has seen sales slip, from 2,000 units pre-Katrina, to about 1,400 now. Employee levels dipped from 155 to 110.

“Among the big needs are getting people to move back to neighborhoods and businesses to open again. Without people you can't do business,” Flick says.

Formerly a city with about 480,000 residents, New Orleans has shrunk to about half that. The 1.4-million population metro area is down significantly, too.

Drive-by traffic at Banner was once about 55,000 cars a day. That's down to about 200, Flick says. Luckily, he says, his Kia and Ford dealerships in nearby Mandeville sustained mostly minor wind damage.

Like others, Marshall Soullier, Banner Chevrolet's general manager, saw the catastrophe at a personal level. His home was under nine to 10 feet of water, and the rest of his family lived for months in Houston after evacuating New Orleans. He personally lived on a sailboat for about four months to keep up his duties.

After an initial upsurge in sales, Soullier says demand has slackened. “It was a false economy — early on we were replacing lost cars; the population shifted as homes were destroyed and people moved north, west and other places.”

“I thought things would move a lot faster. Maybe I was just optimistic.”

Parts of the parish areas still resemble war-torn zones that one might see in bombed-out Iraq. Chains such as McDonald's, Burger King, I-Hop, Lowes, RiteAid and entire shopping strips are shuttered. Some areas without street lights and full police service are under National Guard watch.

Many dealerships have gone nine months or more without basic services such as nearby grocery stores or gas stations, mail delivery, phone and Internet access. Many restaurants, schools and housing units remain closed.

A few days after Katrina, Vincent Castro, Premier's Toyota of New Orleans general manager, began assembling a handwritten sheet with employee names and contact details. One employee led to another until every possible one was reached, some hundreds of miles away. They were told they still had jobs.

He still carries the tattered sheet folded in his wallet on the premise that you never know what might happen once you've been the victim of a storm of this magnitude.

Months later, management all returned, but total staffing that was once about 100 employees is down by one-third, Castro says. “We're a lot tighter now,” says Castro. “We find we're able to do more with less.”

About half of New Orleans area residents have not returned, but income of returning employees rose two to three times former rates, Castro says.

New Kid on the Block

Eric Hill is the new kid on the dealer block. He wasn't there when the storm hit. The following April he negotiated to buy the demolished Lamarque Nissan dealership, in the Orleans parish strip, from Ronnie Lamarque.

Eric Hill Nissan opened last October, but the main dealership is still being rebuilt, as Hill operates out of two wide trailers.

Hill, a former pro football linebacker, played for the Arizona Cardinals, St. Louis Rams and San Diego Chargers from 1989 to 2000. He worked with John Grant's Avondale Auto Group in Arizona after retiring from football.

Hill has the utmost respect for area car dealers struggling to rebuild after Katrina.

“These guys rolled up their sleeves and went to work. They turned misfortune into fortune where possible. They had a product with a great need right after Katrina. By October, a few were up and running,” he says. The prevailing sentiment was “I've been wronged; I'll do whatever I have to do. I tip my hat to these guys dealers — and other businesses.”

In a sense, Hill, former college star at Louisiana State University in Baton Rouge, has come home. After several excursions to see the damaged property, he had qualms. Then he met Lamarque as a neighbor in Paradise Valley, Az., where he still commutes from. That helped swing the deal, a vote of confidence he could bring the business back.

“It's hard to say, but it has to be said. I think everybody — business, home owners, renters, boy, man, woman, girl, has been dealt a big injustice here in Louisiana,” Hill says.

He pauses. “But they need to somehow make peace with what has happened here; allow themselves to live for the future and pray that there's vindication in the end.”

“It's Not that Some Areas Are Being Helped and Some Aren't. No One's Being Helped”

After Katrina, nearly 90% of metro New Orleans had damage to homes and businesses. About 80% evacuated to safer areas like Lafayette and Baton Rouge, LA, or out of the state completely. Many likely will never return.

At least 61 dealerships were extensively damaged in Louisiana, 36 in Mississippi, according to the Louisiana Automobile Dealers Assn. and Mississippi Automobile Dealers Assn. About 298,000 consumer and dealer vehicles were damaged in the New Orleans East area alone.

Immediate post-Katrina sales in New Orleans were higher than expected because of replacement needs, says Bob Israel, executive president of LADA.

Three parish areas — Orleans, Jefferson and St. Tammany — sold 2,947 units in Sept. 2005, a month after Katrina, vs. 6,533 in Sept. 2006, when most dealers were back in business, according to LADA.

Sales in the three parish areas are rising slowly as more dealers get facilities restored, Year-to-date parish sales through November totaled 67,433 units, compared with 50,414 by September of 2005 when fewer dealers were up and running but still benefiting from vehicle-replacement needs.

“It looks like demand is slowing down now in the state. We were amazed it had not slowed down earlier,” Israel says.

He disputes claims of unequally distributed state and federal aid. “It's not that some areas are being helped and others aren't,” he says. “No one's being helped. Everyone needs help.”

The area is rebounding slowly; but economic recovery could take five years or more, experts say. What's needed now are customers and rebuilding funds, dealers say.

The biggest problem is rebuilding money not getting to residents yet, says Chevrolet dealer Rick Flick, because government recovery funds have been mired in red tape.

Of about 77,000 Louisiana Recovery Authority applications, only a few dozen have received funds so far, dealers estimate.

By December, around 159,000 federal Small Business Administration loans had been approved for Hurricane Katrina and Rita victims, or nearly 45% of applications, according to the SBA.

“We've eliminated tax requirements for business and did everything we could to streamline the process as much as possible,” says Mark Randall of the SBA.

About $10.7 billion in disaster loans have been paid out to the stricken areas, he says.

Katrina's main devastation occurred when water poured over the helpless east shore, coming from the Mississippi River Gulf Outlet, the navigable Industrial Canal, Lake Pontchartrain and other systems as compromised levees broke loose in 20 different places.

“We were 100% devastated,” says Elizabeth McDougall, director of the St. Bernard Parish tourism office.

Of 60,000 St. Bernard residents, less than one-third have returned and businesses are only 20-30% back, she says

Vince Castro, general manager at heavily damaged Toyota of New Orleans, says, “The challenge is to effectively get people to drive out and do business with us.”

But it can be discouraging, he says.

“The biggest complaint is lack of a plan and (public) leadership to implement a plan people can rally behind. There's no plan to go forward,” says Castro, who works with local civic rebuilding groups.

New Orleans Mayor Ray Nagin says that by 2008, about 90% of the center city convention business is expected to return to pre-Katrina levels. But large areas — such as the eastern edge of parish districts where many dealers do business — are still uninhabitable and boarded up.

The National Automobile Dealers Assn. plans to return to New Orleans for its annual convention.

“We're slated to be in New Orleans in 2009, and plan to hold to that schedule,” says NADA spokesman Jeff Beddow.
By Lillie Guyer

“I Personally Try to Thank Every Customer Coming In”

Vincent Castro, general manager of Toyota of New Orleans, sees a difference in how staffers interact with customers. “You see a different level of relating to customers. People sit down and talk to folks, relate to their experiences now,” he says. “I personally try to thank every customer that comes in.”

Castro says dealerships have benefited from “compassion” sales. Pre-Katrina customers are coming back, as well as new faces. Some customers drive for hours to help out. “Folks who never shopped here want to help a New Orleans company rebuild in some way,” he says.

“We rely on people's good will. You really don't take into account what dealership good will means until a disaster like this hits.”

When Everyone's Saying City Is Dead, This Guy Invests In It

At times, Eric Hill sounds more like a preacher than a former NFL player who now is a car dealer in hurricane-ravaged New Orleans East.

He has his work cut out for him.

Challenges include convincing the region's diminished customer base that Eric Hill Nissan is the new deal in town and worth visiting.

Hill acknowledges using his cache as a prominent African-American to draw traffic and rebuild the former Lamarque Nissan dealership in the still dysfunctional New Orleans outer area.

He bought the damaged dealership after Katrina blew through. Last April, he opened in temporary quarters, christening it Eric Hill Nissan.

“People are proud and even thankful that I've taken a closed store and invested in their great city,” he says. “When everyone was saying the city is dead, this guy comes in and invests his own money.

“The lesson for people here is you have to move on. I hope and pray that the people of New Orleans can somehow move on and have faith that this wrong they have endured will be made right. We've got a lot of work to do here. The question is why it's taking so long. But in the end, I believe it will be a greater city.”

The dealership was closed for nearly eight months after Katrina hit. Now, Hill is building with loans and private money, plowing more than $4 million into the dealership. His “headquarters” have been two double-wide trailers, for administration and accounting.

About 42 staffers are jammed into the used-car showroom, and service teams work in trailers. The new showroom expects to open this year.

Because the demolished Lamarque store and other businesses did not reopen after the storm, locals believed the dealer point was gone for good.

“Because of that impression, my budget is spent not only on advertising but branding Eric Hill Nissan as a new dealership in New Orleans East,” says Hill, who adds that he received certain concessions and considerations from Nissan North America Inc. Customers are rewarding Hill with business. In good months, he sells about 80 new units. That's above the 67 new monthly units Lamarque averaged before Katrina in 2005, he says.

Hill is completely rebuilding the dealership based on Nissan's boutique image design.

“Eric Hill's primary market area was one of the most devastated by Katrina in Louisiana, says Nissan regional marketing manager Rob Maas. The local community is struggling back, but local housing, infrastructure and job base have all taken a devastating hit.

“Hill ran for the first three months on generators, water was in station tanks so dealership employees had to drive for miles to fuel up delivery vehicles and as far to get meals to bring back to feed the dealership.”

Maas calls Hill's steadily rebounding sales “remarkable,” considering how many people in the market region were displaced. Hill has increased the dealership's market share by 30% since Katrina.

Dealers like Hill who are a credible voice for the region and are guides for others, says Monica Collins of Nissan. “They can say, ‘Yes, we've been through a catastrophe, but we can recover.’”

Hill is no stranger to recovery. He retired from a 12-year NFL career in 2000, after a severe neck injury and surgery.

After surgery, Hill took about eight months to travel and pursue leisure activities. “Vacationing is overrated. I got bored playing golf,” he quips.

In 2001, he joined Avondale Auto Group, near Phoenix, run by friend and mentor John Grant, who taught him the business over five years.

Grant runs seven Arizona dealerships and put Hill in charge of Chrysler-Jeep-Dodge and later three import franchises — Subaru, Kia and Mitsubishi, which flourished.

“I owe everything that I have achieved in the car business to John Grant,” says Hill.

In New Orleans, Hill is advertising his own image and reputation, especially on billboards and radio.

He aims to reach college fans and New Orleans' large minority population, which is about 72% African-American.

“Using my likeness also lets the city of New Orleans know that I am an African-American dealer,” he says. “I think that this is very important.”

Urban radio is his best form of advertising. Commute times have more than doubled since the storm, and as the population shifted farther from stricken New Orleans, people spend more time driving, he notes.

Hill voices a belief many people in the area hold, but don't talk about openly. It is this: There's a less urgent, compelling response to aid victims of Katrina than the 9-11 terrorist attacks on the East Coast, he suggests.

“If this had happened in New York, there might be a different reaction (primarily from government.) We've never dealt with anything like this as a country before. I don't mean to minimize it, but 9-11 did not affect as many people, or an entire area. Here there was an entire city (and region) — 80% or more — under water.”
By Lillie Guyer

TAGS: Dealers Retail
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