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Tropical Storm Irene teaches costly lessons

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Tropical Storm Irene teaches costly lessons

When Tropical Storm Irene caused widespread flooding in Vermont in August 2011, custom corporate furniture maker WallGoldfinger Inc.'s location on the Dog River in Northfield put it in a vulnerable spot.

Afterwards, a YouTube video of the water surrounding WallGoldfinger's plant made the steps necessary to mitigate the company's flood exposure obvious.

“We had two floors. The first floor had six-and-a-half feet of water,” said Bill Miller, WallGoldfinger's chief financial officer. “The second floor would have had four-and-a-half feet of water except for two sets of double doors that held.

“The machines were all on the first floor, unfortunately, and they were destroyed,” Mr. Miller said. Among them were a computer numerical control router and a CNC sander, both made in Italy.

“I would say 90% of the machinery had to be thrown out,” said John Wall, the furniture maker's CEO. “We lost quite a bit of inventory and a little bit of work in progress, and you lose a lot of shelving, racks and carts that you build up over the years.”

Fortunately, some completed product avoided damage. “We were actually shipping the day after the flood and a couple of days after,” Mr. Miller said.

Founded in 1971 as Union Woodworks, WallGoldfinger has evolved from a local woodworking shop focused on residential projects to a nationally known builder of high-end corporate furniture. With approximately 40 employees, WallGoldfinger has provided office furniture to the White House, the United Nations, the New York Stock Exchange, Fortune 50 companies and many of the largest law firms, among others.

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The furniture maker was insured for its losses.

“We were insured up to the maximum of the National Flood Insurance Program,” Mr. Miller said. Beyond that, WallGoldfinger financed its recovery through various financing agencies, with assistance from Vermont economic development officials.

But looking at those YouTube videos convinced company officials it needed to take steps to reduce its flood risk, Mr. Miller said. On June 18, the company moved into new facilities in a building that formerly housed an Ethan Allen furniture plant in Randolph, Vt.

The move was the primary risk mitigation step the furniture maker took after the flood, Mr. Miller said. “Frankly, it was the YouTube videos where you see that water going around the plant,” he said. “The variability in weather patterns is only going to increase. So the likelihood of a 100-year storm has become a 25-year storm.”

On its old facility's second floor, it was at eye level with the top of a dam on the Dog River, Mr. Miller said, while at the new site flooding from Tropical Storm Irene didn't raise the level of the nearby White River to within 30 feet of its bank. “So we feel much more secure here,” he said.

“I think the river here is probably 50, 75 feet below the factory, so it's really not a factor,” Mr. Wall said. “Our old mill, even though we'd been there 36 years, I think we had a lot more close calls then we even realized.”

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While saying the company had a very good landlord at its old location, Mr. Wall said that after evaluating the situation, staying in the former mill wasn't a viable option. “We couldn't be properly insured going back in there,” he said.

“My feeling is you really can't do much if a river is going to come at you,” Mr. Wall said. “I've never seen such power. I don't think you can fight a river. You've just got to move. We looked at all kinds of berming and other things, but I don't think it can be done economically.”

Beyond the move to a less flood-exposed site, the furniture maker considered buying additional flood insurance beyond what national flood insurance provides.

“But that's obviously going to be very expensive, and there aren't many companies that offer that,” Mr. Miller said. For now the company's focus is returning to full operations, though purchasing additional flood coverage remains “on the radar screen,” he said.

The company is “quite close” to being fully operational at its new site, Mr. Miller said, and now has two CNC routers. Work to refurbish the damaged sander is nearing completion in Italy. With its open office environment and linear production flow, the new facility is “close to an ideal building for us,” Mr. Miller said. “We're hoping this is really going to spur productivity.”

The company is “quite close” to being fully operational at its new site, Mr. Miller said, and now has two CNC routers. Work to refurbish the damaged sander is nearing completion in Italy. With its open office environment and linear production flow, the new facility is “close to an ideal building for us,” Mr. Miller said. “We're hoping this is really going to spur productivity.”

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