With Andrew Past, Florida Companies Face Fiercer Blow : Disasters: Hurricane-hit businesses are finding difficulties in forming a regional economy from scratch.

HOMESTEAD, Fla. —  Those trying to look beyond the rubble of the nation’s worst natural disaster are conjuring up a bright vision for themselves in which the south half of Dade County is rebuilt from the ground up--a brand new place, better than the old one.

After all, the early payments on something like $15 billion in public and private funds have already started to arrive. The money will build new houses, schools, stores, vegetable packing houses and office towers. This will take years, of course, but the construction boom itself will be a massive tonic.

“In five years, this place is going to be beautiful,” says Jon Lutter, a Toyota dealer. Richard Alger, farmer and nurseryman, says, “It’s a rare opportunity.”

Indeed, economists say that South Dade--the region of about 360,000 people just below Miami that was largely destroyed by Hurricane Andrew early on Aug. 24--will be rebuilt into something if only because its climate and geography suit it to agriculture, drive-through tourism bound for the Florida Keys on U.S. 1 and bedrooms for greater Miami.

But those who would stay and rebuild their businesses--and save the jobs that will keep people here--face such huge immediate problems and overwhelming long-term doubts that it takes a big leap of faith and a good measure of ingenuity to even begin.

What’s the smart thing for Bob Brown, owner of a small pharmacy called the Medicine Shoppe, to do? He says, “A large number of our customers, at least half, say they’re leaving and not coming back.”

Instinctively, business people are scrambling to get back in operation, battling price-gougers, bureaucratic nightmares, a lack of precedent for knowing what to do next, and the shock of finding themselves at the brink.

Only a few--notably financial institutions required by law to have backup arrangements--are even remotely prepared. While many have business interruption insurance, few small and mid-size businesses have the money or foresight to be ready with alternative office space, emergency phone equipment and electrical power, or stored copies of key company records at safe, remote sites.

That kind of protection can cost $25,000 to more than $500,000, says William Gaines, senior vice president at Sungard Recovery services in Philadelphia, one of the biggest in a fast-growing field of specialists in getting businesses up and running quickly after such an event.

“Obviously, waiting until the disaster occurs is no time to be looking for solutions,” says Gaines. “You pay your premiums or you take your risk.”

Thus, because Andrew’s devastation was so complete, most of his business victims are starting at economic ground zero--missing not merely such vital services as telephones and electricity but often the whole shooting match: four walls with roof, employees, customers, financial records, inventory.

And as the insurance checks arrive, many face a moment of truth: whether to even bother pouring the money back into a nonexistent economy--one whose future will be partly defined by distant pork-barrel artists weighing the fate of Homestead Air Force Base, its 7,000 residents and employees, and the tens of thousands of military retirees who live here because of it.

Some business owners, taking their cue from many of the estimated 250,000 residents left homeless by Andrew, seem sure to take the insurance money and run toward someplace where the sun has a fair chance to shine. And many entrepreneurs who do rebuild will do so in financial self-defense rather than out of some clear vision of a hot-wired economy in the future.

For example, how much bowling is going to go on here?

Professional bowler Paula Carter’s year-old, $4.7-million, 44-lane bowling Mecca along U.S. 1 here was literally leveled by Andrew. The place employed 70, a dozen of whom fled there during the storm and took refuge under billiard tables, the only things left standing.

The insurance won’t cover a “substantial” part of her debt, Carter says, and land costs elsewhere in the Miami area would make it prohibitive to move. Yet she expects business at lanes rebuilt here would fall far below her needs.

“We’re going to get hurt badly if we don’t rebuild,” says Carter. “But 95% of our business was from the Homestead area, including the air base. And I’ve got to believe the people who stay will be occupied with other things than bowling.”

Though Andrew hit hardest in the low-income communities of Homestead, population 27,000, Florida City, 6,000, and surrounding farms, the disaster area includes prosperous Miami bedroom communities and, overall, has a median household income of $38,000 versus the Dade County median of $27,000. It is home to a heavily damaged Bloomingdale’s and the upscale Cutler Ridge Mall, still closed except for Sears.

So divining South Dade’s future is worth a try for retail firms and others. Maurice Gelina, a commercial real estate broker from Miami, says that before Andrew, South Dade retailers enjoyed four times more sales per square foot than those in the north. The hordes of displaced businesses fleeing north are doing so temporarily, he says.

“The overwhelming majority is seeking temporary space with the intent of moving back,” Gelina says. “And our retail clients are looking to redefine their presence there with the assumption that the demographics will remain strong. The new Dade has an opportunity to improve itself.”

For small and mid-sized local firms, however, such long-term questions are so unanswerable and intimidating that some find it easier to focus on the next few minutes than the next few years. Besides, at times like this, the next few minutes can decide all.

Independent auto mechanic Lee Payton’s financial lifeline is tied to about $32,000 worth of tools he has accumulated over a 22-year career. So when the roof blew off his apartment building, Payton brought his wife, teen-age daughter, gun collection, five dogs and his wife’s inventory of about 100 commercial birds to the shop and has been there since. He fixes storm-damaged cars by day and protects his equipment, and arguably the birds, from looters by night.

His counterpart at the dealership next door, Payton says, lost $100,000 of personal, uninsured tools to looters: “He’s flat out of business.”

Payton is the lead technician at Zinn Mazda, where the poured-concrete garage is intact but the steel-and-glass showroom and office building looks like a bomb site. All 160 new cars ended the storm in different places than they began; only a handful are repairable. Dealer Robert Zinn, who estimates damage at more than $3 million, is surrounded by alligators.

Zinn fended off an industrial scalper who doubled his asking price for a small generator--still the most prized of all pieces of equipment in powerless South Dade--to $6,000 a month. He instead found a generator three times bigger at two-thirds the price from a fellow smart enough to parlay it into a major electrical-repair contract with Zinn.

The dealer--whose father, Dave, lost his Toyota dealership to Hurricane Betsy on Miami Beach in 1965--lost his computer system to Andrew and can’t track pending orders, money owed the dealership, or other vital information. But the big firm that sold him the system “tried to gouge me,” Zinn says, and demanded proof of ability to pay before it would even agree to gouge him. He said, Thanks a lot, pal, and is now looking for local computer help.

Indeed, for all the valentine stories here of business enterprises helping each other out, hardball is being played too. Zinn says angrily that some other Mazda dealers in Florida exploited his woes by hiring away “some of our best people.” Many other employees just left the area, leaving him 20 of 70 employees.

“Those people kicking us when we’re down, tell ‘em to keep on kicking,” he says. “I’m not gonna forget. We’ve seen vultures and we’ve seen saints.”

Stores still standing are in a shambles, dark and still flooded from the storm’s torrential rains. About two dozen shopping centers would have to be entirely rebuilt. Factories will remain crippled for months, awaiting not only insurance money but overburdened contractors.

The temporary economy, meanwhile, driven by insurance checks paying for the $15-billion to $20-billion rebuilding job, is skewed by the state insurance department’s price-fixing in the fight against gouging: a contractor may charge $2.50 for a square foot of wall tile and $2 to install it. And there are huge distortions in labor supply and demand. Thousands need work, and laborers have flocked here from across the country; yet U.S. 1 is lined with countless hand-made “help wanted” signs.

Phone service remains badly disrupted--72,000 lines were still down last weekend--yet many businesses fleeing north in search of such niceties as office space and telephones are being told that Southern Bell, swamped with work in the disaster area, can’t help them before October.

With no phones, retailers can’t check the credit of customers. And employees can’t cash paychecks without standing in line for hours at overtaxed banks processing disaster loan applications. Cash is king. Says Robert Jensen, a vice president at First National Bank of Homestead, “It’s an all-cash economy.”

Business people can’t order supplies. And customers, if they’re up and running themselves, can’t reach them. John Fredrick, who owns a fertilizer business here, says, “Trying to get in touch with customers to tell them we’re in business or to order potash is impossible. I talked to a woman yesterday who said, ‘Fax me the information.’ Well, that dog don’t hunt.”

With no refrigeration, restaurants can’t keep food, as Tomas Martinez can testify. A 55-year-old Cuban refugee, Martinez owns Miami Fried Chicken, a modest fast-food joint in blue-collar Homestead. He has just gotten a six-month, no-interest loan of $25,000 from the state of Florida so he can get up and running before the insurance money comes.

His building stands but took a $170,000 hit, Martinez says, knocking out his kitchen and walk-in refrigerator. Three weeks after Andrew, he was still unable to find a generator. This weekend, cooking on a small gas fryer, he began offering a limited chicken-and-cole-slaw menu.

Martinez normally gets a lot of business from laborers who work the vegetable fields nearby--but who appear to have fled South Dade by the thousands after their mobile homes and other ramshackle housing were obliterated by Andrew.

This disappearance of clientele has a familiar ring to Martinez. He says he operated a second chicken stand near the air base until Operation Desert Storm dispatched so many of his customers to Saudi Arabia that he had to close down.

His “Mickey Mouse” insurance policy won’t cover his losses, Martinez goes on. And he won’t go to the bank for the relief lenders are promising hurricane victims on outstanding loans because, he says, the banks discriminate against Cubans: “They want blood.”

“My philosophy is that life is a boxing match,” Martinez says. “In the first round, I lost everything in Cuba. Now at age 55 I’ve lost almost everything again. But I have only 10 years left, and I can’t lose one single minute of my time feeling sorry for myself. I pick up the pieces God left me.”

Linda Stein is one of many business owners who were already pinched by the recession and an ongoing slowdown in Florida’s boom that had bumped the local jobless rate up to 10% before Andrew passed through.

She started Florida Veterinary Supplies Inc. nine years ago, distributing medical and pharmaceutical products to veterinarians across the state, including Homestead Air Force Base. Faced with soaring insurance premiums, she decided to drop coverage on her business inventories in favor of keeping health protection for her four employees. The result: no protection on the $75,000 in medical supplies and financial records destroyed when Andrew blew the roof off her rented warehouse space.

Stein now operates out of her mother’s house. It took three weeks to get phone service transferred there, and the first veterinarian to reach her finally got through this weekend with an order for needles and syringes. That coincides with an emergency, temporary state loan that will let her replenish one-third of her supplies.

“But where will we put it?” she asks. “In my mother’s bedroom?”