Industrial Fire Losses—Everybody’s Business

Industrial Fire Losses—Everybody’s Business

Insurance authorities have stated that more than 40 per cent of all businesses which suffer major fires never open their doors again. In addition nearly three-quarters of those that do reopen will fail in a few short years. Many fire officers can recall experiences where these facts have been borne out and the hardships to the community which inevitably followed. However, few people seem to realize how the results may influence everyone’s well being.

Fire loss is generally considered a personal tragedy and is given close attention only by those intimately concerned. When an industrial fire occurs the statistical data is published in cold factual form and for a short time much is made of the plight of the dislocated workers who formerly occupied jobs provided by the factory. As time passes the workers eventually find new employment, insurance companies pay the loss claims and to all intent and purposes everyday life returns to normal.

Unfortunately fire losses are much more complicated than most people suspect, and instead of being lightly dismissed, they frequently leave deep scars which remain long after the incident is forgotten. An example is Butler, N. J. The May 1957 issue of FIRE ENGINEERING reported a large fire in a rubber reclaiming plant with an estimated loss at the time of $5 million. Later it was reported that the total insurance claims paid to the company which sustained the loss were more than $15 million. This was the largest single fire in this country for that year.

Recently the scene of this fire was revisited and speculation concerning its effect on the community was a natural result. A talk with the borough clerk produced some startling facts, none of which was expected.

Following the fire which completely destroyed all but one of the vast buildings making up this plant, the company moved its operations to another state where it owned existing facilities. Some 350 workers were idled by the fire, but within six months all those willing were again employed in nearby industry. Many of the older personnel took their social security retirement while the great majority of the clerical help was hired by the parent company which moved its business offices into Butler.

To all outward appearances the community had suffered only a temporary setback and in a very short time had made an amazing recovery. Only two restaurants had gone out of business due to the loss of the mill trade! Other than that, all seemed serene. A check of the community fiscal operations quickly brought the hidden facts to light.

The original building valuation of the plant for tax purposes produced approximately $30,000 revenue for the borough and its budget was geared accordingly. The more or less complete destruction of the ratables created a deficiency of exactly the same amount in the operating revenues collectable in the following year. This required that municipal taxes be raised accordingly if normal community services were to be continued. This increase amounted to about 32 cents per $100 of assessed valuation and came as a completely unexpected jolt to the local citizens; it still continues.

The taxpayers of Butler have now come to realize that a fire in the community is a very personal event. It matters not who has the fire since all must share the cost in the end. Insurance payments may ease the stricken individual or company over the economic hardship hump but nothing is realized for the hidden losses.

T. Sodden Duke, chairman of the board, N.F.P.A., recently stated at the Pittsburgh conference, “Let’s not kid ourselves that because we personally fail to have a fire, we don’t pay for the other fellow’s fire. Insurance premiums collected from you help to cover the losses of somebody else’s fire. And fire waste is reflected in higher costs of everything you eat, wear and live in.”

These words hardly need to be said to the people of Butler, but the fire service should remember them when inspecting or teaching fire prevention. We may fail to notice the slight difference of costs caused by a few minor fires. But a major fire loss such as industry sustains from time to time can hit us all hard where we least expect it and sometimes where it hurts most —right in our own pocketbook!

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