Saturday, September 15, 2001

Effects from terrorist attacks resonate throughout Tristate

By Cliff Peale
The Cincinnati Enquirer

        Four days after the terrorist attacks that hit the United States, the repercussions continue to sting the Tristate.

        Mail delays, triggered when planes were grounded Tuesday, are shrinking but still continue.

        Air service to the Cincinnati/Northern Kentucky International Airport remained spotty, with delays and cancellations costly to individuals, business travelers and airlines. Perhaps more important, it's not certain Delta Air Lines will resume its full schedule here, the carrier's second-largest hub, or nationally.

        The local economic consequences of the attacks seemed to be getting stronger Friday. Toyota Motor Corp.'s Georgetown, Ky., plant shut down for a time after security checks at the Canadian border — strengthened after Tuesday's attacks — delayed parts deliveries as much as 10 hours.

        In the long term, the terrorist attack could change the way companies collect parts, assemble them, and deliver services or finished products. Those changes could increase the cost of business — and prices for consumers.

        “As far as the long term, I mean, ask George Bush,” said Richard Graeter, executive vice president at Graeter's Inc. “If we go to war, who knows?”

        Graeter's shut down its air-mail delivery this week because it could not guarantee overnight arrival of its ice cream.

        Less than a week after Tuesday's attacks, most business owners were concentrating on getting their businesses functioning again.

        “I'm concerned that as a result of this, business will slow down,” said Andy Berman, president of Berman Printing in the West End. “People are going to be very cautious.”

        Dan Lally, a spokesman at the Frontgate retailer in West Chester that mails up to 40,000 packages a day, said slower deliveries were accepted this week.

        “We're working on the assumption that things are quickly returning to normal,” he said. “But it's hurt everybody's business, just because people are preoccupied with it.”

        The disruptions this week ran the gamut, but appeared focused in three areas:

        • Mail and packages: Bonnie Manies, a spokeswoman at the local office of the U.S. Postal Service, said the service has used its own fleet of 71 trucks in this district and more than 100 private contractors running around the clock to fill in for missing plane travel.

        That plane service is gradually coming back. That's reducing delays in deliveries, once reported to be two to four days.

        Federal Express, which operates its own package delivery business as well as some from the U.S. Postal Service, resumed U.S. air operations Thursday, and Emery Worldwide did the same Friday.

        DHL Worldwide Express, which operates a hub at the Cincinnati/Northern Kentucky International Airport, also had planes in the air Thursday night and has almost eliminated its backlog from the last three days, said Steve White, vice president and general manager here.

        DHL has most deliveries to and from Europe and Asia working, and was awaiting government approval for flights into Mexico and Canada.

        The air delivery trickles down to hundreds of businesses.

        Mr. Graeter, whose company ships about 50 boxes of ice cream a day by overnight mail, said he hoped to reopen that service next week.

        Air-mail delivery is less than 10 percent of Graeter's business, but is profitable and growing.

        • Transportation: The region's and the nation's air travel systems probably will continue to be one of those most directly harmed by the attacks.

        The cost of the two-day shutdown and subsequent slow start-up has yet to be tallied, but some estimates run as much as $200 million a day.

        These losses come in a year that's already an economic disaster for the airlines. Demand for travel stalled in the spring, especially for business travel, and if the American public views the system as unsafe or feels there is the threat of additional attacks, the red ink could flow even further.

        The nation's largest carrier, American Airlines, has already said it would reduce its schedule to about 80 percent of what it was if and when travel returns to close to normal. Two American planes were lost in Tuesday's attacks.

        Officials from Delta said Friday that they are hoping to resume 70 percent of their schedule in the short term, and that they will reassess their capacity on an ongoing basis.

        “Airlines are looking at a lot of additional costs in terms of security,” said David Stempler, president of the Air Travelers Association, a Washington-based airline passengers representation group. “Who knows how bad a year it will be for the airlines?”

        • Parts supplies: Toyota's Georgetown assembly plant was forced to halt production during Friday's morning shift because of a parts shortage triggered by delays getting parts from Canadian suppliers.

        Toyota plants operate with a just-in-time inventory system, which means parts are delivered just as they are needed for assembly with little kept in its assembly plants. That keeps costs low.

        In the wake of Tuesday's attacks, border police are conducting more stringent security checks, Toyota said, and that's delayed parts from several Canadian suppliers.

        It was the third time this week that Toyota had to curtail production at its North American plants. Production was halted Tuesday night at Georgetown, the Princeton, Ind., truck plant and its Buffalo, W.Va., engine plant, as managers tried to assess assembly needs in the wake of Tuesday's attacks.

        “We're not anticipating any problems next week,” said Trina Visceglia, spokeswoman at Toyota's North American manufacturing headquarters in Erlanger. “But we're not out of the woods yet.”

       Enquirer reporters Mike Boyer and James Pilcher contributed to this report.

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