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Disaster Recovery Plan, Business Interruption Insurance Avert Catastrophe for MAPP Member
   by Staff
   Spotlight   Summer  2012
  
On a Thursday morning in March, the maintenance staff at Viking Plastics, Corry, PA, was performing the daily exterior walk-around. An oil leak was discovered on the concrete near an electric transformer and, upon opening up the transformer, the maintenance staff found a steady stream of oil coming from one of the connections. With the transformer only hours away from exploding, Viking quickly went into shut-down mode. The injection molding machines were purged, and all employees were evacuated from the plant.

Activating the disaster recovery plan, Viking’s IT staff worked through Thursday night to remove the server from the plant and reconnect all of the systems at the corporate office location (less than one mile from its plant). While ensuring all customer communications were uninterrupted, Viking personnel also were working to return the plant to working order as quickly as possible. The local power supplier was called to assess the damage and estimate repair costs, and a company from Rochester, NY was brought in to further assess the possibility of repairing the transformer. At the same time, Viking employees were working on a back-up plan, locating a company that rents and sells transformers and ordering the transformer to be loaded onto a truck on Thursday afternoon. When the Rochester, NY firm decided that a replacement was necessary on Friday morning, a transformer was already on the way.

The replacement transformer arrived approximately 24 hours after the leak was discovered and was installed by Saturday afternoon. In all, Viking’s facility was without power from 10 a.m. on Thursday through Saturday at 4 p.m. – approximately 55 hours. The costs to assess the feasibility of repairing the transformer, replace the transformer when it was determined that it could not be repaired and reconnect power to the plant was well over $100,000. That figure did not include personnel costs for Viking employees, many of whom worked throughout the disaster. “This is not an insurance commercial,” said President and Owner Kelly Goodsel. “However, I am now a very strong proponent of business interruption insurance for all privately owned MAPP member companies.”

“Because we had business interruption insurance, our total exposure was $10,000, which represents Viking’s policy deductible,” explained Goodsel. “The policy covered all of the out-of-pocket costs and much of our internal expenses for overtime, lost production and lost shipments.”

Goodsel said, “Thanks to a combination of an effective disaster recovery plan and business interruption insurance, what could have been a huge financial loss and embarrassing customer discussion turned out to have a minor impact to our customers and a very manageable financial result.”