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Wednesday, August 8, 2012

Leading Through Crisis – University of Virginia Interviews Merritt Lane

Canal Barge Company President and CEO Merritt Lane was recently interviewed by the University of Virginia’s McIntire School of Commerce for a ‘Profile on Leadership’. Though the interview focuses on CBC’s response to Hurricane Katrina and the devastating impact to New Orleans, Merritt shares insights into our culture, the core values we share and how our company, and our city, has come through the crisis stronger and more optimistic than ever. To read the full interview, visit the McIntire School of Commerce website. We have included the text of Merritt’s interview below as well.

Leading Through Crisis

Merritt Lane (McIntire ’83), President and CEO of Canal Barge Company, reflects on Hurricane Katrina and its effects on New Orleans and his company. Seven years after a disaster of epic proportions, the company is stronger than ever.

Did you have a plan in place to prepare for a major storm?

Yes, because of the nature of our business, transporting hazardous materials and valuable cargos for our customers by water on a 24-7-365 basis, we have had both emergency response and hurricane preparedness plans in place for many years. In my career, we had exercised our hurricane plan several times and even run our business from remote sites for a couple of days during hurricane events that threatened to impact the New Orleans area. The primary concerns were to make sure that our people and equipment were safe and that we could run our business continually even if our offices and homes lost electrical power or experienced hurricane-related damage. In general, we were concerned about a relatively short-interval event—certainly not lasting more than a week. After 9/11, we reviewed our plan and built in a stronger business continuity element that also helped us during our Katrina experience.

How did Katrina impact your people and company, and how did you respond?

Fortunately for Canal Barge Company, Katrina’s greatest force was felt east of New Orleans, along the Mississippi Gulf Coast, where we have very limited marine operations. We were able to hold up or move our vessels either west or north of New Orleans, and so we experienced downtime, but no damage to our marine assets. Also, most of our mariners (people who work on our towboats) do not live in New Orleans; in fact, most live inland from the Gulf Coast, so their homes were mostly spared. As a result, the main effect of Katrina was on our shoreside staff—and it was very significant.

When our management team went home on the Friday night before Katrina, we were watching the storm tracking towards Florida. In the abundance of caution, we agreed to have an all-hands executive staff conference call on Saturday morning at 10 a.m. By that time, the storm had turned, and New Orleans was within the “cone of uncertainty.” We activated our hurricane plan, and my family and I started packing. We were in the car driving to Houston by early afternoon so that I would be in a good place to run the business during the storm and my family would be in a safe place where we had friends (including a number of UVA grads) and local knowledge. We packed three days’ worth of clothes. We also deployed several advance team staff members to Houston and Memphis so that we would have the necessary resources in place to manage daily operations.

As we all now know, the mayor of New Orleans issued a mandatory evacuation on Sunday, and the storm came ashore east of New Orleans early Monday morning. The storm was mainly a wind event that did little damage to structures, blew down a bunch of trees, and left the city without electricity. Unfortunately, the storm’s surge drove water into the city that overwhelmed the flood walls and levees, inundating all but the higher land in the older parts of the city. The fact is that the force did not exceed the design parameters of the flood protection system, but it failed nonetheless, making Katrina’s impact on New Orleans a manmade disaster.

CBC has its headquarters in downtown New Orleans and our main operations facility in Belle Chasse, across the river from New Orleans. Although our offices sustained some relatively minor damage due to wind and water (flood water got into our HQ lobby and damaged our elevators, and our Belle Chasse office suffered roof damage), our main problem was that no one was allowed to return to the city for almost six weeks after the storm.

Thanks to our well-executed hurricane plan, we were able to locate all of our employees and make sure they and their families were safe. We used a phone tree that kept supervisors aware of their people’s whereabouts and did twice-daily conference calls to keep in touch and to discuss logistical and planning elements. By day 3, we had all employees safe and accounted for. Our Vice President of Human Resources made a masterful decision without asking my permission. Before he left the office on Friday, he had his staff run payroll. As a result, we were able to communicate to our employees that all of their colleagues were safe, that we would return to New Orleans as soon as it was safe and we were ready to do so, and that their next paycheck would be processed as usual!

Ultimately, we set up our headquarters office in Houston and our operations office in Memphis. We also established an accounting and administrative center in Baton Rouge. We moved most of our New Orleans area-based employees and their families (and often extended families) to those locales and provided housing and assisted with schools and other basic services. We ran the company in this structure for about 110 days (my daughters spent an entire semester in school in Houston).

Our people were incredible, our customers and vendors supportive. We were extraordinarily well-treated in our host cities, as were so many Katrina refugees around the country. We never missed a sailing, our operation was incident-free, and we ended up with record profitability.

What role did you play in helping things return to normal and in preparing for the future?

As it relates to Canal Barge, although we all had to leave in an emergency circumstance, it was important to return our operation back to “normal” in phases. My family and those of our key executives, including my brother, returned back to our homes in mid-December (our house incurred no flooding, but we had some serious roof damage), and things returned back to normalcy for our company pretty quickly. No one lost their jobs or missed a paycheck. Some of our employees lived in hard-hit areas and needed more time and help to get their lives back together. We ultimately had some employees who moved away from New Orleans permanently, and we have hired quite a few new employees to cover both replacement and growth needs since the storm. Those of us who went through it together drew closer through the shared experience, and our company’s reputation as a good place to work has grown since that time. Canal Barge has continued to prosper and has now three times the revenue we had pre-Katrina, thanks to organic growth and two significant acquisitions.

Personally, the main lesson I learned is that having a plan was a very important ingredient to our success. The greater lesson, though, was that you need to run your business well every day, not just during emergencies. The fact that we had a good team who trusted one another and a culture that pulls together through both good and bad times really made the difference for CBC.I know from experience that if you take care of your people they will take care of you as well.

Are you working beyond Canal Barge to restore New Orleans?

New Orleans is the only modern city in America where every soul who lived there was forced to leave without knowing if they’d ever be able to return. The result was that, once it was safe to live in New Orleans, every person who returned did so as a matter of choice. This is incredibly profound, especially when a large majority of New Orleans residents at the time of Katrina were natives who had never considered living anywhere else. Katrina revealed many of the city’s existing weaknesses and exposed our citizenry to many cities around the country that, at the time, were more economically vibrant and high-functioning than New Orleans. Some people used this as an opportunity to start a new life. Some wonderful newcomers were “called” to New Orleans to make a difference in rebuilding a great American city. For others of us, having faced the possibility of losing our hometown, we were energized by the prospect of going back and rebuilding it into the city it could be rather than the city it had been.

Our city is undergoing a renaissance beyond the boomlet that comes in a post-disaster reconstruction situation. We have a long way to go, but New Orleans is now our nation’s laboratory for all kinds of innovation. For instance, we are “ground zero” for education reform, with the majority of public school students attending charter schools. Also, we have experienced a “brain gain” that has resulted in what is now a vibrant community of social and “for-profit” entrepreneurs. Once laissez-faire and frustrated, business leaders have pushed reform efforts and demanded greater accountability from our elected officials.

I have been actively involved in flood protection initiatives for the New Orleans Business Council. The federal government has spent billions of dollars rebuilding and improving the flood protection system in New Orleans and the surrounding area, and I am part of a group working with the authorities to see to it that this is done correctly and efficiently. Needless to say, flood protection is very important to the future of our city. We now have far better flood protection than we did before Katrina, and we are working to improve it even further by rebuilding wetlands and barrier islands.

I was privileged to be the first chairman of the board of a startup entrepreneurial accelerator called the “Idea Village.” It has hit its stride post-Katrina and has been the vanguard in creating the entrepreneurial ecosystem that is the foundation for the future of New Orleans as a business-friendly and innovative city.

I also sit on the board of one of the largest foundations in the state that has been instrumental in funding and influencing the pivotal efforts to reform schools, improving the delivery of needed health services, and impacting public safety and the efficiency and effectiveness of government in post-Katrina New Orleans.

Katrina was catastrophic, but it also created opportunities to accomplish things that were unattainable without the catalyst of a major crisis. People of my generation understand that we absolutely have to capitalize on every opportunity to get this right and are spending countless volunteer hours working to make things better.

I think the future looks bright for New Orleans. We have an energized and committed populace, the support of our business leadership, better government, and much improved public education and flood protection. It’s not just a great place to visit, with a unique culture; it also has a great quality of life and is a wonderful place to live and work. We’re good and getting better!