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For many parts of economy, lack of snow is all to the good
Sunday, January 07, 2007

This story was reported and written by Post-Gazette business writers Dan Fitzpatrick, Elwin Green, Patricia Sabatini and Corilyn Shropshire.Go ahead and shed some tears for ski resorts, winter gear retailers and private snowplow operators. But you may want to shed a few tears for yourself, too -- tears of joy.

For all the woes the warm winter is creating for companies that rely on snow, it's been a boon for most people and their household budgets, saving them on heating bills, gasoline, car upkeep, new winter coats -- potentially even taxes.

"Our savings are going to be substantial," said Tom Donatelli, director of public works for Allegheny County. So far, for example, the county has spent $3,400 on overtime pay because of winter-related road work, compared with $43,000 at the same point a year ago.

To be sure, it's a little early to be tallying up the savings bonanza. Winter still has more than two months to run, and if past is prelude, it could still wind up being a doozy.

The Pennsylvania Department of Transportation "has learned through experience that we don't count our chickens until the winter season is over," said Jim Struzzi, spokesman for PennDOT District 11, which covers southwestern Pennsylvania. "Winter has a lot of time left to play out."

Still, there's been a lot of upside so far to the warmer weather and lack of snow and, if it holds, the impact on the economy could be significant.

If the unseasonable temperatures continue through March, said Mark Zandi, chief economist at Moody's Economy.com Inc. in West Chester, Chester County, "the impact would add up to some real dollars and cents."

In addition to household and government savings, there probably "would be more construction -- more homes built and more renovations," Mr. Zandi said. And without as many shoppers huddled in their homes, retail sales would get a lift, he said.

Tom Harrington, general manger of Winthrop Management, manager of the U.S. Steel Tower, already has seen substantial savings.

The city's tallest office building used 26 percent less natural gas than in a typical November and 30 percent less in December. "When it gets warm enough, you can shut off your boiler completely and that really saves energy," he said.

In addition to using less natural gas, it also helps that natural gas prices have plunged because of burgeoning inventories and lower demand.

The warmer-than-usual winter has given a lift to construction companies.

"In masonry, you can get more block laid ... you can pour concrete, you can make concrete," said Jeff Burd, owner of the Tall Timber Marketing Group in Ross, a market research and consulting firm that specializes in the construction industry.

"It all adds up to getting more work done more quickly," he said. "That accelerates billing, and that accelerates cash flow."

It isn't necessarily all good news for construction companies, he added. If the soil is wet instead of frozen, "you wind up with soil that is not compact'' and that can actually deter work, Mr. Burd said.

But that hasn't been a problem for Rob Sklarsky, vice president of Zambrano Construction, which is helping build the Downtown condominium tower 151 First Side, another condominium project in Fox Chapel and a Siemens manufacturing facility in Washington County.

He said his company is saving simply by not having to provide as much heat and protection for workers and equipment.

For motorists, the lack of frigid temperatures and snow has made for quieter phone lines at the AAA distress center.

The motor club said service calls plunged 19 percent in December from a year ago in the five-state region of Pennsylvania, West Virginia, Ohio, Kentucky and New York.

The mild weather also is helping to keep gasoline prices down by freeing up crude oil supplies normally diverted to pumping out home heating oil, said AAA East Central spokeswoman Bevi Powell. A gallon of regular unleaded was averaging $2.38 in the Pittsburgh region last week, just a couple of pennies higher than a year ago, according to the motor club.

Less snow means less money spent on rock salt and overtime pay at the government agencies charged with clearing local roads.

"So far, we have been very fortunate, very lucky," said Pittsburgh Public Works Director Guy Costa.

Last year, when 30 inches of snow fell inside the city, Mr. Costa spent a total of $2.1 million -- $1.1 million on salt and another $1 million on salaries and overtime. This year, with 0.7 inches on the ground to date, he is on track to spend a lot less.

While the city has a total rock salt budget of $1.6 million, based on the anticipation of 43 inches of snow, only $160,000 of it has been spent, and just $60,000 has been needed for actual cleanup (every inch of snow costs the city $72,000 in salt, workers' time, fuel and equipment costs).

What's more, Mr. Costa knows the aberrational weather helped him dodge what could have been a very expensive Christmas. If the rain that fell that day had been snow, he said, it would have meant $200,000 in salt and triple-time holiday pay.

At the county level, Mr. Donatelli purchased 6,000 tons of salt for $240,000 before winter began, and he already knows that's all he will need, despite the $550,000 set aside in his budget.

Not only does Mr. Donatelli save money on salt, but also he can redirect his crews to tasks that might get ignored this time of year: drainage work, excavation, repairs and trimming of weeds.

As for retailers, the milder temperatures are provoking mixed responses.

For home improvement retailer Home Depot, it has brought an increase in sales of such items as concrete, lumber and roofing materials.

"Contractors are still remodeling and a lot of additions and garages being built," said Pat Kreutzer, assistant store manager at the Greensburg location. "Normally, they wouldn't be doing that."

Jackets by brand-name outfitters The North Face and Columbia, which make some of the trendiest and priciest winter gear, are selling about $20 cheaper at Dick's Sporting Goods.

And the Findlay-based retailer also is offering free shipping on snowboard jackets and boots -- part of its "snow sports sales" that trail every holiday shopping season.

"It's an excellent time to buy winter gear, no doubt about it," said Jeff Hennion, senior vice president and chief marketing officer at Dick's Sporting Goods.

But, he added, the weather isn't really the big reason. January happens to be the month when retailers start clearing out inventories for spring.

That's why it's sale season at outdoor retailer REI, but customers at the company's South Side store shouldn't expect to see prices slashed are any more or less than the markdowns and sales that happen every January, said spokeswoman Nicole Fallat.

That may be true, but it may be worth doing a price comparison with stores in Colorado, the Northwest and other parts of the country that have been clobbered by snow. As of last week, REI's revenues on ski and snowboard gear are up "as much as double digits in other areas of the country on average," said Ms. Hallat.

First published on January 7, 2007 at 12:00 am
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