Amid Harvey's destruction in Texas, auto industry assesses damage

Detroit 3 say parts are still moving; AutoNation stores to be closed Monday

People walk through the flooding along Houston's Telephone Road. The city has dealt with deluges before, but elected officials, meteorologists and emergency managers all say there has never been anything like this before, and the downpour could last for days. Photo credit: Thomas B. Shea/Getty Images
UPDATED: 8/28/17 6:37 am ET -- adds details

Editor's note: Automotive News is monitoring the effects Harvey is having on automotive operations, supply chain, retailers and shipping. We will report developments as details emerge.

Floodwaters overwhelmed swathes of Houston as Tropical Storm Harvey continued to inundate southeastern Texas, pounding America’s fourth-largest city with unprecedented levels of rainfall and crippling the core of the U.S. energy industry.

While the city has battled some of the nation’s worst deluges, elected officials, meteorologists and emergency managers say it’s never faced anything like the current record floods, which may worsen as the downpour is expected to last for days. Volunteers joined efforts by emergency teams Sunday night, while thousands of people fled to rooftops and higher ground to avoid the aftermath of the storm, which has so far been blamed for at least two deaths, according to the Associated Press.

“Words really can’t express the impacts this will have, when all is said and done,” said Todd Crawford, chief meteorologist at The Weather Company in Andover, Mass. “There is no historical comparison. It is simply a tragedy of epic proportions.”

Ford Motor Co., General Motors and Fiat Chrysler Automobiles on Sunday said they had thus far not seen any impact or issues with getting parts across the storm zone but were monitoring the storm closely. The area of Mexico south of the storm zone is a major center for auto parts manufacturing.

AutoNation spokesman Marc Cannon said that stores in Houston will be closed on Monday as the dealer group monitors an ongoing situation, with rain continuing to pour down on the already saturated city.

“Our No. 1 priority has been the safety of our associates and the good news is our associates are safe,” said Cannon, who has relatives in the Houston area.

Some of the group’s 18 sales operations and collision centers in Houston are still unaccessible, so it’s too early to tell what the ultimate damage will be. “Right now, we are still in the assessment phase,” he said in an interview, with conference calls several times a day.

AutoNation stores in Houston and Corpus Christi were closed on Saturday as a precaution. The Corpus Christi stores will open on Monday, as will those in the Austin area, Cannon said.

It’s difficult to mitigate for a storm of Harvey’s magnitude, he added, because even if a dealership is set on relatively high ground it could still be reached by flood waters. “This is historic,” he said.

Up to 50 inches expected

After smashing ashore Friday as the strongest storm to hit the U.S. since 2004, rains and flooding had become the biggest threat. More than 30 inches have fallen in some areas and as much as 50 inches are expected over the upper Texas coast including the Houston and Galveston metropolitan region, the National Hurricane Center said in an advisory at about 5 a.m. New York time Monday.

As much as 15 inches of rain are expected in an area stretching south to the middle Texas coast, west toward Texas Hill Country, around Austin, and east across south-central Louisiana, the center said.

About one-quarter of oil and natural gas production in the Gulf of Mexico and more than 10 percent of U.S. refining capacity has been shuttered. Crops, livestock and drinking water are also under threat and rail shipments near Houston have been delayed. Airlines canceled almost 1,848 flights Sunday at airports in Houston, Corpus Christi, San Antonio, Austin and Dallas, and another 1,652 were scrubbed for Monday, according to FlightAware, an airline-tracking service.

“It is very bad flooding, rivaling the Katrina disaster in some cases,” Brett Rossio, a meteorologist with AccuWeather Inc. in State College, Pa., said by phone, referring to the 2005 disaster centered in neighboring Louisiana. “Some places will get greater than 30 inches; this is very deep, tropical moisture that is lifting northward.”

Harvey, which had stalled northwest of Victoria, Texas, started to drift back toward the Gulf of Mexico, the hurricane center said. The worst-case scenario is if it reintensifies Monday into Tuesday before swinging back into the southeastern Texas coast, Rossio said. While the storm may intensify slightly as it moves back over water, the hurricane center said it’s not forecasting significant strengthening. It’s forecast to move off the central Texas coast Monday morning and remain just offshore through Tuesday, the center said.

At least 19 points across southeastern Texas were expected to set flooding records, said Greg Waller, a service coordination hydrologist with the National Weather Service in Fort Worth, Texas. Buffalo Bayou, a waterway that runs through downtown Houston, broke its old flood record Sunday morning and was forecast to stay above that mark until Wednesday.

Major roadways in Houston had flooded by Sunday morning, some under several feet of water, while motorists were stranded on freeways for hours because off-ramps are inundated. Mayor Sylvester Turner opened the city’s downtown convention center to residents left homeless by the storm, while the city’s police urged residents to stay in their houses if they faced only manageable levels of flooding.

“Non-life threatening water inside home is safer than going outside," the Harris County Sheriff’s Office tweeted on Sunday morning. “Difficult & scary, but we’ll get to you. Pls shelter in place. Be Safe."

President Donald Trump approved a major disaster declaration, making federal assistance available to supplement state and local efforts. The U.S. Environmental Protection Agency waived certain fuel requirements for gasoline and diesel supplies in Texas, including the Dallas-Fort Worth area, to allay concerns of fuel shortages.

The Federal Emergency Management Agency, meanwhile, is prepared to be in the Houston area “for years,” Administrator Brock Long told CNN on Sunday.

Damage from the initial strike won’t tell the whole story, said Chuck Watson, director of research and development at Enki Holdings LLC in Savannah, Georgia. “If it was a traditional hurricane it would be a $2 billion storm, maybe $3 billion, but that is not what this storm is about.”

Electricity service was cut to about 260,835 customers in Texas as of 4 a.m. local time, according to a tally of utility blackout reports by Bloomberg. Severe flooding was hampering the ability of crews to assess damage and restore service in certain areas, the Washington-based Edison Electric Institute said.

Gasoline futures on Monday surged to the highest in two years. If the storm does significant damage to the refineries in the region, the effects could ripple to other parts of the country that rely heavily on the Gulf Coast for fuel supplies.

Tornadoes are also possible near the upper Texas coast and into far southwest Louisiana, the hurricane center warned.

“If you live through this event, it is one you will remember for the rest of your life,” Waller said.

Automotive impact

Texas is a significant vehicle market, particularly for pickup trucks built by the Detroit 3. In the short term, the storm is likely to hamper operations at dealers. But longer term, "it seems there has been enough flooding to damage thousands of light vehicles that will need replacing,” said Nick Colas, an independent analyst based in New York City.

On Friday, the Kansas City Southern railroad, a primary transport mode for vehicles shipped to the U.S. from Mexican assembly plants, said on its website that it has suspended train operations between Kendleton and Laredo, Texas. The company warned customers to expect delays of at least two to three days as it evaluates its network for damage before resuming operations. The railroad has extra crews assigned to monitor and react to developments.

The other major cross-border railroad, Union Pacific, said it is moving rail cars in yards prone to flooding to higher elevations and has curtailed operations in the path of the storm.

Vehicle imports and exports also will be temporarily stalled at the ports of Houston and Galveston. Port Houston handled 85,600 vehicles last year. Volkswagen has a facility at the port, and third-party processor Auto Warehousing Co. handles vehicles for Fiat Chrysler Automobiles.

Nationwide Auto Transport Inc., a small auto hauler based in Oklahoma, already has rerouted trucks out of the storm region and put shipments on hold, President Julie Delp said.

Her company operates eight trucks and primarily hauls vehicles purchased by dealers from auction houses or dealer-to-dealer trades. Vehicles bought from Manheim auction houses in San Antonio, Dallas and Houston are sitting, as are shipments in Plains states destined for Texas, she said.

Dealers prepare

Mitchell Dale, co-owner of McRee Ford in Dickinson, Texas, just south of Houston, said even though his area is under voluntary evacuation, his dealership closed before noon Friday to allow employees the opportunity to leave town.

“There's only so much you can do,” Dale said. “Our main concern is our employees, and making sure they had time to leave if they want to.”

Dale said this is the worst storm event the dealership has seen since 1979, when a similar tropical hurricane swept more than 30 inches of water into the building.

“We were totally shut down for about two weeks,” he said. “We had to replenish inventory and it just creates a real mess.”

While flooding remains his main concern, Dale said the store recently finished a new building higher than the previous one.

Automotive News staff and Reuters contributed to this report.

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