Friday, October 27, 2017

The Market for Disaster Recovery

According to this report, the cleanup from Hurricane Harvey in the Houston area may take longer than expected. Cities contract with various companies to remove debris that residents have piled up on curbsides on a price per cubic yard. These companies then contract with truckers with specialized equipment to do the actual work.
SIEGEL: After Hurricane Irma. That is Dee Sosa. He's the city manager of Groves. And here's what he told me. He says his city contracted with the DRC and agreed to pay a little under $10 per cubic yard of debris. DRC agreed to send an array of equipment. And in fact, the company sent some 10 or more of those big trucks.
SOSA: They're double trucks with a grapple in the middle. And there's about 300 of them in existence.

But then Hurricane Irma hit Florida. Demand for these trucks rose. The Florida cities were paying more per cubic yard. Owners of these big trucks  moved them to Florida.
SOSA: The best analogy I can make is like this. Let's say that you want me to Sheetrock your house, and I am the general contractor. And I hire the Sheetrock people, and I have them working for me all the time. But it's an arrangement whereby, hey, I find you work; you come in and work. I get a cut, and you get a cut.
All of a sudden, they have way more jobs available than there are Sheetrock people, and these guys can make more money someplace else. Well, I go back to you and say, hey, do you want to raise your price and try to match this so we can keep these guys here? 

This a variant of hold-up.

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