Texas Heat Wave Leaves Some Businesses Cooked

Woman protects her head in extreme heat
Woman protects her head in extreme heat | Image by Nelson Antoine/Shutterstock

The extreme summer weather has had a negative financial impact on some of the state’s most essential industries.

After record-breakingly high temperatures throughout the summer, nearly a quarter of Texas business executives in the manufacturing, retail, and services sectors acknowledged seeing lower revenue and production due to the sweltering summer heat, according to recent outlook surveys from the Federal Reserve Bank of Dallas.

In total, 352 Texas business executives responded to the Fed’s survey during the week of August 15-23.

“Hardest-hit sectors were leisure & hospitality, retail, and manufacturing,” Kerr told The Dallas Express. “Lower customer demand was the problem for leisure & hospitality as well as retail. In manufacturing, the impact stemmed from lower labor productivity and temperature-sensitive worksites. In most sectors, the degree of the impact was not significant,” explained Emily Kerr, senior business economist at the Dallas Fed.

About a quarter of Texas businesses said the recent heat wave has had a negative financial impact, with 18.8% reporting a slight decrease in production or revenue and about 5% saying they saw a significant decrease.

Of those who reported diminished production or revenue, 38% reported difficulty operating in extreme temperatures or at temperature-sensitive worksites.

Kate Weiser Chocolate (KWC) is a local chain of retail shops that sells chocolate bars, bonbons, gift boxes, candy bars, and other temperature-sensitive confections.

Earlier this summer, KWC had to run 120-degree product durability tests to determine which packaging style could withstand the heat wave and ensure product consistency.

If KWC hadn’t prepared for the heat wave six weeks in advance, the company would have seen a major drop in business output, according to Lauren Neat, director of digital marketing and e-commerce strategies at KWC.

“We even thought about shutting down shipping completely during this weather, but luckily, we didn’t have to,” said Neat, The Dallas Morning News reported. “I think that’s because we were prepared with how hot it was supposed to get. We planned for a good six weeks on how to figure out what to do,” she said.

The Lone Star State has thus far endured a heat wave of historic proportions, according to a recent analysis from The Perryman Group, an economic consulting firm based in Waco, Texas.

“The higher-than-normal temperatures have created health issues for many residents and impacted the quality of life for millions of people. Not surprisingly, the effects do not stop there,” author Ray Perryman said in the analysis.

“Both our study and the survey from the Federal Reserve indicate that the ongoing heat is having a notable effect on the Texas economy,” Perryman told The Dallas Express. “While some industries see gains and others see losses, the overall impact is decidedly negative. Our analysis also shows that, if such weather patterns continue over time, the effects compound and could bring annual losses in the hundreds of billions of dollars.”

While The Perryman Group doesn’t foresee any long-term effects from this particular heat wave, the firm says the Texas economy could end up losing about $400 billion in real gross product in 2050 from cumulative effects if similar heat waves continue over time.

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