The Disaster Story the Media Isn’t Talking About
This year began with horrific earthquakes in Turkey and Syria, monumental atmospheric rivers in California, and a railroad derailment in Ohio resulting in a major hazardous chemical spill. The damage from these disasters needs to be addressed and steps have to be taken to prevent future destruction. The affected areas will require help, but who do they call?
Fortunately, there is an industry comprised of companies providing disaster recovery and prevention products and services. With natural disasters occurring more frequently and becoming more destructive, the market for disaster recovery and prevention is poised to grow. After a major disaster, a timely response is essential. Firms with experience are best equipped to assess the damage and implement short- and long-term recovery plans.
Earthquakes in Turkey and Syria
The devastating earthquakes in Turkey and Syria affected nearly 15 million people and destroyed twelve thousand buildings. Going forward, housing, schools and hospitals will need to be rebuilt and water supplies restored.1 A recent World Bank estimate put the cost of direct physical damage at almost $34.2 billion and total reconstruction and recovery at nearly twice that amount!2
The quakes highlighted the inconsistency in building code adherence throughout the region. Amazingly, some buildings withstood the impact while others were destroyed. In the future, stricter adherence to building codes will be enforced and new construction processes will be investigated with changes like less reliance on concrete as a building material adopted. Companies like Fugro,* a Dutch firm that analyzes earth stability for building may be in demand. Not that long ago they were hired to analyze the ground prior to construction of a nuclear reactor in Turkey.3
California Atmospheric Rivers and Flooding
Nonstop atmospheric rivers have been pounding California with unprecedented snowstorms and rainfalls. Floods, lack of power, and mudslides are just some of the fallout from these weather disasters. Levees that had been in danger for years have been breached. While it may be too late to prevent the current damage, federal and state agencies have announced funding for repairs. The USDA Natural Resources Conservation Service in California recently announced $1.5 million to repair levees in Northern California.4 Belatedly, a $400 million levee rebuild is scheduled for 2025.5
Mudslides, blocked and damaged roadways, weakened bridges, and other damaged infrastructure will need to be repaired. In the short-term, the lack of power may be handled with generators from companies like Generac,* Cummins,* and Xylem.* Meanwhile longer-term solutions may require the new microgrids by companies like Eaton,* Enersys* and Willdan.* Microgrids may help to transmit energy during periods of power disruptions. A recent industry study forecasted the global microgrid market to increase by 18.6% between 2022 and 2027.6
Flooding has been a major consequence of the historic storms pounding California. The state will have to contend with contaminated water supplies and flooded residential and commercial properties. An unintended consequence of flooding has been the damage to farmland. Farmland may become unusable according to Federal regulations because the soil may have become contaminated from debris and other contaminants. Water management, sanitation, and flood control are markets for companies like Xylem,* Wood Group,* Sulzer,* Stantec,* Clean Harbors,* and TetraTech.*
Norfolk Southern Derailment
In the case of the Norfolk Southern rail crash, instant action was taken to analyze the water and air samples in the area. AECOM* was brought in immediately to analyze water samples. TetraTech* and Arcadis* have been deployed to clean the water and streams that were contaminated by the chemical spill and to excavate and replace soil adjacent to the affected train tracks. Much of this work will be funded by the railway. Meanwhile, AECOM* as well as the Ohio Environmental Protection Agency, will be monitoring and testing in the area for the foreseeable future.7
The Disaster Recovery and Prevention Industry is an essential and growing industry. Whether it’s from natural disasters like earthquakes, floods, hurricanes, blizzards, droughts and wildfires, or manmade hazards, the resulting destruction will need to be repaired. The companies providing the products and services to facilitate a return to normal will continue to be busy.
*As of March 20th, 2023, AECOM (ACM) was a 1.91% holding, Arcadis (ARCAD NA) was a 1.90% holding, Clean Harbors CLHJ) was a 1.99% holding, Cummins (CMI) was 1.81% holding, Eaton Corp (ETN) was a 1.86% holding, Enersys (ENS) was a 1.85% holding, Fugro (FUR NA) was a 1.90% holding, Generac (GNRC) was a 1.95% holding, John Wood Group (WG/ LN) was a 1.89% holding, Stantec (SNT CN) was a 2.00% holding, Sulzer (SUN SW) was a 1.82% holding, Tetra Tech (TTEK) was a 2.06% holding, Willdan Group (WLDN) was a 1.93% holding, and Xylem (XYL) was a 1.92% holding in the Procure Disaster Recovery Strategy ETF (NASDAQ: FIXT).
1 What Turkey Needs for Its Long Recovery, Insights.som.yale.edu, February 17, 2023.
2 Turkey’s crisis management playbook: Donations, reconstruction, and inflation with an eye on elections, Mei.edu, M. Murat Kubilay, March 3, 2023.
3 Fugro’s Site Characterization Supports Safe Design of Turkey’s Second Nuclear Power Plant, Fugro.com, August 12, 2021.
4 NRCS California Awards Federal Funding for Emergency Levee Repairs, nrcs.usda.gov, February 24, 2023.
5 Levee break brings more flood problems to California as new storm approaches, PBS.com, March 13, 2023.
6 Microgrid Market by Connectivity… Global Forecast to 2027, Marketsandmarkets.com, July2022.
7 NTSB Issues Initial Ohio Derailment Report as EPA Takes Over Cleanup, enr.com, February 2023.
Please consider the Funds investment objectives, risks, and charges and expenses carefully before you invest. This and other important information is contained in the Fund’s summary prospectus and prospectus, which can be obtained by visiting procureetfs.com. Read carefully before you invest.
Investing involves risk. Principal loss is possible. The Fund is also subject to the following risks: Shares of any ETF are bought and sold at market price (not NAV), may trade at a discount or premium to NAV and are not individually redeemed from the funds. Brokerage commissions will reduce returns. Securities of small- and mid-capitalization companies may experience much more price volatility, greater spreads between their bid and ask prices and significantly lower trading volumes than securities issued by large, more established companies. The Fund is not actively managed so it would not take defensive positions in declining markets unless such positions are reflected in the underlying index. Please refer to the summary prospectus for a more detailed explanation of the Funds’ principal risks. It is not possible to invest in an index.
Natural Disaster/Epidemic Risk – Natural or environmental disasters, such as earthquakes, fires, floods, hurricanes, tsunamis and other severe weather-related phenomena generally, and widespread disease, including pandemics and epidemics, have been and may be highly disruptive to economies and markets, adversely impacting individual companies, sectors, industries, markets, currencies, interest and inflation rates, credit ratings, investor sentiment, and other factors affecting the value of the Fund’s investments. Foreign Investment Risks – Foreign securities are typically more volatile, harder to price, and less liquid than U.S. securities.
Foreign Investment Risks – Foreign securities are typically more volatile, harder to price, and less liquid than U.S. securities.
American Depositary Receipt Risk (ADR)-ADRs involve risks like those associated with investments in foreign securities, including changes in political or economic conditions of other countries and changes in the exchange rates of foreign currencies. ADRs listed on U.S. exchanges are issued by banks or trust companies and entitle the holder to all dividends and capital gains paid out on the underlying foreign shares. Investing in ADRs as a substitute for an investment directly in the foreign company shares, exposes the Fund to the risk that the ADRs may not provide a return that corresponds precisely with that of the foreign company’s shares.
The Procure Disaster Recovery Strategy ETF is neither associated with, nor endorsed by, the Federal Emergency Management Agency.
The Procure Disaster Recovery Strategy ETF is distributed by Quasar Distributors LLC.