EARTHQUAKE / THE LONG ROAD BACK : Calculating Calamity : Disruption, Losses to the Region Could Hit at Least $7 Billion

As businesses cleaned up and assessed damage on the day after the Northridge earthquake, it became clear that the costs of the disaster to Southern California will mount quickly--to a total of $7 billion or more, according to insurance industry estimates.

Some costs will be immediate:

* Thousands of workers will forgo wages as they sit home, either because they can’t commute to work over crippled freeways or their plants and offices are still closed.

* Business will lose millions of dollars from damage to inventories, collapsed buildings and sales that fell through. For many small and medium-sized businesses, those losses are uninsured.

The Insurance Information Institute estimated that the losses from structural damage would easily match those resulting from the 1989 quake in the San Francisco Bay Area. That quake caused $7 billion in total losses, of which about $960 million was not covered by insurance.

But some early estimates went even higher: One San Francisco engineering consulting firm said losses could reach as high as $15.1 billion, of which between $1.5 billion and $1.9 billion would be insured.

The long-term effects are less certain. At the very least, area businesses can expect to see higher costs due to interrupted transportation. With the key arteries of Interstates 5 and 10 expected to be blocked for at least a year, economists predict chronic delays in getting goods to market or commuters to workplaces.

“You’re holding up people and merchandise, and all of that costs something,� said Bruce F. DeVine, chief economist at the Southern California Assn. of Governments.

So far, no agency or economist has come up with estimates of the extent of damage to businesses or of the numbers of workers laid off temporarily.

“Typically, across the board in catastrophes, 30% to 40% of insurance claims and 60% to 70% of total dollars lost� are business related, said Jim Welsh, claim consultant at Property Claims Service, a trade group in Rahway, N.J.

A survey of local firms illustrates how the quake is already having an impact on the local economy, particularly in areas near the epicenter.

Valley Firms Take Stock

Several large employers remained shuttered. The Anheuser-Busch brewery in Van Nuys, which employs 1,500 people, was closed as damage was being assessed. Many of the workers were helping clean up, while others stayed home to deal with their own damage. The brewery is expected to be closed for at least a week.

Plant manager Gary Lee said through a spokesman that the company had no estimate of damages yet. Production was diverted to breweries near Sacramento and in Colorado and Texas.

Similarly, at Superior Industries International in Van Nuys, an auto parts plant that employs 1,000 workers, the doors were closed for damage inspections Tuesday.

Many workers were there, but others had trouble getting in, particularly those who live in Santa Clarita and the Antelope Valley, areas virtually cut off by the collapse of California 14, said R. Jeffrey Ornstein, chief financial officer.

The plant, which supplies aluminum wheels to auto makers, was expected to reopen today and resume limited production within a week. Orders were being filled from the company’s four other plants outside Southern California.

At the 20th Century Insurance Co.’s ravaged headquarters building in Woodland Hills, customers who didn’t want to wait for a phone call decided to drive in with their earthquake damage claims.

The 11-story building was closed, with panes of glass shattered all over the building, but in the parking lot, a cardboard sign reading “Customers� had been taped up. It directed people to a dozen claims adjusters set up at tables in the parking lot, processing claims and handing out bottled water in the hot sun.

Seven floors up in the darkened headquarters building, 20th Century’s chief executive, Neil H. Ashley, said he expected the company’s earthquake damage claims to come in comfortably under the $100-million reinsurance earthquake limit that it has through Lloyd’s of London and other European insurers.

Malls Tally Losses

Southern California retailers swept up broken glass and sorted through jumbled merchandise. While some stores were able to open, most major malls, which employ thousands of people, remained closed in the hard-hit swath from the San Fernando Valley to West Los Angeles.

The crumpled Northridge Fashion Mall was not expected to reopen for weeks, and several others--including Topanga Plaza, Sherman Oaks Galleria and Sherman Oaks Fashion Square--were still assessing the destruction. Damage estimates were not yet available.

Baldwin Hills Crenshaw Plaza was closed Tuesday and was not expected to reopen until Thursday or Friday, general manager Joseph Rouzan said.

Westside Pavilion sustained glass and water damage, but may reopen today or Thursday. The parking garage behind the Robinsons-May store has visible cracks and will remain closed.

Glendale Galleria reopened Tuesday, but mall officials closed an older parking structure that represented more than half the mall’s parking space.

Beverly Center had significant glass breakage and some water damage, but “the building seems to have come through in pretty good shape,� said Don Trefry, general manager of the 170-store mall. “We’re shooting to reopen by the end of the week.�

Meanwhile, Good Guys said five of its 23 consumer electronics stores remained closed in Southern California as workers cleaned up. Many of the stores, which each carry more than $1.25 million in inventory, lost goods in the quake.

And every day a store is closed means the loss of about $33,000 in sales, a typical day’s take, company officials said. Most of that loss is covered by business-interruption insurance.

Even so, all told, the company expects its total losses to amount to about $400,000 before taxes.

Plight of Small Business

Small businesses often do not have the luxury of insurance.

Four years ago, Steve Yang and his wife, Christine, opened Phoenicia Liquor Jr. Market in Northridge with a $100,000 loan. The Yangs, who emigrated from South Korea 10 years ago, wanted to own a business in a quiet neighborhood.

But when the sun rose Tuesday, Yang awakened in a car parked in front of the wrecked store, through which the quake had sent a river of liquor gushing into the street. Yang, 34, had spent the night in his car with two friends to guard against looters.

“We need some help!� Christine Yang said. The Yangs don’t have earthquake insurance and probably lost $30,000 in inventory. “We have to make home payment, rent for store. We have to do something.�

Not far away, Jean-Yves Etesse wore hiking boots as he crunched through layers of broken glass strewn over the floor of his Northridge pasta restaurant, California Cucina. A few of his 40 employees showed up for work and salvaged what they could of the frozen meat and other perishables.

The damage was extensive: A $7,000 cappuccino machine had been torn from the wall. Bottles of fine Italian wine had been hurled as far as 20 feet.

Etesse, who opened the restaurant just four months ago with about $250,000, acknowledged that he had gambled by starting a business in the midst of a recession. “I thought it would do good,� he said. “But now I think it was the biggest mistake of my life.�

Owners of stores on Santa Monica’s trendy Third Street Promenade, meanwhile, scrambled to repair heavy exterior damage up and down the street. Front-end loaders and other construction machinery drowned out conversation at the outdoor cafes, while passers-by strolled and gawked in the sunny 80-degree weather.

Though gas service was restored by midday, business owners in Santa Monica fretted about the economic effects of the partial closure of the Santa Monica Freeway

Banks Dig Out

As power was restored to more branches, banks continued to bring their automated teller machines back on line and open branches in affected areas.

Bank of America said about 90% of its 280 branches in Los Angeles County were open Tuesday.

In South-Central Los Angeles, the main office of Founders National Bank--the only black-owned commercial bank in the city--sustained heavy structural damage.

President Carlton Jenkins, dressed in jeans and sitting in an office littered with fallen plaques, estimated that the bank suffered between $250,000 and $500,000 in damage. The two-story building may be a total loss: The bank didn’t have earthquake insurance because the policy was too expensive.

On Tuesday, employees were loading computers and other office equipment into trucks so they could be taken to one of the bank’s three other branches.

“In the disturbances of ‘92, the place was untouched,� Jenkins said. “We tended to look at the building as being invincible and not subject to the wrath of the Almighty.�

At Wilshire Boulevard and Beverly Drive, the windows of the Union Bank building were pasted with red stickers that read, “Unsafe: Do Not Enter.� At the top of the seven-story building, a water tower had toppled and was poking through the side of the structure, attracting stares.

“It’s been closed for safety reasons right now,� said Stephen Johnson, a Union Bank spokesman, who said eight other bank branches in Los Angeles were also closed for damage. He said most of the branches will reopen in the next two weeks.

Taking on Hazardous Duty

For some companies, cleaning up meant more than sweeping up broken glass.

By Tuesday morning, the Southern Pacific Railroad had reclaimed sulfuric acid that spilled from one of 64 train cars that derailed on SP’s Coast Line route near Northridge and had begun soil remediation efforts.

Fortunately, cargo spilled from only one of 16 tank cars carrying sulfuric acid and equipped with special couplers and protective shields to minimize punctures.

For its part, Atlantic Richfield Co. will have to pay for damage caused by leaks from one of its oil pipelines in the San Fernando Valley and in Santa Clarita.

By Tuesday, the oil company had fielded 200 workers to clean up a spill of 3,500 barrels--147,000 gallons--of crude oil, about 2,900 to 3,000 barrels of which created a slick along the entire 12-mile length of the Santa Clara River.

Some of the oil caught fire and burned 17 cars and four houses near San Fernando.

The company had no estimate of its liability, but spokesman Al Greenstein said, “It’ll be expensive.�

Times staff writers Nancy Rivera Brooks, Don Lee, David Olmos, Stuart Silverstein, Barry Stavro and Donald Woutat contributed to this report.