(Part 3 of 3) Impact on construction sector businesses in Nepal due to the Gorkha Earthquake 2015 and its potential implications on reconstruction

Iron and Steel(Photo Source: Google)

(Project Submission Date: 15th December, 2015)

CHAPTER III: RESULTS (Contd.)

Results from telephone survey

A telephone survey was conducted for altogether 37 construction sector industries as well as professional associations including brick, cement, reinforcement steel bar, CGI sheets and GI wire industries throughout the country to estimate their production capacity of construction materials before the Gorkha Earthquake. The results are briefly explained below.

  • As per FNBI’s estimation there are a total of 850 registered brick industries in Nepal. Around 108 brick factories residing inside Kathmandu valley produced around 430 million bricks while nearly 3 billion bricks were produced by 742 brick industries outside the valley. The total estimated annual production capacity was around 3.4 billion bricks before the earthquake. Please see Table 15.

Table 15. Brick industries and their production capacity in NepalTable 15

  • As per CMAN there are 46 cement industries producing a total of around 4 million MT cement every year before the earthquake. Major 16 cement industries had the annual production capacity of around 3.5 million MT cement nationwide. Please see Table 16.

Table 16. Factory location and production capacity of Cement industries in NepalTable 16

  • Out of the 16 reinforcement steel bar industries nationwide, 12 factories produced around 849,000 MT of steel bars annually. The total national production capacity was 1,131,000 MT before the earthquake. Please see theTable 17.

Table 17. Factory location and production capacity of Reinforcement Steel Bar industries in NepalTable 17

  • Before the Gorkha Earthquake, 4 CGI Sheet industries produced around 234,000 MT of CGI Sheets every year. Please see the Table 18 for individual capacity of each of the CGI Sheet industries countrywide.

Table 18. Factory location and production capacity of CGI Sheet industries in NepalTable 18

  • Altogether 5 GI Wire industries produced around 78,300 MT of GI Wire every year. Please see the Table 19 for the individual capacity of each of the GI Wire industries countrywide.

Table 19. Factory location and production capacity of GI Wire industries in NepalTable 19

CHAPTER IV: SUMMARY

Conclusion

To satisfy the five major objectives of the study, the conclusions have been derived as below:

  1. After the Gorkha Earthquake, Brick industries recorded 2 fatalities and 6 injuries. Cement, Steel bar, CGI Sheet and GI Wire industries did not report any major casualty except for some minor injuries to the employees.
  2. Brick industries of Nepal suffered maximum damage loss of around NPR 1.13 billion. It is estimated that Cement and CGI Sheet industries each suffered damage loss of over NPR 100 million. Only minor damages were recorded in Steel and GI Wire factories all over the country. The damages were mostly done to the sheds and boundary walls of the plants.
  3. In the first 3 months all the industries reported revenue loss ranging from 60% to 85%. Only CGI Sheet industries experienced around 90% revenue hike.
  4. In the months following the earthquake, brick industries and cement industries reported loss of employment by around 95% and 25% respectively. Steel bar, CGI Sheet and GI Wire industries reported minimum or no loss of employment due to the earthquake.
  5. Assessing the first three months’ trend after the earthquake, annual production capacity of Brick and Cement industries have drastically gone down by around 95% and 75% respectively. Annual production of Steel bar and GI Wire industries has decreased by around 33% and 9% respectively. Only CGI Sheet industries have reported around 80% increase in their annual production.
  6. After the earthquake, Cement and CGI Sheet industries have claimed an increase in unit market price by around 15% and 3% respectively. Both Steel bar and GI Wire industries have reported decrease in unit market price by around 10% and 11% respectively. Depending on varying quality of bricks, the current brick prices are fluctuating in the market although FNBI claims that brick prices are stable before and after the earthquake.
  7. Nearly 8 months after the Gorkha Earthquake, most of the Brick industries of Nepal are still in their recovery phase. The average business recovery time for Steel bar industries was over one month while Cement, CGI Sheet and GI Wire industries took around two weeks to resume their businesses.
  8. The national annual demand for bricks before the earthquake was 3.57 billion while the annual projected demand has increased to 4.77 billion bricks after the earthquake. The projected annual production of mere 170 million bricks is based on the first three months’ production trend after the earthquake and the current reduced production is mainly due to damaged facilities, fuel crisis, labor shortages. It is also worth mentioning here that 1.2 billion extra reconstruction demand for bricks, as projected by PDNA, would spread out in next couple of years and may not overburden the industries’ annual targets in the future. Also, PDNA estimates that around 25% of the brick demand can be compensated by the recycling of the salvage. Meanwhile, FNBI also claims that with an expected 25% increase in existing total capacity, around 5 billion bricks could be produced within next year if economic and climate conditions are favorable.
  9. The national annual demand for cement before the earthquake was around 5 million MT while the annual projected demand has increased to 7 million MT after the earthquake. Since the projected annual production of around 1 million MT is based on the first three months’ production trend after the earthquake and the current reduced production is mainly due to fuel crisis, power shortage and supply-chain disruptions, the cement industries are assured that the future reconstruction demand can be met as the situations starts improving in the country. It is worth mentioning here that around 2 million extra reconstruction demand for cement, as projected by PDNA, would spread out in next couple of years and may not overburden the industries’ annual targets in the future. On the other hand, CMAN estimates that due to reconstruction activities there will be only 25% hike in total demand which can be sustained by Nepalese cement factories as most of them were operating almost 50% below their installed capacity even before the earthquake.
  10. The total annual projected demand for reinforcement steel bar is over 1 million MT which comprises the annual demand of 875,000 MT and reconstruction demand of around 140,000 MT. Since the projected annual production of 757,770 MT is based on the first three months’ production after the earthquake and the current reduced production is mainly due to fuel crisis, power shortage and supply-chain disruption, the reinforcement steel bar industries assure that the future reconstruction demand can be met successfully if the situations are favorable.
  11. The total annual projected demand for CGI Sheets after the earthquake is around 240,000 MT which comprises the regular annual demand of 150,000 MT and reconstruction demand of around 90,000 MT. The projected annual production of 421,200 MT after the earthquake is well above the required demand.
  12. The total annual projected demand for GI Wire after the earthquake is 35,000 MT which comprises the national annual demand of 25,000 MT and reconstruction demand of around 10,000 MT. The projected annual production of 71,253 MT after the earthquake is well above the future demand of the country.
  13. The production capacity survey of various construction material industries namely, Brick, Cement, Reinforcement steel bar, CGI Sheet and GI Wire industries revealed that the aggregate production capacities were 3.4 billion bricks, 4 million MT cement, 1,131,000 MT Reinforcement steel bar, 234,000 MT CGI Sheets and 78,300 MT GI Wire respectively.
  14. International Labor Organization (ILO) estimates that there are one million workers already involved in the housing sector. PDNA estimates that an extra 700,000 construction workers will be required for reconstruction alone.

Recommendations

Various recommendations were made based on the study and the results of the study.

  1. To gather information related to the Gorkha Earthquake impact, various participants from altogether 15 private sector construction industries/associations including, brick, cement, steel bar, CGI Sheet and GI Wire industries were included in the open-ended questionnaire sessions. Including more participants would maximize the authenticity of the entire study.
  2. The scope and applicability of the study could be widened further by including other housing material industries such as, Timber, Bamboo, Quarry stone, River Sand, Aggregates, etc.
  3. Since the earthquake was shortly followed by political upheaval and border closure in the country, entire private sector industries were heavily impacted by the added crisis posed by strikes, fuel shortage, load shedding, supply chain disruption, etc. Majority of the construction sector fraternity claim that the economic blockade has been so severe that it diluted the impact of the Gorkha Earthquake. An inclusive impact study of the earthquake and blockade together could produce more comprehensive impact study on earthquake reconstruction projects.
  4. A total of 37 construction sector industries houses including, brick, cement, steel bar, CGI Sheet and GI Wire industries were included in the telephone survey to estimate the nationwide production of construction materials before the earthquake. To be more specific, the survey could have further explored the rated as well as usual production capacities of individual factories as most of the industries were operating under their rated capacity even before the earthquake.
  5. Future study could also be directed towards the estimation of demand as well as supply of construction related workers in the country over the next 3 years when reconstruction will be in its prime.

REFERENCES

  • NEPAL EARTHQUAKE 2015: Post Disaster Needs Assessment (PDNA), Vol. B: Sector Reports, Government of Nepal, National Planning Commission, Kathmandu 2015
  • Nepal Labor Market Update, ILO Country Office for Nepal, November 2014

 *  *  *  *

(Part 1 of 3) Impact on construction sector businesses in Nepal due to the Gorkha Earthquake 2015 and its potential implications on reconstruction

(Part 2 of 3) Impact on construction sector businesses in Nepal due to the Gorkha Earthquake 2015 and its potential implications on reconstruction

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(Part 2 of 3) Impact on construction sector businesses in Nepal due to the Gorkha Earthquake 2015 and its potential implications on reconstruction

Nepal-Earthquake(Photo Source: Google)

(Project Submission Date: 15th December, 2015)

CHAPTER III: RESULTS (Contd.)

Brick Industries

  • After the Gorkha Earthquake, there were 2 recorded fatalities and 6 injuries in brick factories all over the nation. Extensive major and minor damages to chimneys, kilns and green bricks were recorded in factories throughout the nation. The total damage loss was estimated to be NPR 1,126,111,700. Please refer the Table 3 below for a detailed earthquake damage loss estimation of brick industries in Nepal.

Table 3. Earthquake damage loss estimation of brick industries in Nepal (Source: FNBI)Table 3

  • At least 75% monthly loss of revenue was estimated for individual brick factories due to reduced demand, production and sales. There are around 300,000 workers are employed in brick factories throughout the country. Although workers have started returning to factories, approximately 95% job loss was estimated in the following 6 months after the earthquake. Please see Table 4.

Table 4. Information related to employee casualty, damage loss, revenue loss and employment lossTable 4

  • Most of the brick factories are unable to recover even after 6 months. Over 95% of the factories are not in full operation due to the earthquake damages incurred as well as lack of workers and fuel after the economic blockade. Before the earthquake an average 4 million bricks were produced annually by individual brick factories in Nepal. Around 850 brick factories all over the country produced about 3.4 billion bricks every year.
  • It is estimated that the national annual demand for bricks all over the country was around 3.57 billion before the earthquake. It is also predicted that in coming days the annual demand would increase by at least 30% after the earthquake. Depending on varying quality of bricks, the current brick price fluctuates between NPR 8 to NPR 12 per piece (excluding VAT and transportation). Brick prices are claimed to be stable before and after the earthquake. Please see Table 5.

Table 5. Information related to business recovery, production capacity, demand and market pricesTable 5

Cement Industries

  • Except for some minor injuries to employees and their families, there were no significant casualty in cement industries. Only minor damages were recorded in some factories ranging from NPR 50,000 to NPR 15 million in loss. The damages were mostly to the sheds and boundary walls. Overall the total damage loss is estimated to be over NPR 100 million.
  • Following the Gorkha Earthquake, individual factories incurred 25% to 95% loss of revenue due to reduced demand, production and sales. It is estimated that the industry experienced a total revenue loss of NPR 3 billion in the first 3 months alone. Over 10,000 workers are employed in cement industry all over the country. Around 25% workers are believed to have lost their job after the earthquake. Most of them are daily wage workers. Please see Table 6.

Table 6. Information related to employee casualty, damage loss, revenue loss and employment lossTable 6

  • Since the damages were not significant, most of the factories were able to recover their production within a couple of weeks. The estimated production downtime due to the earthquake ranged from 2 days to 2 weeks for different factories, majorly due to the employees’ fear of future shakings. Presently there are 46 cement factories all over the country. Before the earthquake, the total annual production capacity of the entire industry was around 4 million MT. Initially, because of the earthquake, production capacity of individual factories has come down by only 30% to 35%. Later, due to government restrictions on construction and reduced demand the production has significantly dropped by 75%.
  • Before the earthquake the country had an estimated demand of around 5 million MT cement annually. In the coming days the demand is expected to shoot up by around 25% due to reconstruction activities. The market price of OPC Cement ranged from NPR 650 to NPR 750 per bag before the earthquake. Due to the hike in transportation cost and fuel crisis the current cement price is around NPR 800 per bag. Please see Table 7.

Table 7. Information related to business recovery, production capacity, demand and market pricesTable 7

Reinforcement Steel Bar Industries

  • There was no earthquake casualty reported by the factories surveyed for this paper. Only minor damages were recorded in iron & steel factories all over the country. The damages were mostly done to the sheds and boundary walls of the plants. Following the earthquake, individual factories incurred a drastic 80% to 90% loss of revenue due to reduced demand, production or sales.
  • It is estimated that the rolling mill industry as a whole experienced a total revenue loss of over NPR 10 billion in the first 3 months after the earthquake. There are 16 reinforcement steel bar industries in the country. Depending on the size of the organization, the number of workers employed in them varied from 200 to 3000. Except for few exceptions where employees left the job out of earthquake fear, the crisis did not cause any major layoff in the industry. Please see Table 8.

Table 8. Information related to employee casualty, damage loss, revenue loss and employment lossTable 8

  • After the earthquake the production was interrupted for at least 1 month or as long as 6 months in major iron & steel industries. The cause of interruption was mostly absent employees, reduced demand and government imposed restriction on new constructions. The individual factories around the country experienced an estimated 33% reduction in their production capacity. The reduced production capacity was mainly caused by the lack of raw materials, fuels, employees as well as reduced demand for the reinforcement steel bars.
  • Before the earthquake the country had an estimated demand of around 875,000 MT every year.  In the following months after the earthquake the demand has gone down as low as 50% of the total annual demand of the country. The unit market price has decreased by approximately 10% in the aftermath of the earthquake. The average market price of reinforcement of steel bar was NPR 70 per kg before the earthquake. The current market price is around NPR 65 per kg excluding VAT. Please see Table 9.

Table 9. Information related to business recovery, production capacity, demand and market pricesTable 9

CGI Sheet Industries

  • During the survey, there was no earthquake casualty reported by the CGI Sheet factories. Besides minor damages to the sheds and boundary walls of the factories, there were also some serious damages reported such as spill of molten zinc and severe damage to the coal gasification plant. The estimated total loss is over NPR 100 million.
  • There was no evident revenue loss since the need for CGI Sheets increased due to skyrocketing demand of temporary shelters right after the Gorkha Earthquake. There are 4 major CGI Sheet industries in the country and no loss of employment recorded due to the earthquake. Please see Table 10.

Table 10. Information related to employee casualty, damage loss, revenue loss and employment lossTable 10

  • Besides first couple of weeks of production interruption due to minor facility damages and fear among the employees, businesses did not face major hardship to recover from the earthquake crisis. Due to increased demand, CGI Sheet industries had to increase their production by nearly 80% in the first few months following the earthquake.
  • Before the earthquake the country had an estimated demand of around 150,000 MT CGI Sheets every year. Because of the steep rise in demand, the unit price of the CGI Sheets increased slightly by around 2% to 3% immediately after the earthquake. Later the market prices were dictated by the varying transportation cost in different districts. Please see Table 11.

Table 11. Information related to business recovery, production capacity, demand and market pricesTable 11

GI Wire Industries

  • There was no major or minor casualty reported by the factories surveyed for this study. After the earthquake, there was only minor or no damage incurred by the GI Wire industries in Nepal. Few minor incidents of boundary wall collapses were reported.
  • Around 50% to 70% loss of revenue every month was reported due to reduced sales in the months following the earthquake. Altogether there are 5 major GI Wire industries throughout the country. An estimated 2,500 employees are working in them. No job loss was reported by the factories due to the earthquake. Please see Table 12.

Table 12. Information related to employee casualty, damage loss, revenue loss and employment lossTable 12

  • GI Wire businesses did not face major hardship to recover from the earthquake crisis. Due to minor facility damages and fear among the employees, there was production interruption for the first couple of weeks after the earthquake. The estimated annual capacity of all the CGI industries in Nepal is 78,300 MT. Due to reduced demand and insufficient power supply, the production dropped around 9% after the earthquake.
  • Before the earthquake the country had an estimated demand of around 25,000 MT of GI Wires every year. In the months and years following the earthquake the demand is expected to rise by around 50%. There are 3 major grades of GI Wires available in the market namely, heavy-Zinc, medium-Zinc & commercial grade. The average market price of the popular heavy-Zinc grade before the earthquake was NPR 86.5 per kg while after the earthquake it is around NPR 77 per kg. Please see Table 13.

Table 13. Information related to business recovery, production capacity, demand and market pricesTable 13

A comparison of nationwide projected production and demand

A comparison of nationwide production and demand projection for construction materials after the earthquake was performed. The Projected Annual Production was calculated by looking at the production trend of first 3 months after the earthquake. Post Disaster Need Assessment (PDNA), Government of Nepal has estimated the Projected Demand for the Earthquake Reconstruction which was further taken into account while calculating the Total Annual Projected Demand after the Earthquake. Please see Table 14 below.      

Table 14. A comparison of nationwide production and demand projection for construction materialsTable 14

Supply and demand of construction materials

In coming days, there will be massive rise in building construction activities for several years as over 600,000 houses will be constructed and nearly 250,000 buildings will be either repaired or retrofitted. The two critical factors to be considered are the availability of construction materials and construction labors in the country.

  • Looking at the trend of first 3 months after the earthquake, the brick factories seem to be in miserable condition with only 170 million projected annual production nationwide. The national annual demand for bricks before the earthquake was 3.57 billion while the estimated annual production capacity was 3.4 billion. It will be hard to meet the annual projected demand of 4.77 billion bricks. PDNA estimates that around 25% of this demand can be compensated by the recycling of the salvage. On the other hand Federation of Nepal Brick Industries (FNBI) claims that with an expected 25% increase in existing total capacity, around 5 billion bricks could be produced within next year if economic and climate conditions are favorable.
  • In the months following the earthquake, due to the government regulations on construction bar, the demand for cement drastically came down to negligible numbers, although total annual projected demand is around 7 million MT. Based on the trend of first 3 months after the earthquake the projected annual production is mere 1 million MT. The nationwide annual demand before the earthquake was around 5 million MT and Cement Manufacturers’ Association of Nepal (CMAN) estimates that due to reconstruction activities there will be only 25% hike in total demand. As per CMAN this demand can be sustained by Nepalese cement factories as most of them were operating almost 50% below their installed capacity even before the earthquake.
  • The total annual projected demand for reinforcement steel bar is over 1 million MT which comprises the annual demand of 875,000 MT and reconstruction demand of around 140,000 MT. Looking at the first 3 months’ production trend after the earthquake, only 757,770 MT of reinforcement steel bar production is expected next year. Since the current reduced production is mainly due to fuel crisis, power shortage and supply-chain disruption, the future reconstruction demand can be met successfully if the situations are favorable.
  • The total annual projected demand for CGI Sheets is around 240,000 MT which comprises the annual demand of 150,000 MT and reconstruction demand of around 90,000 MT. In coming months, the demand is expected to stay more or less the same as new constructions have come to a halt while the demand for new shelters has gone up. CGI Sheet industries had to increase their production by nearly 80% in the first few months after the earthquake. Following the trend, the projected annual production after the earthquake is estimated to be 421,200 MT which can sufficiently meet the reconstruction demand of the country.
  • The total annual projected demand for GI Wire is 35,000 MT which comprises the national annual demand of 25,000 MT and reconstruction demand of around 10,000 MT. From the first 3 months’ production trend after the earthquake, 71,253 MT of GI Wire will be produced next year. Even with the current reduced production capacity, Nepal can sufficiently meet the reconstruction demand for GI Wires.

Demand for construction workers

The reconstruction phase can also be seen as an opportunity for job creation. International Labor Organization (ILO) estimates that there are one million workers already involved in the housing sector. PDNA estimates that housing reconstruction may generate up to 352 million workdays over the next five years. Since the major reconstruction will occur in first 3 years, it is estimated that 700,000 construction workers will be required for reconstruction alone.  

(To Be Contd. ….)

(Part 1 of 3) Impact on construction sector businesses in Nepal due to the Gorkha Earthquake 2015 and its potential implications on reconstruction

(Part 3 of 3) Impact on construction sector businesses in Nepal due to the Gorkha Earthquake 2015 and its potential implications on reconstruction

 

 

(Part 1 of 3) Impact on construction sector businesses in Nepal due to the Gorkha Earthquake 2015 and its potential implications on reconstruction

Brick(Photo Source: Google)

(Project Submission Date: 15th December, 2015)

CHAPTER I: INTRODUCTION

Background

Nepal was heavily impacted by the recent M 7.6 earthquake on Saturday, 25th April, 2015 at 11:56 NST and a major aftershock of M 6.8 on Tuesday, 12th May, 2015 at 12:50 NST. Post Disaster Needs Assessment (PDNA) published by the National Planning Commission, Government of Nepal estimates that the total damages and losses caused by the Gorkha Earthquake is NPR 706 billion (US$ 7.0 billion) which is about one third of the country’s Gross Domestic Product (GDP) in FY 2013-2014. Of the total damages and loses incurred by the country, the private sectors sustained over three times in damages and losses compared to the public sectors. The Housing & Human Settlements alone sustained about 50 percent of the total damages and losses.

The impacts sustained by the construction sector businesses in Nepal have far-reaching repercussions which need to be analyzed to support the ongoing reconstruction efforts. It is highly expected that the demand for construction materials such as bricks, cement, reinforcement steel bar, CGI-Sheets, GI-Wires, etc. would shoot up and the reconstruction work would also suffer due to increasing labor scarcity in the country.

Out of over 100 brick chimneys inside the Kathmandu valley, almost all collapsed in the wake of the Gorkha Earthquake while most of the iron and cement industries outside the valley were structurally intact and suffered no significant downtime during the earthquake. Businesses which suffered fewer damages and reduced downtime had better probability of continuing their business. Besides, prices of construction materials are expected to grow significantly in coming days as people will begin reconstruction. Due to the high rate of migrating labors out of the country over the past decade, the scarcity of construction manpower will be another major bottleneck faced by the country.

In the post-earthquake period, this research study attempts to examine the available data from various sources including government agencies, private sector stakeholders as well as authentic literature to explore the Gorkha Earthquake’s widespread impact on the major construction sector businesses nationwide. Furthermore, the findings of this research aspire to support the government and private sector stakeholders in prioritizing their future reconstruction and Disaster Risk Reduction (DRR) initiatives.

Research Objective

The broad objective of this research, a significant part of Public-Private Partnership for Earthquake Risk Management (3PERM) program under the National Society for Earthquake Technology-Nepal (NSET), was to study the widespread impact of the Gorkha Earthquake on various construction sector businesses in Nepal and to evaluate their manufacturing capacity as the country prepares to enter the reconstruction phase. The specific objectives are listed below.

  1. To study the the Gorkha Earthquake impacts related to employee casualty, damage loss, revenue loss and employment loss.
  2. To study and gather information related to business recovery, production capacity, nationwide demand for construction materials and their market price fluctuations.
  3. To carry out a comparative study on business resumption time for different construction related industries.
  4. To calculate the nationwide supply and market demand for various construction materials such as Brick, Cement, Reinforcement steel bars, CGI sheet and GI wire.
  5. To conduct a capacity survey of various construction material businesses such as Brick, Cement, Reinforcement steel bars, CGI sheet and GI wire industries.

Literature Review

The Gorkha Earthquake had an extensive impact on private sector businesses nationwide and in coming days/years this would inevitably show up in construction businesses as well. As per the Federation of Construction Materials Business Association of Nepal (FCMBAN), consumers will face a price hike of around 10 to 15 percent on cement, 10 percent on reinforcement steel bars and 40 percent on sand & aggregates. The price of bricks is expected to increase arbitrarily in the next fiscal year with around 25 percent hike in wages of workers. Immediately after the disaster, the demand for bricks came to a complete halt while the demand for other construction materials such as cement and steel rods have been confined to 30 percent as compared to the same period in previous fiscal year. It is predicted that although there will be sufficient capacity to fulfill the demand for cement, there will be significant crisis for iron rods and bricks. There could also be artificial scarcity and price hike for bricks, sand, aggregates as well as construction labor. (The Himalayan Times, June 2015)

The Federation of Nepal Brick Industries (FNBI) predicts the damage loss to be around NPR 1.2 billion while around 90 percent brick kilns came to a complete halt. Around 70 percent of them are in need of complete renovation. The government states that there is a need of at least 12 billion brick to raise the damaged buildings. FNBI claims that Nepal produces around 3 billion bricks every year. With the four-fold increase in the demand of bricks, meeting the demand remains a challenge for the entire brick industry. Around 850 brick kilns across the nation were operating before the earthquake. With over 100 damaged brick kilns within Kathmandu valley alone and a total of around 350 damaged kilns across the country, meeting the construction needs remains a major challenge for this industry. (My Republica, July, 2015)

As per Cement Manufacturers Association of Nepal (CMAN), the ban on construction after the earthquake has induced an estimated 85 percent dip in the demand for cement. As the cement factories are currently operating only at 50 percent of installed capacity, they can fulfill an extra 50 percent demand in the coming days when reconstruction will start in full swing. According to CMAN, the annual consumption of cement totals 4.5 million Metric Tons and there are 45 cement factories operating across the country. (The Himalayan Times, June 2015)

Nepal Steel and Iron Rolling Mills Association (NSIRMA) assures that although post-earthquake Nepalese steel and iron industry may be utilizing around 48% of its production capacity, it will be sufficient to meet the demand. There are around 20 steel and iron factories operating across Nepal. This sector consists of industries like the rebar industry, corrugated iron industry, and wire industry, among others. The steel rod industry, under normal conditions has an estimated annual production capacity of 1.5 million tons. Likewise, the corrugated iron industry and wire industry has an annual production capacity of around 300,000 tons and around 200,000 tons respectively. (New Business Age, July 2015)

CHAPTER II: METHODOLOGY

Data Collection Procedures

A semi-structured interview methodology was utilized to gather information about earthquake impact on construction sector industries including brick, cement, reinforcement steel bar, CGI sheets and GI wires. A total of 15 industries including major business houses and pertinent professional associations were interviewed. The open-ended interview questionnaire was widely divided in two segments. The first part targeted to extract information related to employee casualty, damage loss, revenue loss and employment loss. The second part focused on gathering information related to business recovery, production capacity, nationwide demand for construction materials, as well as their market prices. A telephone survey was conducted for altogether 37 construction sector industries to estimate their production capacity of construction materials throughout the country.     

Data Analysis

Data was analyzed to study the widespread impacts of the Gorkha Earthquake including, employee casualty, damage loss, revenue loss, employment loss, business recovery time, production capacity, nationwide demand for construction materials, as well as their market price repercussions. The results from the semi-structured questionnaire were used to identify the total number of industries, employee casualty, damage loss, monthly revenue loss, immediate loss of employment, average business recovery time, annual production capacity (before & after the earthquake), nationwide annual demand after the earthquake and change in unit market price.

The results from the open-ended interview questionnaire was also utilized to carry out a comparative study on business resumption time for different construction related manufacturing industries, their percentage revenue losses for first 3 months after the earthquake, nationwide supply capacity (before & after the earthquake) and market demand (before the earthquake) for various construction materials such as brick, cement, reinforcement steel rods, CGI sheet and GI wire.

Post Disaster Need Assessment (PDNA), Government of Nepal, in its preliminary report estimated the construction materials’ Projected Demand for the Earthquake Reconstruction which was further added to the existing Annual Demands before the Earthquake to calculate the Total Annual Projected Demand after the Earthquake.

The data collected from the telephone survey was utilized to estimate the production capacity of construction material industries such as, brick, cement, reinforcement steel bar, CGI sheets and GI wire before the earthquake.

Limitations of the Study

The limitations of the study are given below:

  1. The study, analysis and conclusions were strictly based on the collected data from the surveyed/interviewed business houses, industries, professional associations and employees working there.
  2. The semi-structured interview and telephone survey were conducted to limited number of employees within the selected organizations and may not necessarily reflect the view of the entire construction sector organizations or the employees working there.
  3. The study is limited to the impact-study of the Gorkha Earthquake on construction sector industries and does not include the consecutive effects of national economic blockade merely 4 months after the earthquake.

CHAPTER III: RESULTS

Results from semi-structured interview

Private construction businesses and professional associations including brick, cement, reinforcement steel bar, CGI sheets and GI wires industries were interviewed to analyze the widespread impact of the Gorkha Earthquake on these industries. The open ended semi-structured interview method was utilized for this purpose. The interview questionnaire and the list of participating industries/associations are given below in Table 1 and Table 2

Table 1. Open ended interview questionnaire setTable 1

Table 2. Construction sector manufacturing industries/associations interviewed for the studyTable 2

(To Be Contd. ….)

(Part 2 of 3) Impact on construction sector businesses in Nepal due to the Gorkha Earthquake 2015 and its potential implications on reconstruction

(Part 3 of 3) Impact on construction sector businesses in Nepal due to the Gorkha Earthquake 2015 and its potential implications on reconstruction

 

Risk Control and Safety Management, NEPAL