Construction Burden

Maintenance Skills Gaps Add to Construction Burden

Until recently, the construction sector has been instrumental in catapulting the nation to higher levels of development. The sector has been catalyzing the burgeoning of all the economic sub sectors such as modern agriculture and manufacturing. However, the construction sector is slowing down nowadays due to various factors such as political unrest and shortages of construction machineries as well as scarcity of finance and hard currency. On top of this, the sector is now confronting another hurdle: shortage of skilled manpower available to handle the maintenance and repair of construction machineries, as EBR’s Ashenafi Endale explores.

On November 14, 2018, Eskinder Ashagre, general manager of Loyal Machinery Rental Company was waiting for the signing of a rental agreement for an excavator and a bulldozer, to be rented for 200 hours. Representatives from the client contractor, who won a contract for a road project in East Wellega Zone, in the state of Oromia, had already arrived to sign forand take the machineries. However, the two machines, which were parked around Gerji, in Bole District, were in need of maintenance. Unfortunately, the only mechanic Eskinder knew who could fix them was busy repairing machines in Mekelle, the capital of the state of Tigray.

“We sent him ETB5,000 for a plane ticket to at least come for the day. But he could not make it in time, because he was needed there. We could not find another mechanic. We waited for five days. When he finally arrived, the machineries needed replacement parts, so we couldn’t sign the agreement,” Eskinder told EBR. “Finding the spare parts took another ten days, by which time the clients had gone to another rental company.”

The construction industry used to make up 9.5Pct of Ethiopia’s gross domestic product (GDP) until three years ago besides growing at an annual rate of 12.6Pct on average, before political unrest, a scarcity of finance and hard currency, lack of construction machinery and corruption hit the once-promising and blossoming sector.

On top of these challenges, a relatively new issue is confronting the growth of the sector due to the shortage of skilled manpower available to handle the maintenance and repair of construction machineries. Of course, there has been a severe shortage of skilled people who know how to repair the machines in the past. However, coupled with the inefficiencies of the machinery rental market, this is becoming one of the major bottlenecks nowadays.

Getaneh Aklilu, a seasoned mechanic of Caterpillar machineries is familiar with the challenge. “There is high demand for machinery maintenance, but few skilled experts are available. Since the machines are usually in rural areas and getting spare parts takes a long time, it is difficult for them to make repairs in a short time,” argues Getaneh. “I was employed at different companies that import machinery before I started doing maintenance independently four years ago.” Having graduated from the mechanical engineering program at Bahir Dar University, Getaneh has trained to repair bulldozer sand other machines.

In addition, failure to find the right expert usually ends with escalating rent expenses, poor performance and project delays. “Winning a project, and finding the right machines, operators and maintenance experts are the most difficult things for us. If your machine has a failure, it stays idle until you find the right expert. We usually offer different incentives to skilled people, like covering their transport costs, accommodationsand offering higher payment,” says Birhan Kassa, general manager of Birhan Kassa General Contractor.

Based on the severity of the machines’ failure, and the project’s distance from Addis Ababa, maintenance experts charge up to ETB5,000 per trip, according to Getaneh. However, Tsegaye Kassa, an electromechanical engineer who has worked on both construction and manufacturing machines for the last 20 years, argues the payment for maintenance experts has declined over the last two years.

“Construction activity was almost nonexistent over the last two years. There are limited active projects. Unless you have personal links with the people on the project, it is difficult to get a maintenance job,” explains Tsegaye. We offer lower prices for maintenance to be competitive. You cannot survive in the business, if you calculate your energy and escalating cost of living.”

Tsegaye, who is a former government employee, and currently works as a private maintenance and repair mechanic, has been working in different regions outside Addis for a long time. However, he is now back in the capital to pursue further education in the field. “There is competition, and the types of machines are becoming more diverse, although the standard is the same. I concluded that only those who have furthered their education and skill sets can survive in the business in the future.”

Excluding VAT, renting a bulldozer costs aroundETB1,500 per hour. An excavator costs around ETB1,200, a roller ETB1,000, a driller ETB1,200, a crushing plant ETB5,000, and a crane ETB800, not including fuel costs, which range from ETB200 to ETB500 per hour. If the parties are put in contact by a third party, the brokers charge at least ETB100 for every hour the machinery operated.

Among the employees involved in the operation of construction machinery, the highest paid operators are the chief operators of cranes, who earn up to ETB25,000 per month, while their assistants earn around ETB16,000. This is followed by bulldozer operators, who earn up to ETB 14,000 per month, according to an assessment conducted by EBR. Excavator operators get a monthly salary of around ETB7,000 and a per diem of ETB400 per day, while loader operators make monthly salaries of ETB 4,000 and per diems of ETB300. The salary of operators at rental companies is up to ETB2,000 higher than salaries at contractor companies.

Even though the industry has not reached the level where sophisticated machineries are required, the types of buildings and infrastructures being built in Ethiopia require bigger machines than they did ten years ago, according to Birhan.

Samson Belda, deputy general manager at Joysmer Construction Machinery Rent and Sale Plc agrees. “Nowadays, there are many types of the same machine in Ethiopia, manufactured in different countries. There are many types of machinery imported from China, but there are no maintenance experts in Ethiopia. Mechanics who are familiar with older models or models from other countries cannot maintain these new brands,” argues Samson. ”We provide any type of machinery required. Most of the owners of the machineries are Ethiopians living abroad.”

Samson says that machine renters are facing three major problems. “The first is that we rent machinery on a time limit. But we do not receive payment on time, usually because the machines are idle, or because the contractor has not received payment. As a result, banks even repossess our machineries because we fail to pay what is due. The second problem is the Chinese machinery rental companies are taking over the business. They are even involved in gravel and soil supply. The law is never on our side.”

There are 7,009 construction machinery registered in the name of rental companies’ while 9,118 are owned by contractors, according to the Ministry of Urban Development, Housing and Construction. “There are close to 16,000 machines registered. However, just as many are operating in the country, unregistered,” explains Anteneh Hayelom, machinery registration officer at the Ministry.

Anteneh indicates that machineries are imported and directly go from site to site. “So, we do not know who owns which machines, and where they are. Many of the unregistered machineries belong to Chinese companies. It has become highly difficult to trace construction machineries in Ethiopia. The number of construction machineries increases by 2,500 per year, on average.” According to insiders, the unofficial figure of machineries in the country is close to 30,000.

In recent years, many students have been graduating in engineering fields. However, the gap between the demand for and supply of mechanical and electrical engineers in the market is still wide. Getaneh, on the other hand, says top minds in the field usually go to work in the Middle East, and other countries, where the income and professional prospects are better. “Graduates work under hire only until they acquire skills. Then they leave and start their own companies, or even go abroad.”

Ethiopia spent 14Pct of its total import bill in 2017/18 (USD16 billion) on importing machineries and aircraft, the largest share of all other import categories. Yet, there are very few companies that specialize in the maintenance and repair of machineries “Many of them are just garages. Most of the machinery rental and maintenance companies work in businesses other than what they have registered. Most of them import, rent and sell vehicles. Therefore, the expertise in the machineries market has not developed to match the demand from the construction industry,” explains Yared Niguse, Quality Management Follow-up expert at the Ministry.

Yared says the Ministry has been trying to talk to machinery importers, renters and maintenance companies, in order to hold meetings, register them, provide support, and ensure efficient machinery and professional supplies for the industry. “We phoned hundreds of these companies but talked to less than 20. Most of them gave us fake addresses while registering, or changed addresses, while others said they sold the machines and left the business.”

“It is possible to legally compete in tenders and win maintenance contracts for government projects. However, tthere are many criteria to be fulfilled, like office space, equipment and licenses, which are difficult for many private maintenance providers, especially since the construction slowdown. That is why many are not unwilling to work with the government,” says Tsegaye.

Tedros Tegegn, construction companies competency and regulation director at the Ministry agrees that the industry is in a vicious cycle. “The last two years have been a nightmare for companies. Right now, business is showing signs of reviving. However, the economy has not been able to get the maximum contribution from the sector, since a large part of the business is out of our control.”

In 2017/18, 7,735 contractors renewed their licenses, up from 7,206 the previous year. “Companies only come for competency certificates. There is no institution that enforces efficiency and construction quality standards. The worst failure of the Ministry is that nobody knows how many construction permits are given annually, and which contractor is using whose machinery at which site. We assume the pace of growth in the rental and maintenance market could not match the growth demand, mainly due to shortages of hard currency, a disorganized market and minimal focus on professional development. This is why the construction sector is characterized by poor and inefficient performance, shady transactions and corruption,” elaborates Tedros.

“Even price of machinery has sharply declined over the last two years. As the result, everybody is buying machinery now. Most machines are currently owned by individuals, so rental companies are affected,” Samson adds.
For his part, Tedros says the establishment of a Construction Control Authority is expected next year, having been approved by Parliament last month. The Authority is expected to reorganize the sector, and oversee the construction permit process, among other things.

Officials of the Ministry admit that it has locked horns with machinery rental companies. “Stakeholders in the sector are unwilling to disclose any information. We have no control, or plans for the future of the economy, and providing capacity building packages,” says Yared. ”Most of the machines that are imported are poor quality, and need spare parts and frequent maintenance. Usually, spare parts are taken from one machine for another, in order to finalize a project.”

“We have just started undertaking a study on the machinery market. We hope it will be finalized by the end of the year. We will analyze how banks, machinery owners and contractors can work together to solve the payment delays, and how the Ministry of Trade and Industry is implementing the law which does not allow foreigners in machinery rental. The law says foreigners cannot get in to the business unless local companies are unable to cover the market,” says Demis Kebede, director of Construction Machinery Manufacturing and Supplying Companies Development Capacity Development and Competency directorate at the Ministry.

Yared, on the other hand, underlines that joint venture investments are necessary to transform big companies involved in machinery import, rent and maintenance, and establish large companies specifically involved in construction machinery maintenance services and fabrication of spare parts. “They must gradually move from maintenance to local manufacturing. The Ministry is ready to provide support for that. However, almost all companies involved in this business use the license for other purposes. This will take the sector nowhere.”

Officials at the Ministry admit the fact that the construction industry has been growing by itself, rather than with proportional support and regulation from government, despite the introduction of the construction policy in 2012. “There are capacity limitations to implement codes, strategies, minimize corruption and control the future of the construction industry,” says Tedros.

However, for those who are close to the issue like Getaneh and Tsegaye, the burning question is the recovery of the industry, and keeping away from the Ministry’s reach. “I have to feed my family. My kids are at the age where they are starting school, so I cannot travel outside Addis Ababa frequently. If I could fulfill the requirements, I would work with the government. But business is done by personal connections. So I plan to train new graduates, create my own team and use my connections,” Getaneh concludes.

7th Year • Dec.16 – Jan.15 2019 • No. 69

Ashenafi Endale

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