Rebuilding northeast to take years and cost billions

IT took just minutes for the earthquake and tsunami to devastate Japan’s northeast. Rebuilding will take years — if it can be afforded.

The relentless wall of water that the quake unleashed killed thousands, swept away towns, inundated roads and knocked ports, oil refineries, steel plants and factories out of action.

Experts say the cost of the destruction likely exceeds that of the catastrophic 1995 Kobe earthquake — estimated & to have totalled €115 billion.

The four most severely affected prefectures — Iwate, Miyagi, Fukushima and Ibaraki — are home to industries that make up 6% of Japan’s economy.

Hundreds of thousands of people have had little food, water or heating in near-freezing temperatures as they dealt with the loss of homes and loved ones.

The biggest port on the northeast, Sendai, has been destroyed. It handled mainly container shipments of exports including rubber and marine products, office machinery, paper goods and auto parts. Three others — Hachinohe, Ishinomaki and Onahama — were severely damaged and may be out of commission for months.

Six oil refineries that can turn 1.4 million barrels of oil a day into fuel — one third of Japan’s capacity — are shut down.

Nippon Steel’s factory in Kamaishi, Iwate, was shut after the tsunami flooded part of the plant that makes steel and wire rods for vehicle powertrains and chassis. Sumitomo Metal Industries plant in Kashima, Ibaraki, also went dark.

Elsewhere, widespread power shortages from damage to nuclear plants have forced many companies to halt production.

Sony has halted output at several factories. Toshiba has done the same.

All car makers including Toyota, the world’s biggest, have stopped production nationwide.

Companies are also facing problems shipping components, receiving raw materials and getting workers to facilities that are working, said Dale Ford, an analyst at technology market research firm IHS iSuppli.

The components made by Japan’s hi-tech industry are destined for final assembly in China and other countries. Analysts said there’s enough inventory in the global supply chain to tide customers over for up to four weeks before companies such as Apple, Dell and Lenovo will have to switch to back-up sources.

Initial estimates of insurance losses from the disaster range as high as €40bn.

Reconstruction will be extremely challenging because the damage is so widespread and has likely destroyed power lines and water treatment facilities, said Jun Yang, president of the Hong Kong branch of the American Society of Civil Engineers.

“In my view it would take five to 10 years to rebuild or repair,” said Yang, who carried out field research in Sichuan, China after the devastating earthquake there in 2008.

That doesn’t include radiation contamination from earthquake-crippled nuclear reactors, which could have a “potentially significant effect on the post-earthquake rebuilding”.

“The destruction to ports, power plants and oil refineries in northeast Japan has been extensive,” economists Matt Robinson and Ruth Stroppiana at Moody’s Analytics wrote. “The cleanup will take months, and the rebuilding of key infrastructure will take substantially longer.”

The rebuilding effort is expected to require tens of billions of dollars of public spending, which will add to the already swollen national debt.

It could be several years before significant construction work is even started, said Ken Collis, an Australian standby member with RedR, which co-ordinates engineering teams for disaster relief efforts.

Mr Collis said that from his experience helping on reconstruction efforts in the Maldives after the 2004 tsunami, the planning phase could take up to a year as people who have lost their homes are given temporary shelter and officials decide what exactly is needed and where money is best spent.

Another year could be spent on designing the roads, bridges, houses and other buildings that need to be rebuilt, while a third year could be spent putting contracts out for bidding.

He said housing, transport links and factories and other businesses would all have to be rebuilt at the same time.

“It’s very difficult to provide a lot of housing if there are no jobs available or transport to and from.”