01 November 2012 22:58 [Source: ICIS news]
HOUSTON (ICIS)--Hurricane Sandy will likely trigger a demand surge in the construction industry, even though it was a relatively weak Category 1 storm, a risk-management firm said on Thursday.
Category 1 hurricanes have sustained winds of 74-95 miles/hour (119-153 km/hour), according to the National Hurricane Center. Storms rated Category 5, the highest, have wind speeds of at least 157 miles/hour.
A surge in construction is unusual for a Category 1 storm because damage is not usually sufficient to trigger extraordinary demand, EQECAT said during a conference call.
However, Hurricane Sandy was a catastrophe that would happen once in every seven to 10 years, EQECAT said. It caused such a magnitude of loss mainly because of the broad wind field that exceeded 1,000 miles (1,609km) and storm surges that reached up to 14 feet (4.3m), the company said.
EQECAT’s post-landfall estimates were $10bn-20bn (€7.7bn-15.4bn) in insured losses and $30bn-50bn in total economic losses.
As a result, demands for labour and supplies will spike with the need for immediate repairs, the company said.
The cost of supply labour, including commute costs and increased temporary housing costs, will go up as well, the EQECAT said.
Still, some US economists expect the spike in the construction industry would only be temporary with overall short-term effects.
The Association of General Contractors (AGC) of America said many workers will be diverted from other tasks. Those who were hired for emergency projects would no longer be needed upon the project’s completion.
Every $1,000 spent on non-residential construction generates $160-230 worth of consumable chemicals and derivatives, according to the American Chemistry Council (ACC).
($1 = €0.77)
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