39.
PROFILE ON BRICKS
TABLE OF CONTENTS
PAGE
I. SUMMARY 39-3
II. PRODUCT DESCRIPTION AND APPLICATION 39-3
III. MARKET STUDY AND PLANT CAPACITY 39-4
A. MARKET STUDY 39-4
B PLANT CAPACITY AND PRODUCTION PROGRAMME 39-11
IV. MATERIALS AND INPUT 39-11
A. MATERIALS 39-11
B. UTILITIES 39-12
V. TECHNOLOGY AND ENGINEERING 39-12
A. TECHNOLOGY 39-12
B. ENGINEERING 39-13
VI. MANPOWER AND TRAINING REQUIREMENT 39-14
A. MANPOWER REQUIREMENT 39-14
B. TRAINING REQUIREMENT 39-14
VII. FINANCIAL ANALYSIS 39-15
A. TOTAL INITITAL INVESTMENT COST 39-15
B. PRODUCTION COST 39-16
C. FINANCIAL EVALUATION 39-17
D. ECONOMIC BENEFITS 39-18
39-3
I. SUMMARY
This profile envisages the establishment of a plant for the production of 600,000 pieces of
bricks per annum.
The present demand for the proposed product is estimated to be 309,366 pieces and it is
projected to reach 1,298,430 pieces by the year 2010.
The plant will create employment opportunities for 27 persons.
The total investment requirement is estimated at Birr 4.07 million, out of which Birr 2.4
million is for plant and machinery.
The project is financially viable with an internal rate of return ( IRR) of 13% and a net
present value ( NPV) of Birr 654 thousand, discounted at 10.5%.
II. PRODUCT DESCRIPTION AND APPLICATION
Brick is physically expressed as a rectangular prism of clay or soil which has been burnet in a
kiln. It is usually red in colour because of the selected clay ingredient for which the bricks are
made. It has a high temperature resistance property. Depending on the type of raw materials
used for the manufacture, bricks can be of different types such as fire- brick and sand - lime
bricks. The standard size of bricks indicated in some literatures is about ( 6x10x20)
centimeters. The one produced in Ethiopia is of hard and softer type having a size of ( 6x 12
x 25 ) centimeters.
The principal application of bricks is for construction in buildings, for partition and for lining
various types of kilns and furnaces used in iron and steel plants, cement and fertilizer, petro-
chemicals, glass and ceramics and other chemical industries extensively.
39-4
III. MARKET STUDY AND PLANT CAPACITY
A. MARKET STUDY
1. Present Supply & Demand
The demand for bricks is a derived demand of mainly building construction. Bricks are
applied in construction of kilns for bakeries, in kitchen due to their high heat resistance and
also in industrial and commercial construction.
Although brick has high strength and high aesthetic value in building construction, it is being
gradually substituted with blockets because of high cost per unit of construction and high
cement consumption in relation to blockets for the same unit area.
Most residential and high rise buildings in Addis Ababa and major urban areas are built with
hollow block as a walling material, when bricks are used in building structure, it is most of
the time for facing (appearance) purposes at the front side, rather than for structural purposes.
The low utilization of bricks for building residential houses could also be inferred from Table
3.1 on urban housing stock.
39-5
Table 3.1
HOUSING UNITS OF REGION, BY CONSTRUCTION MATERIALS OF WALL
(URBAN)
Total Urban Material of Wall
Region Housing Bricks Blockets Wood and Others
Units Mud
Tigray 115421 534 543 46102 68242
Afar 20160 24 399 14842 4895
Amhara 285203 229 3409 254396 27169
Oromiya 406169 1996 4775 371986 27439
Somali 70088 30 1418 38186 39439
Bensishangul-Gumuz 8499 17 131 6489 1862
SNNR 142212 90 1029 124057 17030
Gambella 6268 10 267 4085 1906
Harari 17455 122 834 11622 4877
Addis Ababa 134742 9163 23076 307855 34648
Dire Dawa 36382 70 4514 11101 20697
Country Total 1,482,589 12,291 40,395 1,190,721 239,182
Source:- CSA, the 1994, Population Housing Census
If we assume Somali, Harrari and Dire Dawa as potential users of bricks, the share of housing
with bricks wall in the total housing stock has been estimated to be only 0.18 per cent. It can
be seen from Table 3.1 that the total housing stock in the three areas identified equals to
123,925 and those with bricks wall amounts to 222. This suggests that one out of 1000
houses are of a brick wall.
The larger proportion of application of bricks is in high rise building, commercial and
industrial constructions. Its application is also more in urban areas than in rural areas.
However, the supply of bricks as reflected from the official statistics is not increasing over the
past many years.
39-6
Table 3.2
PRODUCTION OF BRICKS IN ETHIOPIA
Year Quantity Produced
(thousand pcs.)
1990 21680
1991 21198
1992 19970
1993 19532
1994 19292
1995 15664
1996 19876
1997 19789
Source:- CSA, Survey of the Manufacturing and Electricity Industries.
A major share of bricks supply comes from three factories; namely Ethiopia Bricks,
Ceramical Bricks and Addis Shekla. Addis Shekla has suspended production following
privatization while the remaining two are still operating. In addition to the two public owned
bricks factories, there are small privately owned bricks factories but their production is small
in quantity and poor in quality. On the other hand, the two bricks factories are over 30 years
old and are operating beyond their technical life.
Transporting and selling bricks over longer distance is not an economical operation. The
Somali Region is so large in terms of land mass that supplying bricks to different urban areas
of the region from a single source will not be economical. Moreover, due to shortage of
cement and transport cost over a long distance construction materials are expensive in the
region.
In view of the relative stagnation of supply of bricks and costs related to transporting it over
long distances the demand situation has been considered within the regional context and
neighboring regions.
39-7
The regional government commit a huge budget to construction and some of it may require
bricks as an input. Though the sectoral plans of the region indicate that the sectoral projects
involve construction, it does not show number of houses constructed with bricks or hollow
blocks or other construction materials. In addition, there is no information on private
commercial and industrial construction in the region.
In view of poor housing condition in the Somali region and an effort to develop the region by
the private and public sector, it is assumed that the demand for construction materials
including bricks will increase.
Estimation of current and future demand for bricks in this study is based on specifying
consumption requirements by different types of buildings as well as anticipated construction
work disaggregated into different types of buildings.
Accordingly, the following consumption coefficient were developed in consultation with
professional in the field (Table 3.3).
Table 3.3
CONSUMPTION COEFFICIENT BY BUILDING TYPE
Wall Area m2 Bricks requirement
Building Type Floor External Internal Extended Internal Total
Area M2
Ground plus zero 150 81 135 9396 7830 17226
Ground plus one 300 162 270 18792 15660 34452
Ground plus two 450 243 405 28188 23490 51678
Ground plus three 600 324 540 37564 31320 68904
Ground plus ten 900 486 872 50376 47096 10,472
Note:- Bricks requirement per m2 of floor area is 58 piece for internal walls,
and 116 pieces for external walls.
39-8
Taking the development in the region and the surrounding regions like Harari and Dire Dawa
town into account, the following development trends were estimated. (Table 3.4).
Table 3.4
PROJECTED IMPLEMENTATION OF BUILDINGS IN THE REGION (NO.)
Year
Item 2001 2002 2003 2004 2005 Total
Ground plus zero 90 100 120 150 180 640
Ground plus one 60 70 85 100 115 430
Ground plus two 40 50 65 80 95 330
Ground plus three 30 40 55 70 85 280
Ground plus four 20 30 45 60 75 230
When the consumption coefficient established earlier are applied on Table 3.4, we can arrive
at the current as well as future demand of bricks in the Somali Region (see Table 3.5). The
demand estimation, however, is carried out under three scenarios.
The first scenario, which is optimistic, assumes that 10% of the buildings will use bricks as
wall material. The second scenario, which is moderately optimistic assumes that 5% of
buildings will be made of bricks. The third scenario assumes that only 3% of the buildings
will use bricks. Accordingly, the present demand for bricks has been estimated at 309,366
pieces.
39-9
Table 3.5
CURRENT AND FUTURE DEMAND OF BRICKS
Year
2001 2002 2003 2004 2005
Base year (105%) 10,312,197 13,207,388 17,640,598 22,254,687 26,867,775
Scenario 1 (10%) 1,031,220 1,320,938 1,764,060 2,225,469 2,686,777
Scenario 2 (5%) 515,610 660,369 882,030 1,127,343 1,343,389
Scenario 3 (3%) 309,366 396,221 529,218 676,641 806,033
Note: the base case refer to scenarios where all buildings are made of bricks plus 5%
wastage allowance.
2. Demand projection
As the data in Table 3.1 reveals, in Ethiopia housing construction is mainly based on naturally
available materials such as wood and mud. With progress in development, modern building
materials, including manufactured bricks, will replace traditionally used natural building
materials. This reduces the negative effect of construction on the environment. Studies made
on effect of economic growth on the construction industry indicated that construction activity
increases faster than growth in the economy as a whole by 20%. The demand for bricks is
also influenced by growth rate of the urban population, which is estimated to be 4% per
annum.
An important determinant of demand for bricks in Ethiopia, however, is the price and
availability of substitute product. The most notable substitute to bricks, i.e. hallow block, is
amply available and very much cheaper than bricks. The cost comparison of the two material
is provided in Table 3.6.
39-10
Table 3.6
COST COMPARISON OF HALLOW BLOCK AND BRICKS
Hallow Block Bricks
Item (a) (b) c+(axb) (a) (b) c = axb
Piece /m2 Birr/piecs Birr /m2 Piece/m2 Birr/price Birr /m2
External 12.5 2.00 25.00 116 0.75 82.00
Partition 12.5 1.75 21.90 58 0.75 43.50
Table 3.6 shows that for the same square area the cost of using bricks as a construction
materials is more than three fold to that of using hollow blocks.
Apart from the price factor, hollow blocks has an added advantage because it requires less
cement and sand which are complementary materials during wall construction. The
workmanship required during brick laying is also of higher standard, thereby raising the cost.
Hence, despite its obvious attractive physical attribute, the demand for bricks is not growing
as fast as the growth of the construction industry. In view of this, for the part of the
construction period within the coming five years, an annual growth rate of 10% has been
applied. Table 3.7 shows demand projection based on this rate of growth.
Table 3.7
DEMAND PROJECTION OF BRICKS
Year Projected Demand in Pieces
2001 309,366
2002 396,221
2003 529,218
2004 676,641
2005 806,033
2006 886,636
2007 975,580
2008 1,075,083
2009 1,180,391
2010 1,298,430
39-11
3. Pricing and Distribution
The current ex-factory price of bricks in Dire-Dawa is Birr 2.00 per piece. This price is
proposed for the envisaged project. All types of customers, small or big, make their
purchases directly from the factories using their own means to transport the bricks to site.
B. PLANT CAPACITY AND PRODUCTION PROGRAMME
1. Plant Capacity
The envisaged plant will have a production capacity of 600,000 pieces or 1500 tonnes of
bricks per annum.
2. Production Programme
The proposed plant is planned to function for about 240 days a year in a single shift of 8
hours a day production system. However, as the firing system in the drying kiln requires
continuous operation, three shift production might be carried out until firing cycle is
completed. The plant will start production at 80%, 90%, 100% capacity in years 1,2, and 3,
respectively.
IV. MATERIALS AND INPUTS
A. MATERIALS
The raw materials used for the production of ordinary type of bricks is clay. Clay is the only
raw materials for the above stated type of bricks, which are mainly used for structural
purposes in building construction. Such raw material can be availed in the out skirts of
Jigjiga. This raw material must possess special properties and composition or constituents
such as hydrous silicates of aluminum together with some colour imparting materials like
hematite and limonite. The annual requirement of clay is estimated at about 1800 tonnes, the
cost of which is about Birr 50,000.
39-12
B. UTILITIES
Major utilities for bricks production are fuel oil for drying and burning of the product, electric
power for machine drive and water for general purpose. The annual consumption of these
utilities is shown in Table 4.1.
Table 4.1_
ANNUAL CONSUMPTION OF UTILITIES
Cost ‘000 Birr
Item Description Qty F L T
No.
1 Fuel Oil (Tonnes,) 95 -- 185.2 185.2
2 Electric Power, (Kwh) 28,125 -- 13.8 13.8
*3 Water (m3) 300,000 -- --
Total 199.0 199.0
V. TECHNOLOGY AND ENGINEERING
A. TECHNOLOGY
1. Process Description
The most common practice of bricks production involves several unit operations such as
material excavation and transportation, grinding and mixing, brick shaping, drying of semi-
finished brick, burning, classifying and packing of the finished product. In the proposed plant
the process starts from grinding operation in order to reduce the investment cost.
The quarried raw material is subsequently crushed and wetted several times before it is passed
or feed to the press vacuum chamber where air is extracted in order to obtain a compact mix.
Then, a well prepared clay mix is extruded through a mold to get the required shape and
dimensions. The wet semi finished brick is conveyed to the batch drying chamber,
----
* Well -water will be used. The cost of pumping is included in electric power charge.
39-13
where drying is carried out by blowing in warm air and expelling of humid air with intensive
fanning. Then, the dried batch is conveyed to the kiln for the final process. Burning of the
batch in the kiln is accomplished by a flame traveling in circle on top of the bricks. Upon
completion of the baking of bricks, the products are stored in a storage place where
preliminary sorting is made. Finally, the selected bricks are made available for market. The
plant is environment friendly.
2. Source of Technology
The machinery and equipment required can be obtained from the following company.
Movers (India) Private Ltd.
BASAVA BHAVAN, High Grounds
Fax 91-802263606
B. ENGINEERING
1. Machinery and Equipment
The machinery and equipments required are listed in Table 5.1. the total cost of the
machinery and equipment is estimated at about Birr 2.4 million. Of the total, Birr 2.175
million is in foreign currency while the remaining 0.255 million is in local currency.
Table 5.1
REQUIRED MACHINERY AND EQUIPMENTS
Cost ‘OOO Birr
Items Qty. F.C L.C Total
1. Front end dumper 1 340.0 - 340.0
2. Box Feeder 1 200.0 - 200.0
3. Roller crusher 1 375.0 - 375.0
4. Vacuum press with mixer 1 350.0 - 350.0
5. Conveyors 2 200.0 - 200.0
6. Cutter (Semi-automatic) 1 250.0 - 250.0
7. Drying kiln 1 460.0 - 460.0
F.O.B 2,175.0 - 2,175.0
C&F - 123.80 123.80
Various charges 131.6 131.6
Total 2,175.0 255.40 2,430.4
39-14
2. Land, Building and Civil Works
The over all land required is about 3500 square meters, of which 750 square meter is alotted
for building and production spaces. The total construction cost at a unit cost of Birr 1250 per
m2 is estimated to be Birr 937,500. Land lease cost at the rate of Birr 1 per m2 and for 95
years is estimated to be Birr 332,500. Thus, total land and construction cost amounts to Birr
1,270.000.
3. Proposed Location
Jigigja town is the best location for the bricks making plant as there is a rapid urban
development activity which is an advantage interms of market outlet for the product.
VI. MANPOWER AND TRAINING REQUIREMENT
A. MANPOWER REQUIREMENT
The list of manpower required and the corresponding labour costs are shown in Table 6.1
below.
Table_6.1
MANPOWER REQUIREMENT
Salary in Birr
Description Required Monthly Annually
Number
A. Administrative staff
1 Manager 1 1500 18,000
2 Secretary 1 350 4,200
3 Accounting clerk 1 350 4,200
4 Store man 1 500 6,000
5 Guards 4 180 8,640
Sub – Total 8 41,040
B. Production Staff
1. Production Head 1 1400 16,800
2. Supervisors 1 750 9,000
3. Machine Operators 5 600 36,000
4. Mechanic cum Electrician 2 500 12,000
5. Unskilled Workers 10 200 24,00
Sub-Total (B) 19 97,800
Total (A+B) 27 138,840
Benefits 25% 34,710
Grand Total 173,550
39-15
B. TRAINING REQUIREMENT
Couple of weeks orientation for production and technical personnel will be conducted during
the plant erection and commissioning period by the machinery supplier. Thus, no training
cost is required.
VII. FINANCIAL ANALYSIS
The financial analysis of the Bricks project is based on the data presented in the previous
chapters and the following assumptions:-
Construction period 2 years
Source of finance 70% equity
30% loan
Tax holidays 3 years
Bank interest 10.5 %
Discounted cashflow 10.5%
Land value based on estimated lease rate of the region
Repair and maintenance 5%plant and machinery
Accounts receivable 30 days
Raw material local 60 days
Work in progress 5 days
Finished products 30 days
Cash in hand 5 days
Accounts payable 30 days
A. TOTAL INITIAL INVESTMENT COST
The total initial investment cost of the project including working capital is estimated at about
Birr 4.07 million, out of which about 53% will be required in foreign currency. For details
see Table 7.1
39-16
Table 7.1
INITIAL INVESTMENT COST (‘000 BIRR)
No. Cost Items Foreign Local Total
Currency Currency
1 Land 332.50 332.50
2 Building and Civil Work 937.50 937.50
3 Plant Machinery and Equipment 2,173.50 256.90 2,430.40
4 Office Furniture and Equipment 50.00 50.00
5 Vehicle - -
6 Pre-production Expenditure* 289.80 289.80
Total Investment Cost 2,173.50 1,866.70 4,040.20
7 Working Capital 33.81 33.81
Total 2,173.50 1,900.51 4,074.00
B. PRODUCTION COST
The annual production cost at full operation capacity of the plant is estimated at Birr 1.4
million (see Table 7.2). The material and utility cost accounts for 16.8 per cent while repair
and maintenance take 13.5 per cent of the production cost.
---
* Pre-production expenditure include interest during construction (Birr 189,000) and cost
of registration, licensing and formation of the company including legal fees, commissioning
expenses, etc.
39-17
Table 7.2
ANNUAL PRODUCTION COST (‘000 BIRR)
Year
Items 3 4 7 15
Raw Material and Inputs 40 45 50 50
Labour direct 78.2 88.00 97.80 97.80
Utilities 159.20 179.10 199.00 199.00
Energy and power
Spare parts
Maintenance and repair 110.40 124.20 138.00 138.00
Factory overheads 27.80 31.20 34.71 34.71
Administration Overheads 41.04 41.04 41.04 41.04
Total operating costs 456.60 508.60 560.55 560.55
Depreciation 298.40 298.40 298.40 298.40
Cost of Finance 557.10 583.90 607.90 597.60
Total Production Cost 1,312.10 1,390.9 1,445.10 1,402.90
C. FINANCIAL EVALUATION
1. Profitability
According to the projected income statement, the project will start generating profit in the
eleventh year of operation. Important ratios such as profit to total sales, net profit to equity
(Return on equity) and net profit plus interest on total investment (return on total investment)
will show an increasing trend during the life-time of the project.
The income statement and the other indicators of profitability show that the project is viable.
39-18
2. Break-even Analysis
The break-even point of the project is estimated by using income statement projection.
BE = Fixed Cost = 60%
Sales - Variable Cost
3. Pay- Back Period
The investment cost and income statement projection are used to project the pay-back period.
The project’s initial investment will be fully recovered within 9 years.
4. Internal Rate of Return and Net Present Value
Based on the cashflow statement, the calculated IRR of the project is 13% and the net present
value at 10.5% discount rate is Birr 653.90 thousand.
D. ECONOMIC BENEFITS
The project can create employment for 27 persons. In addition to supply of the domestic
needs, the project will generate Birr 198.46 thousand interms of tax revenue. Moreover, the
Regional Government can collect employment, income tax and sales tax revenue. The
establishment of such factory will have a foreign exchange saving effect to the country by
substituting the current imports.
