Construction Giants Score Big Deals Amidst Subcontractor Crisis

As major construction companies announce contract wins worth trillions of won, specialized construction firms are facing difficulties due to stagnant contract prices despite significant increases in raw material costs.

Representative A of a specialized construction firm in Gyeonggi Province stated that the subcontracting rates offered by major developers are the same as they were 2-3 years ago. He explained that he abandoned site explanation meetings because he couldn't reflect the rising raw material and labor costs in the contract prices.

Consequently, the situation has become difficult for ongoing construction projects, and disruptions to site operations are a concern. Specialized construction firms, hit directly by soaring raw material prices, are struggling with increased costs and facing pressure from major developers to shorten construction periods and transfer costs. Some are refusing new projects or even considering bankruptcy.

Behind the impressive order books of major construction firms lie the struggles of subcontracted laborers and small-to-medium-sized construction companies. If this structural distortion is left unaddressed, South Korea's construction industry risks losing its sustainability.