New Entries Restricted Until 2023... "Over 3,000 Units Short on Site"
97% of Industry Are SMEs... "Government Must Take Responsibility for Supply-Demand Side Effects"
Supply-Demand Adjustment Committee Formation Also Criticized... Industry Officials Say 'Zero'
[Asia Economy Reporter Lee Junhyung] The industry’s concerns are deepening as the registration of new ready-mix concrete (remicon) transport vehicles (concrete mixer trucks) has been restricted for the 12th consecutive year. Remicon manufacturers say that this comes as a blow following the implementation of the ‘8-5 system’ (working hours from 8 a.m. to 5 p.m.) and the Saturday off policy applied to transport vehicle owners. With the expected increase in remicon demand due to the supply of the third phase of new towns in the Seoul metropolitan area, there is a possibility of a supply and demand crisis.
According to the industry on the 27th, the Ministry of Land, Infrastructure and Transport’s Construction Machinery Supply and Demand Adjustment Committee decided to freeze the registration of new licenses for three types of construction machinery, including remicon transport vehicles, until July 2023. The Ministry holds the supply and demand adjustment committee every two years to regulate the supply of construction machinery according to the supply and demand plan. Since 2009, the Ministry has prohibited new entries to protect remicon transport vehicle owners for 12 years.
Complaints of ‘Triple Hardship’... “Industry Opinions Ignored”
Remicon manufacturers protested, saying, “Industry demands were not reflected at all.” The remicon industry has argued that transport vehicles are severely insufficient compared to market demand. According to the industry, last year, there were about 26,000 transport vehicles nationwide, which is approximately 3,000 fewer than the 29,000 vehicles needed at construction sites across the country. During the peak construction season from March to May, this gap widens to about 6,300 vehicles.
The Korea Ready-Mixed Concrete Industry Association and others submitted a proposal regarding the imbalance in transport vehicle supply and demand ahead of the supply and demand adjustment committee meeting. A representative from the Korea Ready-Mixed Concrete Industry Association explained, “We expressed to the Ministry of Land, Infrastructure and Transport and others that if the supply and demand regulation of transport vehicles is not eased, there will inevitably be immediate problems in remicon supply,” adding, “Ultimately, we have no choice but to conclude that industry opinions were ignored.”
Ready-mix concrete transport vehicles parked at a construction site in Seoul. Photo by Lee Jun-hyung
The industry responded that they are suffering from triple hardships due to the 40-hour workweek, increased transportation costs, and restrictions on transport vehicle supply. Previously, remicon transport vehicle owners have been operating under the 8-5 system implemented since 2016 and, starting this March, have also observed a 40-hour workweek with Saturdays off. While they sympathize with the intent to prevent overwork among transport workers, the industry explains that the continuous reduction in transport hours without any countermeasures has become a factor causing supply disruptions. Furthermore, according to the Korea Ready-Mixed Concrete Industry Association, while the price of remicon rose by 10.5% from 56,200 KRW in 2009 to 62,100 KRW in October last year, transportation costs (per rotation) increased by 68.64% during the same period.
The Korea Ready-Mixed Concrete Cooperative Federation expressed strong regret in a statement. It pointed out that the harsh reality of the industry, composed of 896 small and medium-sized enterprises (96.8%) out of 925 remicon manufacturers, was overlooked. The federation stated, “Despite the desperate appeals of the small and medium remicon industry, the Ministry of Land, Infrastructure and Transport and others did not consider the industry’s circumstances,” adding, “They should take responsibility for the adverse effects on supply and demand, such as remicon supply delays that may occur in the future.” It continued, “Transportation costs have risen sharply every year and delivery hours have gradually decreased, but it is not easy to raise remicon delivery prices,” adding, “Small and medium remicon companies are in a desperate situation.”
Concerns Over ‘Supply and Demand Crisis’... Criticism of Supply and Demand Adjustment Committee Composition
There are also voices expressing concern that a supply and demand crisis may occur as remicon demand increases with the recent recovery of the construction market. The government is accelerating efforts to increase housing supply by developing the third phase of new towns in the Seoul metropolitan area and promoting the ‘Public-led 3080+ policy.’ A total of 62,000 households will be supplied by next year through the third phase of new towns alone. This is why there are observations that the Ministry of Land, Infrastructure and Transport’s recent measures could exacerbate instability in remicon supply and demand.
The fairness of the composition of the supply and demand adjustment committee was also criticized. Among the 15 committee members, three represent transport vehicle owners from organizations such as the Korean Confederation of Trade Unions and the Federation of Korean Trade Unions, while only one member represents the opposing side, the Korea Construction Machinery Industry Association, a machinery manufacturing organization. An industry official said, “We have continuously raised issues regarding the current composition of the supply and demand adjustment committee through the Korea Federation of SMEs,” adding, “Requests to increase industry representatives on the committee as stakeholders have been consistently ignored.”
Ready-mix Concrete Workers Declare General Strike(Seoul=Yonhap News) Jin Yeonsu reports = Members of the National Construction Workers' Union held a press conference declaring a general strike of ready-mix concrete workers on the 9th in front of the Blue House Fountain in Seoul. 2021.6.9
On the other hand, the Korean Confederation of Trade Unions’ National Construction Workers’ Union issued a statement on the same day expressing a welcoming stance. The union said, “We welcome the 2021 construction machinery supply and demand plan,” adding, “We hope that these measures will improve the lives of small-scale construction machinery workers and ensure safety at worksites.” It further stated, “Before talking about resolving conflicts in the remicon industry and fostering a culture of coexistence, the Ministry of Land, Infrastructure and Transport should strive to improve actions that degrade the labor conditions of remicon transport workers.”
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