[Reporter’s Notebook] Mid-Sized Construction Firms in a Dilemma... Let Them Hold Onto Hope

Losing Ground to Major Players in Redevelopment and New Business Sectors
Industry Growth Unlikely Without Small and Mid-Sized Construction Companies

"I'm tired of hearing how difficult things are. For now, my goal this year is simply to survive."

An executive at a mid-sized construction company expressed this sentiment in his New Year's address, stating that he would further solidify the company's focus on sound management this year. The keyword of last year's New Year's message was also "sound management." Just like last year, his remarks made it clear that mere survival remains the goal, leaving little room for hope.

The space for small and mid-sized construction companies is steadily shrinking. In Seoul's prime redevelopment areas, where business viability is assured, the battlefield has long been dominated by large corporations. If you are not a major player, you cannot even get a foot in the door. Building brand power for apartments and engaging in order-winning marketing both require substantial financial resources.

The same applies to entering new business sectors. While it is well understood that new growth engines such as artificial intelligence (AI), small modular reactors (SMR), and modular housing need to be explored, these companies simply do not have the capacity. Unlike large corporations that can allocate separate budgets for research and development (R&D), small and mid-sized firms must prioritize covering the costs necessary for survival.

To survive, small and mid-sized construction companies are limited to participating in small-scale redevelopment projects or securing public redevelopment contracts. However, even these opportunities have become precarious, as the government tightened safety regulations last year, making it possible for companies to be forced to shut down if an industrial accident occurs. Construction must be halted, and companies must wait for disciplinary action. This is a stark contrast to large corporations, which have the capital and manpower to invest in safety and can withstand project suspensions.

It is only natural to uphold fundamental values such as safety and the protection of life. However, a closer look at reality is needed. The room for maneuver in responding to government regulations varies greatly depending on whether a company is large or not. The more the government raises awareness about safety, the faster the construction industry is reorganized around top-tier construction companies. This is why concerns are being raised about the accelerating restructuring of the industry in favor of major players.

To support the survival of small and mid-sized construction companies, it is essential to revive the devastated local real estate markets and restore the private sector's ability to supply housing. This is not merely about prolonging their existence. The survival of these companies leads to growth in the construction industry and lays the foundation for the government to achieve its economic growth targets.

Accelerating public procurement and execution, promoting the launch of private sector projects and providing liquidity support, and implementing support measures centered on regional and small and mid-sized construction companies are also necessary. Even if not all of these policies are implemented, there must at least be hope that "this year could be a little different." Genuine growth is impossible in a market where small and mid-sized construction companies have disappeared.