Celebration of Construction Day

Korean builders to focus on profitable plant projects, diversify markets

The Construction Association of Korea celebrated the Construction Day on June 19 at the Construction Hall in Yeouido, Seoul with many dignitaries and industry executives attending in the annual event.
Minister of Construction and Transportation Choo Byung-jik, in his speech at the ceremony, eulogized the construction industry for having been a backbone of the country's miraculous economic take-off by building infrastructure, new urban cities, and factories.
He said as a result of the astounding development of the industry from the middle of the 1960's, the residential housing supply rate expanded to 102 percent in 2004 from 78 percent in 1970 and the length of highways extended for 100,000 km during the period from 40,000 km. Recently, the overseas construction sector is having another boom with project orders for Korean builders to total $13 billion this year.
However, the minister said technology renovation and a win-win strategy among major construction firms and small builders for further growth of the industry, adding that the government has been working on a strategy to advance the industry centered on "mutual cooperation"and innovation as a major core of its policies.
The government has set aside 262 billion won for R&D activities for the industry this year and the fund will be doubled from next year onward to 500 billion won per year. The increased investment in R & D activities will help the industry upgrade its technology levels in tandem with the private investment in the sector so that the Korean construction firms could be able to undertake more high value-added projects relying less on the labor-intensive ones.
Minister Choo said Construction Day is the biggest festive day for construction industry people and he would like to take the opportunity to thank those people in the industry for their hard work and call on them to work together to advance the industry through the live and let-live strategy and innovation to create a momentum for the industry's second take-off.
Chairman of the Construction Association of Korea Kwon Hong-sa said in his speech that the construction industry has played a great role in the development of the country by building infrastructure, reconstruction of the war-ravaged country during the Korean war(1950-1953) and building residential houses, in addition to taking on projects overseas, which resulted in improved living standards of the people.
He remarked that the industry achieved $10.8 billion in overseas projects orders clinched and in February, its accumulated earnings from overseas construction amounted to over $200 billion in 40 years since 1965, a stunning record that will hardly be surpassed for ages.
But, he warned that the industry is not without trouble. It is faced with difficult times due to many factors including the reductions in public construction projects with the government cutting its budgets for those projects, excessive competition among domestic builders, the spread of the lowest bidder system worsening the bottom lines for construction firms, and the reluctance of competent young men to join the industry, reducing the technology level of the industry, to name just a few.
He called for a new resolution and determination on the part of the industry for its second take-off and become an industry with the people. He said the industry needs to strengthen the growth base for continued growth. He said investment in construction should be maintained at a proper level and the industry has to find a blue ocean market for construction such as those in overseas construction market for its restructuring.
Both large and small construction firms should venture into the overseas construction market, especially in the Middle East, whose construction market is booming with the oil dollars flowing in due to high oil prices and the government expanding its diplomacy to explore construction markets in the Central Asia and Africa.
CAK Chairman Kwon said the industry should increase investment in manpower training and the development of technology and renovate management to enhance its international competitive edge. Both large and small builders should cooperate together to undertake overseas construction projects jointly under a win-win strategic tie-ups in such key areas as management and technology.
He also called for transparency and ethical management as means of survival and enhanced competitive edge. He also called on the industry to make social contributions for the sake of those who live in the shade of economic growth, adding that more construction firms should participate in the construction of "love house"for senior citizens who live alone.
To look at the development of the construction industry at a glance, 1950s was its formative year with many construction firms established to engage in reconstruction projects to rebuild the war-damaged nation during the Korean war. In the '600s, the industry undertook various projects under the first five-year economic development plan established by the government. The industry began to build roads, highways, harbors, tap water and drainage systems, in addition to building residential houses. The nation's first expressway was completed in 1968, stretching for 23.89 km linking Seoul and Incheon.
In the 1970s, the industry undertook key projects included in the government's first national land development plan, aimed at building national highway network and dams in major rivers in the country. In the mid-70s, the construction market in the Middle East opened up and Korean builders advanced into the market to earn valuable foreign exchange need for the economic development of the country. The major project, the Seoul-Busan Highway was completed in 1970, stretching for 425.48 km. In 1974, the No.1 subway in Seoul formally opened for traffic, along with the Soyang river dam the highest in the country soaring 123 meters into the sky with the capacity to hold 2.900 billion tons of water.
In the 1980s, Korean construction firms become the second largest overseas construction industry next to the U.S., making a major contribution to the nation's economic development. With the phase out of the construction boom in the Middle East after the mid-80s, construction firms turned to domestic projects building residential houses and social overhead capital projects under the government plan to build 2 million residential housing units in the country, which continued until the early 1990s. Major landmark projects included the completion of the Main Seoul Olympic Stadium in Seoul in 1984, encompassing 121,000 pyeong and the 63 Building in Seoul in 1985. In the 1990s, the industry learned a valuable lesson in the collapse of Sampoong Department Store and the Seongsu Grand Bridge in Seoul, while the construction market opening to foreign countries under the Uruguay Round service sector agreement and the financial crisis brought management crisis to construction firms with many of them going belly-up.
Major projects in the period included the LNG production terminal in Incheon in 1996 and Petronas Twin Tower in Malaysia.
In the period 2000 and 2005, the industry came back from the doldrums by undertaking major construction projects in the country and winning technology-intensive projects overseas. The industry imported advanced construction technology and managed rational strategies to secure overseas project orders and won 102 trillion won worth of construction orders in 2003.
The industry, for the first time since 1997, won overseas projects orders totaling $10.8 billion in 2005, thanks to thanks to reform that construction firms carried out since the financial crisis in 1998 and winning high value-added projects overseas such as plants.
The industry will continue to win high-value-added project orders overseas armed with solid construction technologies this year and explore the new market such as real estate development projects. Overseas project orders to be secured by the industry is likely to total $13 billion this year. nw

CAK Chairman Kwon Hong-sa.

Chairman Kwon Hong-sa of the Construction Association of Korea is delivering a speech at Construction Day ceremony on June 19.Prime Minister Han Myung-sook, MOCT Minister Choo Byung-jik and Lee Bang-joo, chairman of Korea Housing Association, are also on hand.

Prime Minister Han Myung-sook presents the Order of Industrial Merit, the Gold Tower medal with Vice Chairman Shin Hoon of Kumho Engineering and Construction Co. on Construction Day ceremony on June 19.