Jo Seong-wook: "Large construction companies should actively engage in 'negotiations for delivery price adjustments' due to the sharp rise in raw material prices"

Fair Trade Commission Holds CEO Meeting to Promote Win-Win Cooperation in the Construction Industry

Cho Sung-wook, Chairman of the Fair Trade Commission (file photo)

[Sejong=Asia Economy Reporter Joo Sang-don] On the 18th, Cho Sung-wook, Chairman of the Fair Trade Commission, urged major construction companies to "actively engage in negotiations to adjust delivery prices due to the sharp rise in raw material costs."

On the same day, Chairman Cho presided over a meeting at the Construction Hall with representatives from the Korea Construction Association, the Korea Specialty Construction Association, and leading construction companies and subcontractors recognized for excellence in promoting win-win cooperation, expressing these remarks.

Chairman Cho stated, "With companies increasingly reliant on bank loans, the Bank of Korea's base rate hikes pose a risk of further deteriorating corporate financing conditions, and the steep rise in raw material prices is exacerbating difficulties for small and medium-sized construction firms. I ask for proactive management to ensure timely payment so that subcontractors do not face insolvency."

At this meeting, representatives from six construction companies that received the highest grade in the 2020 Win-Win Growth Index ? Samsung C&T, Hyundai Engineering & Construction, Hyundai Engineering, DL E&C, SK Ecoplant, and Samsung Engineering ? attended to share exemplary cases of win-win cooperation and pledged to continuously realize shared value as role models and leaders in the construction industry.

Following this, the main contractors introduced their best practices in win-win cooperation, and subcontractors and related associations presented their suggestions. Samsung C&T introduced initiatives such as unsecured advance payment support, 100% prepayment of safety management costs, and an expanded incentive system to guarantee workers' right to stop work for safety. Hyundai Engineering & Construction explained its win-win cooperation programs including strategic purchasing for excellent subcontractors and safety points awarded for accident-free workdays.

On the subcontractors’ side, they expressed ongoing difficulties across the industry due to COVID-19, the steel material price crisis, and shortages of urea solution. In particular, many companies complained about the unfavorable modification of the standard subcontract agreement or the preferential application of separate special clauses, requesting that the Fair Trade Commission and the construction industry join forces to eradicate violations of the Subcontracting Act.

In response, Chairman Cho promised to actively work to spread a voluntary culture of win-win cooperation even to secondary and lower-tier transactions. He explained, "We have revised the Fair Trade Agreement implementation evaluation criteria to encourage large corporations to actively promote participation of secondary and lower-tier subcontractors in the agreement, and to award additional points when supporting subcontractors’ industrial safety prevention activities. Furthermore, to enhance the reliability and predictability of subcontracting transactions, we plan to prepare and distribute 'Legal Interpretations and Adjustment Standards on Subcontract Price Adjustments in the Construction Sector.'"

The Fair Trade Commission plans to actively consider the opinions raised at this meeting in future law enforcement and policy implementation processes, and to continue vigorous communication with the construction industry to reflect diverse voices from the corporate field.

This content was produced with the assistance of AI translation services.