Direct Transactions Between Construction Companies and Remicon Unions... What Is the Remicon Industry Worried About?

"Passing the Buck, Will Shift to Ready-Mix Concrete Companies in Future Price Negotiations"
Local Minno Union Has No Countermeasures if Transportation Cost Increase Demands Are Made Through Benchmarking
Key to Overcoming Crisis: Allowing New Entry of Ready-Mix Concrete Mixer Trucks and Introducing Delivery Price Linkage System

Ready-mix concrete trucks entering the site in accordance with the construction progress.
[Photo by Asia Economy DB]

[Asia Economy Reporter Kim Jong-hwa] The ready-mixed concrete (remicon) industry is struggling in an unprecedented crisis. The transport refusal incident in Seoul by five metropolitan branches (Dongnambuk, Anyang, Bucheon, Goyang-Paju, Seongnam-Gwangju) of the Korean Federation of Trade Unions (KFTU) Remicon Transport Labor Union erupted before negotiations over the timing of cement price hikes were finalized, adding insult to injury.

According to the remicon industry on the 23rd, the construction industry's capitulation to the transport union's refusal to transport within Seoul's four major gates and dense areas is expected to become a greater burden for the construction and remicon sectors going forward.

Construction companies have agreed to pay an additional approximately 63,700 KRW on top of the current 56,000 KRW per transport, more than doubling the per-trip transport fee. Furthermore, if transport vehicles enter alleys with one-way traffic, an additional 20,000 KRW will be paid, and long-term plans to allow remicon mixer trucks to use bus-only lanes are also under consideration.

The remicon industry's concern lies in the fact that "all the aftershocks caused by this incident will be borne by the remicon companies." They believe that the additional transport fees agreed to be paid by construction companies will eventually become the burden of remicon companies. A remicon company official lamented, "The construction companies' surrender this time is just a 'temporary fix' and a 'passing the buck' game," adding, "In future remicon price negotiations, construction companies will shift the burden onto remicon companies."

There is also worry about the trends of local remicon transport unions, stimulated by the metropolitan transport refusal. The remicon transport unions are divided between the KFTU in the metropolitan area and the Korean Confederation of Trade Unions (KCTU) in the provinces. If the KCTU in the provinces benchmarks the KFTU's approach and demands transport fee increases nationwide through similar irregular and illicit methods, there will be no proper countermeasures.

The industry believes that the key to overcoming this crisis lies in allowing new entries of remicon mixer trucks and introducing a delivery price linkage system.

The industry claims that the Ministry of Land, Infrastructure and Transport's Construction Machinery Supply Adjustment Committee has effectively overlooked the transport unions' overreach by restricting new registrations of remicon mixer trucks for a staggering 14 years from 2009 to 2023. During this period, remicon prices increased by 47.6%, but transport fees rose by 110.1%. While the remicon industry grew by about 21%, the number of operating vehicles per factory decreased by 15.7%, causing transport disruptions. The risk of safety accidents is also increasing due to aging mixer trucks and an aging transport workforce.

A remicon industry official emphasized, "If supply adjustment is necessary, local governments can autonomously regulate the number of registrations according to regional construction demand," adding, "Abolishing the supply adjustment system and allowing new entries of remicon mixer trucks will reduce repeated shutdowns at construction sites and related damages."

The introduction of a delivery price linkage system faces a bleak outlook after hitting obstacles from the start. Although the Ministry of SMEs and Startups attempted a pilot project last month, it ultimately failed. This was due to unresolved preconditions such as participation from the cement and aggregate industries in the supply chain, construction industry adjustments to project costs, and the power dynamics between local small remicon companies and large remicon companies concerning remicon quality.

Moreover, the remicon industry still needs to negotiate price increases with the cement industry, and internal conflicts have surfaced following the appointment of a Korean Remicon Industry Association chairman from a cement affiliate, causing further strain.

Regarding this, a remicon industry official said, "This year, the remicon industry is facing more difficulties than ever. Nevertheless, the industry has made many concessions and accepted numerous demands from a grand perspective of stabilizing the construction market," adding, "The remicon industry can no longer endure this situation and hopes that these issues will be resolved amicably for mutual coexistence."

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