POSCO E&C Scales Back Redevelopment Bids... Continues Participation in Gaepo and Seongsu Projects

Faced with a series of fatal accidents, POSCO E&C has shifted to a more conservative stance in its maintenance project bidding strategy. The company has decided to maintain business activities only for key projects such as Seongsu District 2. With construction halted at most sites, concerns over deteriorating performance and potential credit rating downgrades have made it increasingly difficult to secure votes from union members, leading POSCO E&C to further strengthen its selective bidding strategy.

Exterior view of the POSCO E&C headquarters building. Provided by POSCO E&C

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According to the maintenance industry on August 18, the Songpa Hanyang 2nd Reconstruction Union recently informed its members that POSCO E&C would not be participating in the bidding process. Initially, a three-way competition among GS Engineering & Construction, HDC Hyundai Development Company, and POSCO E&C was expected, but POSCO E&C was the first to announce its withdrawal. The bidding for the Songpa Hanyang 2nd project will close on September 4.

Following the recent fatal accidents, President Lee Jae Myung mentioned possible license revocation and punitive damages, making it difficult for POSCO E&C to pursue an aggressive bidding strategy. A representative of the Songpa Hanyang 2nd Union explained, "We were informed that the company could not participate in the bidding due to internal circumstances, and this was shared with union members, but there was no significant reaction among them."

For Gaepo Woosung 4th, where the contractor rebidding has been postponed, preliminary promotional activities for the bidding are still ongoing. This site is one where POSCO E&C, after withdrawing from the Gaepo Woosung 7th bid, has focused its full capabilities. Despite the impact of major industrial accidents, the company appears not to have withdrawn its intention to win the contract. POSCO E&C is operating a promotional office near the complex and continues to visit the union to carry out promotional activities. A union representative stated, "Recently, POSCO E&C's promotional staff visited the union office and promoted the project in much the same way as before."

However, the union considers POSCO E&C's participation in the bidding to be uncertain and is reviewing the possibility of rebidding for the contractor. Originally, a two-way competition with Lotte Engineering & Construction was expected, but there are concerns that if POSCO E&C withdraws, the project may proceed through a private contract. If the re-announcement proposal is approved at the delegates' meeting on August 19, a bidding announcement will be made in December. The contractor selection general meeting is expected to be held in March next year.

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POSCO E&C will continue to compete for the Seongsu District 2 project, which is considered one of its core bidding projects. This prime site, located along the Hangang Belt, is a key area where POSCO E&C has been focusing its efforts to strengthen its brand presence.

A representative of the Seongsu District 2 Union stated, "The promotional staff are working just as diligently as before." The union plans to announce the contractor bidding in September, with a three-way competition expected among DL E&C, Samsung C&T, and POSCO E&C. A POSCO E&C representative said, "We have officially decided not to participate in the Songpa Hanyang 2nd project, but for other sites, we will do our utmost to reciprocate the trust of the union members."

In maintenance projects, the corporate and brand image of a construction company significantly influences union member sentiment. Various accidents involving POSCO E&C and the government's responses may serve as negative factors when seeking votes from union members during contractor selection. An industry official said, "I understand that there were differing opinions between management and staff regarding participation in projects other than Seongsu District 2. There is also talk that, following the management reshuffle, the company will focus on projects ordered by organizations such as LH."

Regarding this, a POSCO E&C official stated, "No decision has been made on whether to participate in bidding for newly announced projects. The temporary suspension of bidding applies only to the infrastructure sector."

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