The Construction Mutual Aid Association announced on the 30th that it will declare an emergency response system to overcome the crisis caused by the construction industry's downturn.
Amid rising interest rates, raw material prices, and labor costs, the construction industry is facing difficulties, and this is a measure to maintain financial stability amidst uncertainty in the construction economy and financial environment.
Due to the construction industry recession, the Construction Mutual Aid Association, which provides guarantees to construction companies, paid 221.8 billion won as loss compensation on behalf of bankrupt construction companies to partner companies or subcontractors last year, which is a 21.1% increase compared to the previous year (183.1 billion won) and 3.6 times higher than in 2022 (61 billion won).
Performance also deteriorated; the net profit of the Construction Mutual Aid Association last year was 23.1 billion won, a decrease of 72.0% compared to the previous year (82.6 billion won).
The Association noted that the increase in rehabilitation applications from middle-sized construction companies due to worsening management is a burden on the association's stable management, and announced that it would activate the financial performance management committee along with the declaration of the emergency response system.
This Commissioner will diagnose the current crisis situation and conduct flexible implementation and inspection of company-wide response plans by crisis stage.
The Association plans to specifically promote measures such as ▲ reducing guarantee payment amounts through strengthened guarantee examination and management of sites expected to become insolvent ▲ increasing organizational operation efficiency through budget cuts ▲ securing liquidity through the sale of idle assets and adjustment of fund operations.
The Association stated, "We will actively respond to the crisis situation and strengthen financial stability to provide a solid foundation for stable financial services to our members," adding, "We will strive to turn the crisis into an opportunity for growth based on organic cooperation with our members."