Cross Construction, ranked fourth in construction capacity in Daejeon, has filed for corporate rehabilitation. The crisis facing small and midsize regional builders continues.
According to the legal and construction sectors on the 11th, Cross Construction filed for corporate rehabilitation (court receivership) with the Daejeon District Court in the previous month and received a decision to commence rehabilitation proceedings on Oct. 30.
Based in Daejeon, Cross Construction ranks 217th nationwide by order volume with a construction capability evaluation amount of 111.2 billion won this year. In the Daejeon area, it ranks fourth after Gyeryong Construction, Kumsung Baekjoe Construction Corp., and Pine Construction.
Cross Construction grew into a leading regional builder by winning not only large public-sector projects but also private-sector contracts. The company expanded nationwide with projects including the Yeongdeungpo-gu General Post Office building in Seoul, an apartment complex for public officials, a new mixed-use facility in Dasan-dong, Namyangju, Gyeonggi Province, and the Busan Medical Center.
However, as the construction downturn outside the capital area has dragged on, Cross Construction could not avoid the crisis. It is said to have filed for corporate rehabilitation after problems emerged more in private projects than in public-sector ones.
Cross Construction's sales fell 28.5% year over year to 79.4 billion won last year, and it swung to a loss with an operating loss of 1.6 billion won in the same period. Its financial soundness also deteriorated. The liability ratio rose to 166% last year, up 61 percentage points from the previous year (105%).
Not only Cross Construction but also other builders have entered court receivership this year. About a dozen construction companies, including ◇ Daejeo Construction ◇ SAMBU Construction ◇ Angang Construction ◇ Daewoo Shipbuilding & Marine Engineering Construction ◇ Samjeong Corporations ◇ Samjeong E&C ◇ Byuksan Engineering ◇ Daeheung Construction ◇ Youngmu Construction, have applied for corporate rehabilitation.
In particular, with a rising share of court receiverships among builders based outside the capital area, the regional construction industry says the "local construction marketplace has started to collapse."
An official at a regional construction company said, "Compared with Seoul, the construction market in the provinces is even colder," and added, "As regional builders collapse, it is as if the neighborhood markets within the construction industry are collapsing."
This official added, "Compared with the capital area, the scale of public-sector projects is limited and there are many unsold private units," and noted, "Few regional builders have their own apartment brands, so large builders are taking all the redevelopment and reconstruction projects. Even the government's regional construction support programs are applied for only by companies of a certain scale."