Posco E&C Resumes Housing Orders...Normalization Drive Faces Sanctions Risk

Bidding for Sinbanpo 19cha and 25cha Officially Announced
Promotion Resumes for Gaepo Woosung 4cha
Kickstarting Work Pipeline After Suspension of Infrastructure Orders
Task of Restoring Trust After Serious Industrial Accidents

Posco E&C has kicked off its housing order-taking activities in earnest this year by deciding to participate in the bidding for the reconstruction of Sinbanpo 19cha and 25cha. As new infrastructure orders have been halted in the aftermath of a series of serious industrial accidents last year, the move is seen as an attempt to normalize management by securing a pipeline of work centered on the housing business. However, the level of administrative sanctions related to the serious accidents and the decline in brand credibility are expected to be variables for securing new projects.

According to the maintenance and redevelopment industry on February 4, Posco E&C recently confirmed its participation in the contractor bidding for the reconstruction of Sinbanpo 19cha and 25cha. This project will rebuild four complexes - Sinbanpo 19cha, Sinbanpo 25cha, Hanshin Jinil Villart, and Jamwon CJ Village - into a 629-unit apartment complex consisting of 7 buildings with 4 basement floors and up to 49 floors above ground. As high-end complexes such as Maple Xi are clustered nearby and the site enjoys the geographical advantage of being along the Han River, major contractors including Daewoo Engineering & Construction and Samsung C&T have long had their eye on this project.

View of the Sinbanpo 19cha complex. Naver Real Estate

Posco E&C was the first to officially declare its intention to bid and has begun efforts to win over union members. As it is introducing "Oterre Banpo (Sinbanpo 21cha)," the first project to which it will apply its own high-end brand "Oterre," the company plans to use the Sinbanpo 19cha and 25cha project as a bridgehead to expand its brand influence in the Banpo and Jamwon areas.

This bidding decision is highly significant in that it effectively serves as a starting signal for the resumption of housing orders, which had practically come to a halt. Previously, after a series of serious industrial accidents, Posco E&C was rebuked by President Lee Jae-myung in August last year and completely suspended new infrastructure orders. As construction suspension costs at the accident sites and other factors were reflected as large-scale losses, the company posted an operating loss of 452.0 billion won last year, swinging to a deficit from the previous year.

The securities industry expects earnings to improve this year. However, with constraints on infrastructure orders continuing, the task of filling the order gap through the housing business still remains. The level of administrative sanctions will be decided in the first quarter, and industry observers say the possibility of a business suspension cannot be ruled out. If a business suspension is finalized, the company will face restrictions on signing contracts and participating in bids for both private-sector construction and public projects.

Although Posco E&C would still be able to operate if it files an administrative lawsuit with the court to cancel a business suspension and continues operations until a ruling is handed down, its brand credibility is expected to suffer considerable damage. Since the success or failure of securing orders in maintenance and redevelopment projects is determined by the votes of union members, any damage to trust can negatively affect the company’s ability to win construction rights. A Posco E&C official said, "We plan to continue our order-taking strategy that solidifies the brand value of 'The Sharp' and 'Oterre'."

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