{"id":64537,"date":"2026-05-26T08:00:16","date_gmt":"2026-05-25T23:00:16","guid":{"rendered":"https:\/\/norimen.net\/?p=64537"},"modified":"2026-05-22T19:28:09","modified_gmt":"2026-05-22T10:28:09","slug":"general-contractor-posts-record-profit-vs-small-construction-firm-files-for-bankruptcy","status":"publish","type":"post","link":"https:\/\/norimen.net\/en\/general-contractor-record-profit-vs-small-construction-bankruptcy\/","title":{"rendered":"Major General Contractors Post Record Revenue, While Small and Medium-Sized Construction Firms See Bankruptcies Exceed 2,000 for the First Time in 12 Years! Three Paths to Survival for the Slope Stabilization Industry"},"content":{"rendered":"<p>Hello, everyone.<\/p>\n<p>This is Enta.<\/p>\n<p>This time, I'll be talking about this season.<\/p>\n<p>What's happening at the \"top\" and \"bottom\" of the construction industry?<\/p>\n<p>I came across an article like this the other day.<\/p>\n<blockquote><p><strong><span style=\"color: #ff0000;\">In the fiscal year ending March 2026 financial results for 23 major and mid-sized general contractors, 11 companies posted record-high revenue and 10 posted record-high operating income. Kajima became the first general contractor to surpass 3 trillion yen in revenue.<\/span><\/strong><br \/>\n(Construction News, May 15, 2026 \/<a href=\"https:\/\/www.kensetsunews.com\/sokuho\/1226771\" target=\"_blank\" rel=\"noopener\">Source<\/a>\uff09<\/p><\/blockquote>\n<p>On the other hand, here's this.<\/p>\n<blockquote><p><span style=\"color: #993366;\"><strong>In April 2026, there were 185 bankruptcies in the construction industry, a 21.7% increase from the same month a year earlier, marking the third consecutive month of year-over-year growth. Small and medium-sized enterprises accounted for 100% of all bankruptcies for the 14th consecutive month.<\/strong><\/span><br \/>\n(Tokyo Shoko Research, May 13, 2026 \/<a href=\"https:\/\/www.tsr-net.co.jp\/news\/status\/detail\/1202835_1610.html\" target=\"_blank\" rel=\"noopener\">Source<\/a>\uff09<\/p><\/blockquote>\n<blockquote><p><span style=\"color: #0000ff;\"><strong>The number of bankruptcies in fiscal year 2025 stood at 10,425, marking the second consecutive fiscal year that the figure exceeded 10,000. The number of bankruptcies caused by \u201crising prices\u201d and \u201clabor shortages\u201d reached record highs, with the construction industry accounting for the largest number of bankruptcies due to rising prices.<\/strong><\/span><br \/>\n(Teikoku Databank \/<a href=\"https:\/\/news.yahoo.co.jp\/articles\/ea1d4eba55a6b475484974056da2e475c8d2b0d5\" target=\"_blank\" rel=\"noopener\">Source<\/a>\uff09<\/p><\/blockquote>\n<p>Even though they\u2019re both talking about the same industry, one says, \u201cAll-time high!\u201d while the other says, \u201cRecord number of bankruptcies!\u201d<\/p>\n<p>Doesn't that seem a little off?<\/p>\n<p>Let\u2019s take a closer look at this distorted structure and consider how we\u2014small and medium-sized contractor firms\u2014can survive.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-64496\" src=\"https:\/\/norimen.net\/wordpress\/wp-content\/uploads\/2026\/05\/9627cd629bc457f200286ff649e1fdb3.jpg\" alt=\"Major Construction Companies and Small and Medium-Sized Construction Companies\" width=\"600\" height=\"338\" \/><\/p>\n<h2>The reality: record-high bankruptcies among large companies and a record number of bankruptcies among small and medium-sized enterprises<\/h2>\n<p>First, let's list the numbers.<br \/>\nFinancial Results for 23 General Contractors for the Fiscal Year Ended March 2026 (Construction News, May 15, 2026 \/<a href=\"https:\/\/www.kensetsunews.com\/sokuho\/1226771\" target=\"_blank\" rel=\"noopener\">Source<\/a>\uff09\u3002<\/p>\n<ul>\n<li>Record-High Sales: 11 Companies<\/li>\n<li>Record-High Operating Profit: 10 Companies<\/li>\n<li>Kajima's Revenue Exceeds 3 Trillion Yen (a First Among General Contractors)<\/li>\n<li>Gross profit margin for civil engineering operations (stand-alone): Kajima 24.6%, Taisei Corporation 23.0%<\/li>\n<\/ul>\n<p>It is reported that the number of companies whose gross profit margin in the construction sector has recovered to around or above the target of 10% for the fiscal year ending March 2026 has risen to 16 out of 25.<br \/>\nTo be honest, it's making so much money that it's almost enviable.<\/p>\n<p>In contrast, small and medium-sized enterprises, according to Tokyo Shoko Research\u2019s April 2026 survey (<a href=\"https:\/\/www.tsr-net.co.jp\/news\/status\/detail\/1202835_1610.html\" target=\"_blank\" rel=\"noopener\">Source<\/a>) These are the numbers.<\/p>\n<ul>\n<li>Construction Industry Bankruptcies: 185 cases (up 21.7% from the same month last year; the third consecutive month of increase)<\/li>\n<li>Percentage of Small and Medium-Sized Enterprise Bankruptcies: 100% for 14 Consecutive Months<\/li>\n<li>Small-scale bankruptcies with liabilities under 100 million yen: 76.7%<\/li>\n<li>Fewer than 10 employees: 90.4% (remaining in the 90% range for four consecutive months)<\/li>\n<\/ul>\n<p>Furthermore, for the full fiscal year 2025, there were 2,041 bankruptcies in the construction industry (according to Teikoku Databank). This marks the first time in 12 years\u2014since 2013\u2014that the number has exceeded 2,000 (<a href=\"https:\/\/diamond.jp\/articles\/-\/383136\" target=\"_blank\" rel=\"noopener\">Diamond Online, February 5, 2026<\/a>\uff09\u3002<br \/>\nThese numbers aren't exactly something to laugh about, are they?<\/p>\n<p>In the same industry, one company is raising a toast to \u201cthe best financial results ever!\u201d while another is closing its doors, saying, \u201cWe can\u2019t keep this up anymore...\u201d<\/p>\n<p>This is seriously out of control, isn't it?<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-64497\" src=\"https:\/\/norimen.net\/wordpress\/wp-content\/uploads\/2026\/05\/6870e8dc5bd35a58dc9a1c2385346146.jpg\" alt=\"A pyramid-shaped diagram illustrating the siloed structure of Japan&#039;s construction industry\" width=\"600\" height=\"338\" \/><\/p>\n<h2>Why Has It Become So Distorted? Uncovering the True Nature of the Structure Through the Numbers<\/h2>\n<p>You might say, \u201cIt\u2019s only natural that the big companies make a profit,\u201d but there\u2019s a clear reason behind the gap widening to this extent.<\/p>\n<h3>\u2460 Unit prices are rising. But the rate of increase is different.<\/h3>\n<p>Labor unit rates for public works design, announced by the Ministry of Land, Infrastructure, Transport and Tourism, to take effect in March 2026.<br \/>\nThe weighted average for all occupations nationwide was 25,834 yen, surpassing the 25,000-yen mark for the first time (<a href=\"https:\/\/www.mlit.go.jp\/report\/press\/tochi_fudousan_kensetsugyo14_hh_000001_00337.html\" target=\"_blank\" rel=\"noopener\">Ministry of Land, Infrastructure, Transport and Tourism, announced on February 17, 2026<\/a>). This represents a 4.5% increase from the previous year and marks the 14th consecutive year of increases.<br \/>\nI\u2019ve been harping on this point every year, so I\u2019m sure you all know what I mean, lol.<br \/>\nAnd the fact that the rise in unit prices hasn't kept pace with inflation...<\/p>\n<p>So, our \u201cslope stabilization work.\u201d<br \/>\nThis is actually priced as a separate job category. In our home prefecture of Aichi, the rate effective in March of Reiwa 8 is 34,600 yen!<\/p>\n<p>The job description for slope construction work states: \u201cRequires a considerable level of skill and high physical fitness, and involves operating mortar\/concrete sprayers or seed sprayers, shaping slopes using pick hammers and breakers at high altitudes and on steep slopes, installing wire mesh and rebar, and finishing slopes by spraying mortar concrete.\u201d<\/p>\n<p>Basically, it's exactly what we do.<\/p>\n<p>For comparison, here are the average daily wages for job categories in Aichi Prefecture that often work together on-site: specialized workers, 29,800 yen; scaffolders, 32,400 yen; and general laborers, 25,200 yen.<\/p>\n<p>At 34,600 yen, the cost of slope stabilization work is on the high side even within this range.<\/p>\n<p>This is proof that the job\u2014which requires putting one\u2019s life on the line at high altitudes and on steep slopes, as well as specific skills and physical fitness\u2014is properly valued.<\/p>\n<p>However, you can't just look at the numbers and say, \"It's going up,\" and leave it at that.<\/p>\n<p>Please note that these are, strictly speaking, unit prices used for government cost estimates.<\/p>\n<p>The actual expenses required for an employer to hire a single worker, plus statutory welfare costs, labor management costs, safety management costs, and other expenses, total 38,234 yen (148%). This is the minimum amount required.<\/p>\n<p>In other words, the design labor rate is a figure that essentially says, \u201cThis doesn\u2019t include overhead costs\u2014those are billed separately.\u201d<\/p>\n<p>Things get complicated because there are general contractors who, either unaware of this or choosing to ignore it, simply say, \u201cWe\u2019ll go with the design-based labor rate.\u201d<\/p>\n<p>That is why the Ministry of Land, Infrastructure, Transport and Tourism has now begun implementing \u201cstandard labor costs\u201d under the amended Construction Industry Act.<\/p>\n<p>Like the reporting system for Construction Group Main and stuff.<\/p>\n<h3>\u2461 Those Who Can Pass On Price Increases and Those Who Cannot<\/h3>\n<p>In an article in the *Construction News*, an executive from a general contractor industry association stated the following:<\/p>\n<blockquote><p>\"While small and medium-sized construction companies in regional areas are being severely affected, our loyal customers\u2014the major general contractors nationwide\u2014have not been impacted to the extent that their projects have come to a halt.\"<br \/>\n\"Unlike during the previous period of soaring prices, this issue is being widely covered in the news, creating an environment where it is easier to gain the understanding of our clients.\"<br \/>\n(Construction News, May 15, 2026 \/<a href=\"https:\/\/www.kensetsunews.com\/sokuho\/1226771\" target=\"_blank\" rel=\"noopener\">Source<\/a>\uff09<\/p><\/blockquote>\n<p>Is this really...<strong><span style=\"color: #ff0000;\">\"Are you being honest?!\"<\/span><\/strong>That's what I thought, lol<\/p>\n<p>Basically, \u201cSince we\u2019re a major company, we can negotiate directly with the client, so our price increases will be approved.\u201d<\/p>\n<p>\"But he's basically admitting that the impact on small and medium-sized businesses in rural areas is severe, isn't he?\" LOL<\/p>\n<p>This might be a bit of a cynical view, but it feels a little\u2014or maybe quite\u2014like it\u2019s none of my business, doesn\u2019t it? lol<\/p>\n<p>Teikoku Databank also notes regarding the background behind the more than 2,000 bankruptcies in the construction industry: \u201cAmid prolonged cost increases due to high prices and labor shortages, a shakeout is underway, primarily affecting businesses with weak financial health\u201d (<a href=\"https:\/\/www.s-housing.jp\/archives\/416517\" target=\"_blank\" rel=\"noopener\">Shinken Housing, April 8, 2026<\/a>\uff09\u3002<\/p>\n<p>The situation is such that we are unable to fully pass on the increases in material and subcontracting costs to the construction price.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-64542\" src=\"https:\/\/norimen.net\/wordpress\/wp-content\/uploads\/2026\/05\/335180cc51c2651d050ba9b011768289.jpg\" alt=\"The statement is real\" width=\"600\" height=\"338\" \/><\/p>\n<h2>Salaries at Major Companies vs. Craftsmen\u2019s Take-Home Pay<\/h2>\n<p>There's one more specific figure.<br \/>\nAverage annual income based on securities reports from 23 major general contractors (<a href=\"https:\/\/archi-book.com\/news\/detail\/310\" target=\"_blank\" rel=\"noopener\">archi-book.com<\/a>\uff09\u3002<\/p>\n<ul>\n<li>Kajima Corporation: 11.847 million yen<\/li>\n<li>Obayashi Corporation: 11.404 million yen<\/li>\n<li>Taisei Corporation: 10.58 million yen<\/li>\n<li>Haseko Corporation: 10,579,000 yen<\/li>\n<li>Average for 23 companies: 10,163,000 yen<\/li>\n<\/ul>\n<p>On the other hand, let\u2019s calculate the annual income for \u201cslope work\u201d based on the labor unit rates for public works design.<\/p>\n<p>The daily rate for slope work in the Tokyo area, effective in March Reiwa 8, is 33,600 yen.<\/p>\n<p>Assuming 220 operating days per year, 33,600 yen \u00d7 220 days = approximately 7.39 million yen.<\/p>\n<p>However, these figures represent the \u201cdesign labor unit rates.\u201d As mentioned earlier, they do not include necessary expenses such as statutory welfare costs, labor management costs, and safety management costs.<\/p>\n<p>The actual expenses required for an employer to hire a single worker are approximately 148 percent of the standard labor rate.<\/p>\n<p>Conversely, the take-home pay for workers on the slope construction site is determined by what remains after necessary expenses are deducted.<\/p>\n<p>These are the figures for the craftsmen who are actually putting their bodies on the line working on-site.<\/p>\n<p>Of course, employees at major companies handle management, sales, and design functions, and construction management involves both heavy responsibility and a demanding workload.<\/p>\n<p>Based on a simple comparison, we cannot say that \u201cthe major companies are at fault.\u201d<\/p>\n<p>However, it\u2019s important to keep in mind that there is a possibility the income gap between \u201cthose who actually make things on the production floor\u201d and \u201cthose who manage them\u201d has widened to this extent.<\/p>\n<p>Back in the day, craftsmen actually made better money, lol.<br \/>\nAs you probably know from the pay stub I posted earlier, the craftsmen were making 1.5 times that amount.<br \/>\nI think the boss was about three times as big (looking back now, lol).<br \/>\nI wonder if the situation has completely reversed by now.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-60033\" src=\"https:\/\/norimen.net\/wordpress\/wp-content\/uploads\/2026\/05\/23b21f0c61dd74af0f9581cb3a5cb319.jpg\" alt=\"A Japanese foreman and a foreign trainee (who appears to be Vietnamese) stand side by side, wearing fall arrest devices, as they review safety materials in their native language during the morning meeting.\" width=\"600\" height=\"338\" \/><\/p>\n<h2>So, what are the three ways for small and medium-sized business owners to survive?<\/h2>\n<p>Complaining won't earn me a single yen, so I'll list some specific measures I think we should take.<\/p>\n<h3>\u2460 Making the Most of the \u201cStandard Labor Costs\u201d Under the Revised Construction Industry Act<\/h3>\n<p>The revised Construction Industry Act, which took full effect in December 2025, established guidelines for the use of \u201cstandard labor costs\u201d to prevent bids with significantly low labor costs in private-sector construction projects.<\/p>\n<p>For small and medium-sized businesses, this could serve as a useful tool for the time being.<\/p>\n<p>Specifically, the Ministry of Land, Infrastructure, Transport and Tourism recommends that, when preparing estimates, the labor rates for design work and necessary expenses (statutory welfare costs, labor management costs, safety management costs, etc.) be presented side by side.<\/p>\n<p>It's recommended, but this is such a hassle!<\/p>\n<p>I just want you to understand that the more detailed you get, the more time-consuming it becomes, lol...<\/p>\n<p>In short, it means issuing a quote that clearly states not just \u201clabor cost,\u201d but \u201clabor cost plus necessary expenses.\u201d<\/p>\n<p>Just this alone might make a difference in how well we can resist dumping claims, but it's such a hassle lol<\/p>\n<h3>\u2461 Making Full Use of the \u201cSliding Scale Clause\u201d in Public Works Projects<\/h3>\n<p>Even if material and labor costs rise after we\u2019ve secured a project, we\u2019ll negotiate as much as possible.<\/p>\n<p>Public works projects include provisions for adjusting unit prices in line with inflation (sliding scale clauses).<\/p>\n<p>The Cabinet decision in January 2026 also reaffirmed the policy of strengthening the pass-through of price increases in public procurement.<\/p>\n<p>Having price increases after signing a contract reflected in the contract terms is not a favor\u2014it is a right.<\/p>\n<p>I wonder if there aren\u2019t quite a few companies that give up just because \u201cit\u2019s hard to say\u201d?<\/p>\n<p>This is a place where you can confidently ask for what you're owed.<\/p>\n<p>But that\u2019s only if the prefecture, city, and municipalities handle it properly and the general contractor goes along with it, lol (The hurdles are incredibly high!)<\/p>\n<h3>\u2462 Be prepared to distance yourself from general contractors who absolutely refuse to pass on price increases<\/h3>\n<p>\"Can you really change customers that easily?\"\u2014You're absolutely right.<\/p>\n<p>I agree.<\/p>\n<p>However, both Tokyo Shoko Research and Teikoku Databank cite \u201cdifficulty in passing on price increases\u201d as the main cause of bankruptcy.<\/p>\n<p>In other words, if you only work with general contractors who refuse to pay even a fraction of the increased costs, your stamina will gradually be sapped, just as the data shows.<\/p>\n<p>A comment from an executive of a general contractor industry association, as reported in the *Construction News*, stated, \u201cMajor companies can negotiate directly with clients.\u201d<\/p>\n<p>That means there\u2019s a chance the price increase approved by the client and passed on to the major companies could trickle down to the lower tiers (at least in theory, lol).<\/p>\n<p>I'm not saying you should cut off all your customers.<\/p>\n<p>However, simply adding the question, \u201cDoes this company seem likely to allow us to pass on price increases?\u201d as a factor in your decision-making when you receive a new inquiry can make a difference.<\/p>\n<p>Once your stamina runs out, you won't even be able to make a choice.<\/p>\n<p>From now on, we contractors will be the ones choosing our general contractors.<\/p>\n<p>Profits for major general contractors and prime contractors have been skyrocketing in recent years.<\/p>\n<p>This is actually a very good thing.<\/p>\n<p>Isn't it our turn next?<\/p>\n<p>It's about time they dripped a little surplus our way, lol.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-64543\" src=\"https:\/\/norimen.net\/wordpress\/wp-content\/uploads\/2026\/05\/a0ad082627cc724830691c5c70040a48.jpg\" alt=\"A craftsman catching excess water in his hands\" width=\"600\" height=\"338\" \/><\/p>\n<h2>If we leave this distorted structure as it is, the site will disappear.<\/h2>\n<p>The major companies are making a profit. That in itself isn't a bad thing.<\/p>\n<p>But we're the ones actually working up a sweat, clinging to the slope, drilling holes, applying the spray, and driving in the anchors.<\/p>\n<p>As these key players continue to go out of business one after another, the ones who will ultimately suffer are the clients who commission the designs, the major general contractors who are awarded the construction contracts, and, ultimately, the public who use the roads.<\/p>\n<p>Bankruptcies in the construction industry totaled 2,041 (FY 2025), the highest number in the past 10 years.<br \/>\nBankruptcies due to labor shortages have reached a record high.<br \/>\nThe construction industry has the highest number of bankruptcies caused by rising prices.<br \/>\nAll of these are facts supported by the same data.<\/p>\n<p>If anyone is mistaking news that \u201cmajor companies posted strong earnings\u201d for \u201cthe entire industry is doing well,\u201d that\u2019s not the case.<\/p>\n<p>Only the top of the pyramid is doing well; the bottom is in total disarray.<\/p>\n<p>We small and medium-sized contractors and foremen can\u2019t just sit around complaining\u2014we have no choice but to use our tools\u2014one by one\u2014such as the standard labor costs under the revised Construction Industry Act, the sliding scale clause for public works projects, and carefully evaluating our general contractors.<\/p>\n<p>Gather information, incorporate it into the estimate, and turn down jobs where we can't pass on the cost.<\/p>\n<p>I believe that this alone can make a difference in the probability of survival.<\/p>\n<p>When you read financial results reports from major companies, I hope you\u2019ll use them not just to think, \u201cThat\u2019s great,\u201d but to steel yourself and say, \u201cWe\u2019re going to survive, too.\u201d<\/p>\n<p>Over the past decade, contractors and general contractors have been chosen by one another.<\/p>\n<p>You'll definitely see this difference.<\/p>\n<p>Furthermore, it is highly likely that major companies that lack popularity will be unable to continue operating.<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>See you later.<\/p>","protected":false},"excerpt":{"rendered":"<p>Hello, everyone. This is Enta. This time, I\u2019d like to talk about the current fiscal year. What\u2019s happening at the \u201ctop\u201d and \u201cbottom\u201d of the construction industry? The other day, I came across an article like this. In the financial results for the fiscal year ending March 2026 from 23 major and mid-sized general contractors, 11 companies posted record-high sales, and 10 companies posted record-high operating profits. As for Kajima\u2026<\/p>","protected":false},"author":2,"featured_media":64546,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_bbp_topic_count":0,"_bbp_reply_count":0,"_bbp_total_topic_count":0,"_bbp_total_reply_count":0,"_bbp_voice_count":0,"_bbp_anonymous_reply_count":0,"_bbp_topic_count_hidden":0,"_bbp_reply_count_hidden":0,"_bbp_forum_subforum_count":0,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[14271],"tags":[6851,14281,14373,14374],"class_list":["post-64537","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-construction-industry-3","tag-6851","tag-14281","tag-14373","tag-14374"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v28.2 (Yoast SEO v28.2) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ 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