Japanese, Korean and U.S. Construction Industries (Archived)

SD-37 Topic Summary
SD 37


This source document compares U.S. construction industry with the Japanese and Korean construction industries. The construction process in Japan is similar to that in the United States. All the larger general contracting companies have design-construct capabilities. The greater proportion of contractors, however, are sub-contractors or specialist contractors and are limited to areas called prefectures (or counties), whereas general contractors can obtain a license to work throughout the country.

The construction industry in Korea is also discussed in this paper, although research suggests Korea is not likely to become a major power in construction in the near future.

Two key strategies for the United States:

  1. The United States still holds the edge in construction management. This must be retained by continued research and development.
  2. We must regain leadership in vital technologies such as automation of construction equipment and techniques.

Key Findings and Implementation Tools

1 : Japanese Construction Market

The Japanese company system is based on the group, not the individual as in the United States. This creates loyalty among Japanese workers toward their companies and results in work surpassing that of their U.S. counterparts. Furthermore, the Japanese contracting system relies much more on trust, a phenomenon illustrated by a lower ratio of lawyers per capita (SD-37, p. 2).
Reference: (SD-37)

2 : Japanese Economy

Japan is currently experiencing a contraction of its economy due to the strong yen. However, the domestic construction market remains buoyant due to three influences (SD-37, p. 9):
  1. Stimulus of construction activity by the government
  2. The relative low reliance on overseas contracts
  3. Diversification into development by Japanese contractors
Reference: (SD-37)

3 : International Construction

Japan is quickly entering overseas markets, such as the USA and Australia. In contrast, it is difficult for outside contractors to enter the Japanese domestic market (SD-37, p. 9).
Reference: (SD-37)

4 : Construction Productivity

Contrary to the generally high level of productivity in Japanese industry, the productivity of construction labor is low compared to other countries. The work force is aging due to a lack of interest by younger workers in entering the industry as well as Westernization of the young, who are not prepared to follow the traditional seniority system to gain advancement. The Japanese construction industry labor force follows the general cultural attitude towards the lifetime employment system of which the essence is recruitment of new graduates each year, training them, and assuring continuous employment until retirement, although this system in changing currently (SD-37, p. 16).
Reference: (SD-37)

5 : Management Style

The Japanese style of management emphasizes group decision-making and consensus, with a bottom-up power structure. The American style is directed towards the individual achiever and has a clear top-down power structure. Decisions in Japan take longer; the U.S. style facilitates flexibility and quick response (SD-37, p. 26).
Reference: (SD-37)

6 : Korean Construction Industry

Due to its dependency on the Middle East market, which has dropped significantly the last few years, and on its shortage of skilled engineers, Korea is not likely to become a major power in construction in the near future, except for its low-bid capability in the competitive market (SD-37, p. 41).
Reference: (SD-37)

Key Performance Indicators

Improved international growth, Improved performance/achieved success

Research Publications

Japanese, Korean, and U.S. Construction Industries - SD-37

Publication Date: 07/1988 Type: Source Document Pages: 49 Status: Archived Reference