“Phew... I’m completely drained.”
When the four-hour marathon meeting finally ended, Department Head Oh collapsed into his seat, looking utterly exhausted.
“It’s not easy. Not easy at all...”
In today’s meeting, they spent about ten minutes discussing reconstruction-related stocks. The remaining three hours and fifty minutes were all devoted to cursing the government.
And understandably so. In an era of a 100 trillion won fiscal deficit, where would the government find 60 billion dollars?
A considerable portion of the loan to Ukraine would be covered by the pension fund, the people’s piggy bank, so naturally everyone had complaints to vent.
“Team Leader Lee... does this make any sense? Sixty billion dollars is 80 trillion won in our money. Even if we just bought U.S. Treasuries with that, it’d bring in hundreds of billions in interest a year.”
“But we’ve already gotten 10 billion dollars back.”
“Did we get that? Domestic defense stocks got it back.”
“Thanks to that, their shares went up, so we made a pretty penny too. Heh heh.”
I gave an awkward laugh and said to him,
“Don’t worry, sir. This is a very solid investment. Ukraine will become a strategic stronghold in Europe from now on, and the resulting demand for weapons will be considerable. Ten billion dollars is just the beginning. If we export artillery, shells, armored vehicles, and even missiles, we’ll hit the break-even point in no time.”
I was certain of it. Ukraine’s weapons supply would not end with Ukraine alone.
Numerous weapons orders were already coming in from Eastern European countries, including Poland, and the larger the scale became, the lower our production costs would fall.
If our self-propelled howitzers, already about five times cheaper, became even cheaper, even France and Germany’s main battle tanks would change.
“How are we supposed to break even? Unless oil starts gushing out of Eastern Europe, that’ll be impossible for the rest of our lives.”
“Is Eastern Europe the only market? If we succeed in developing independent missile technology, Britain, France, and Germany won’t be able to avoid buying our hypersonic missiles. It’s a small investment for a much bigger market.”
“Enough, let’s stop there. So how are we going to come up with this money?”
I answered.
“For now, we’ll use cash-equivalent assets. We have about 20 trillion won in bonds maturing within three months. I think we should put that money in first.”
“Cash-equivalent assets? Forget it. Our stock weighting is already too high these days. Wouldn’t it be right to sell off domestic and foreign equities and use that instead?”
“Then we’d be throwing money away. Our companies are certain to benefit through the reconstruction projects. We have to increase our stock holdings, if anything, to make up for the opportunity cost.”
“I think a little differently... Now that the Russo-Ukrainian War is over, do defense stocks really have any prospects?”
“We’ve already signed weapons contracts, haven’t we? Germany’s rearmament trend isn’t over either.”
“I wonder how many years that’ll last. Before the war broke out, that was a country that spent one percent on defense for decades. Won’t they return to square one soon?”
“Don’t worry. If they do, America won’t sit still.”
If my memory was correct, that was how it went. Europe, which had ignored America’s nagging for decades, only normalized its defense spending after the Russo-Ukrainian War broke out.
That trend continued even after the war ended, and I did not recall the defense industry ever returning to the brink of collapse like before.
“Fine... Then what about construction?”
Department Head Oh changed the subject.
“Judging from the government’s response, it looks like they’ll support construction by giving as much work as possible to Korean companies. What do you think?”
“Of course they will. Right now, the most urgent reconstruction need in Ukraine is civilian housing, so domestic construction firms will enter in large numbers.”
“But looking at it long term, it doesn’t seem all that promising either. On top of everything, with the recent theme-stock craze, it looks like a lot of bubble has built up. Shouldn’t we be careful about increasing our purchase ratio?”
“No. It’s not a bubble, it’s normalization. Even though they’ve risen, they still haven’t recovered their previous highs, have they? Not only reconstruction, but Korean real estate has plenty of prospects too.”
“And what’s the basis for that?”
“Next year’s Korean economic growth rate announced by the IMF. Depending on that growth rate, I think signals will soon come in real estate as well.”
Recently, there had been many favorable factors for Korea.
Not only had the KOSPI surpassed 5,000, but over the next three years, semiconductors were expected to go beyond a supercycle into a megacycle, and the economic growth rate was among the highest of major countries.
And economic growth meant real estate would grow as well. If this trend continued, real estate would certainly rise.
“Well, that does make sense. But we can’t invest everything in construction, so organize the companies with good prospects. The Ukraine reconstruction work—didn’t the government decide to do it through open bidding? If they win, it’ll be profitable, so let’s select companies that have a good chance of winning those bids and invest intensively.”
“Yes, understood.”
And just as the meeting was ending on such a warm note.
As I turned to leave, I said to Department Head Oh,
“Um... sir?”
“What now?”
“Since we’re on the subject, about the open bidding. This is actually being done with pension fund money, so shouldn’t we also participate in the contractor selection?”
Department Head Oh spoke as if he found it absurd.
“What?”
*
A building located in Sinsa-dong, Gangnam.
“Chairman, I’m back...”
“Hurry up and come in. What happened?”
The executives of PM Construction had gathered in one place and were looking at Director Choi.
Among them, Chairman Park Min-su, whose mind was especially urgent, immediately sprang up from his seat and pressed Director Choi for an answer.
“First, it’s certain. Of the loans to Ukraine supported by the government, five billion dollars is construction support. And it seems this will be used to give work to domestic companies.”
It was only natural. If they were going to provide aid anyway, they would do it in a way that sent work to domestic companies.
Director Choi, who was in charge of government relations within the company, had returned after confirming this with politicians.
“Ha...”
“Whew...”
Once Director Choi’s report ended, sighs of relief leaked out here and there.
It was a crisis. PM Construction, Korea’s top construction company, was currently facing high-intensity restructuring. They said nothing in this world lasted forever, but surely there had never been such extreme booms and busts.
During the real estate frenzy, when even thatched huts built on empty lots sold like hotcakes, PM, Korea’s top construction company, had been recognized for its overwhelming construction capability and won a large number of government orders, doubling the company’s market capitalization.
But who could have known? That the Fed would raise interest rates every time it opened its eyes...
In the aftermath of high interest rates originating in America, Korea had no choice but to follow suit through gritted teeth, and apartment prices that had seemed destined to rise forever began to be cut in half.
And this became a fatal blow to PM, which had won the most construction work at the time.
Apartments built in the provinces went massively unsold, drying up the company’s funding lines. Worse still, those unsold units had become ultra-malignant unsold inventory that had remained for over three years, with no sign of being resolved.
Recently, Seoul real estate had at least begun to stir, making it seem as though the construction economy might revive, but the government’s ultra-strong regulations and the election of Mayor Choi Sang-dong had extinguished that spark once again.
For PM, it was a bleak situation.
Even if population dispersion proceeded according to the government’s plan, they first had to overcome the mountain of 60,000 malignant unsold units nationwide. If so, how long would it take for all that inventory to be cleared and new apartments to be built...
“Five billion dollars?”
“Yes. And that’s only for civilian housing. If we take into account the overall budget for roads and transportation infrastructure, we forecast it will be at least ten billion dollars.”
But even when the sky collapsed, there was always a hole to escape through.
The construction-related support for Ukraine currently being prepared by the government was estimated to be around ten billion dollars. In Korean money, that was 15 trillion won, and for domestic construction companies, it was nothing less than rain after a drought.
“That amount is bigger than I expected. Are you sure?”
“Yes. In fact, all the construction company executives handling government relations have even made a group chat. They’re sharing everything coming out of the government in real time. Based on cross-checking there, that amount is roughly correct.”
“Good. Then what’s the method for selecting construction companies?”
“It seems most of it will be open bidding.”
Chairman Park clenched his fist.
“Open bidding? Then what was the point of me handing those old men pocket money so dutifully! Isn’t there anything besides that, like negotiated contracts?”
“...With all due respect, sir, we’re not the only ones they took pocket money from.”
“What?”
“There isn’t a single construction company right now that isn’t crying poverty. Given the nature of the matter, it seems everything will proceed through open bidding.”
Chairman Park, whose complexion had brightened for a moment, immediately went cold.
Open bidding. There was no more irritating kind of work in the world. Through open bidding, construction companies inevitably entered a bloody price competition, and in these days when domestic work had completely dried up, it was obvious the Warring States period would begin.
“Even so, this is too much. Aren’t our old men slacking off far too much!”
Chairman Park’s voice grew louder.
“Seoul real estate has been halved in value, and right now there are over four hundred lawsuits hanging over our PM Construction. Damn it, it’s not even our fault. We said we’d sell the unsold apartments at a discount, and the residents’ representatives, women’s associations, and every last bastard started charging at us with their eyes turned upside down!”
Chairman Park felt somewhat wronged.
When the construction company began selling at a discount, all kinds of apartment associations turned the apartment complexes into impregnable fortresses to prevent discounted-sale households from moving in.
But the local governments and district, provincial, and city councilors who were supposed to stop this absurdity all gritted their teeth and pretended not to know... As a result, even when they sold at a discount, no residents appeared, and that directly led to the company’s finances worsening.
“I know. Our old men can’t say anything that’ll cost them votes. But if they’re going to stand by and ignore this kind of problem, they should at least hand us plenty of work! And now they’re going to make construction companies compete with one another through open bidding again? Should I just march into the Seocho District Prosecutors’ Office and reveal the list?”
“C-Chairman, please calm down.”
“You mustn’t do that. PM will be completely blown apart!”
When Chairman Park even began saying dangerous things, the surrounding executives rushed in.
“Chairman. Just because it’s open bidding, does that mean there’s no method? If we all put our heads together, we can overcome this problem as well.”
Only after those final words did Chairman Park finally calm down.
He turned his head.
“At any rate, politics is the problem. It always turns even good people into bad people. Tsk, tsk. Executive Director Lee, we’ll have to use that method, won’t we?”
Executive Director Lee, the company fixer, nodded.
“Yes. If the government comes out like that, we have no choice. We’ll collude on the bids.”
“Can you coordinate well with the others?”
“To be honest, from the moment talk of support for Ukraine came out, everyone was probably already calculating how to divide up the work. And the concerns we’re having now are the exact same concerns other construction companies will have.”
“You can handle it?”
“It’s not as if this is our first or second time working in sync. We’ll consult carefully in various ways and divide up the work without any problems.”
After hearing a satisfactory answer, Chairman Park looked at the executives, whose expressions had become troubled.
“Is there anyone here opposed to this? Anyone who says, ‘I have such a strong law-abiding spirit that I always want to be honest’?”
“...”
“If there is, say so right now. I’ll very honestly make that bastard take off his suit first.”
“N-No, sir. There isn’t.”
Chairman Park said with a cold face,
“This is a crisis. Today’s meeting was originally a restructuring meeting. I’ll say it again: if we don’t win work, half of the people here will be taking off their suits. If you don’t want that, then do your best to help Executive Director Lee.”
All the executives shouted thunderously.
“Yes, understood!”