"Struggling in a Project-driven Industry in Decline: Case of East Asian Engineering Construction Firms in 2003-2022"

The engineering construction industry is an industry that involves uncertainties and risks intertwined with each individual petroleum/industrial/power plant construction project. The undesirable/unforeseeable risks of the engineering construction industry eventually induce each construction firm to adopt risk-aversive, reactive characteristics, and temporary quasi-firm structures that strikingly differ from those of manufacturers (Eccles 1981a, 1981b; Pasquire, 2012). Although the project itself was acknowledged as an interesting topic for business historians (Scranton and Fridenson, 2013), partial attentions were given to examining the engineering construction industry itself (Álvaro-Moya, 2014; De la Torre et al., 2022). Accordingly, how the project-driven nature of the engineering construction industry affects individual firms’ activities and how they address those risks and uncertainties need to be explored further. Grounded on the historical context of the recent 20 years of the petroleum/industrial engineering construction sector, a major sector of the engineering construction industry, this paper examines how project-driven international engineering construction firms in the Petroleum/Industrial sector conducted their business over the past 20 years during which a golden age and a period of decline were both emerged. Changes in the international construction market, as well as diversification strategies of target firms, will be analyzed mainly using secondary sources. I make two arguments. First, the intensifying competition due to the entry of engineering construction firms from emerging countries often mentioned in IR reports, has been overestimated when regarding the Petroleum/Industrial engineering construction sector. Chinese/Korean firms have indeed put their name on the top 10 construction firms, however, the top 10 international construction firms - most of them are Western firms - in revenue-base have not changed much over the past 20 years. Second, along with the decline in the sector since 2015, knockout-blow to firms such as CHIYODA was a rather “once-a-decade failure from the individual project” presumably due to the project-driven nature.