Construction Labor Shortage Bankruptcies Reach 113 in 2025: Free AI Implementation Guide Released for Rural Small and Medium-Sized Construction Firms

Construction labor shortage bankruptcies reached 113 in 2025, marking the third consecutive year of increase. The proportion of construction firms feeling a shortage of full-time employees stands at 69.6%, approximately 17 percentage points higher than the average across all industries (Teikoku Databank, announced January 8 and February 20, 2026). Meanwhile, among companies with fewer than 10 to 50 employees, the adoption and utilization rate of generative AI, including experimental verification, remains at only 10.7% (Information and Communications Research Institute, published September 4, 2025). DeC Inc. (Headquarters: Tokyo, Representative Director: Masahiro Saito, member of Tokyo Chamber of Commerce and Industry) is offering its 'Construction Industry AI Implementation Guide (site name: Construction Industry AI White Paper 2026 Edition)', a 12-chapter document (5 charts, PDF format) designed for small and medium-sized construction firms in rural areas with 5–50 employees. The guide is available via a registration form on the company’s website, dec-ai.com. Upon form submission, immediate download is enabled.

Social Context: 113 Construction Labor Shortage Bankruptcies in 2025, Workforce Shrinks by ~30% Over 27 Years

According to Teikoku Databank’s 'Survey on Labor Shortage Bankruptcies (2025)', published on January 8, 2026, the number of labor shortage bankruptcies in the construction industry reached 113 in 2025, the highest among all industries and showing a three-year consecutive upward trend (Source: Teikoku Databank, January 8, 2026 announcement https://www.tdb.co.jp/report/economic/20260108-laborshortage-br2025/). The company’s 'Survey on Corporate Trends Regarding Labor Shortages (January 2026)', published on February 20, 2026, revealed that the proportion of firms feeling a shortage of full-time employees is 52.3% on average across all industries, while in construction it reaches 69.6%, approximately 17 percentage points higher than the overall average (Source: Teikoku Databank, February 20, 2026 announcement https://www.tdb.co.jp/report/economic/20260220-laborshortage202601/).

According to published materials from the Ministry of Land, Infrastructure, Transport and Tourism (MLIT), the number of construction workers peaked at 6.85 million in fiscal year 1997 and declined to an average of 4.77 million in fiscal year 2024, representing a reduction of approximately 30% over 27 years. The proportion of workers aged 55 and above is 36.6%, while those aged 29 and under account for only 11.9%, indicating parallel trends of aging and youth decline (Source: MLIT Real Estate and Construction Economy Bureau, Construction Industry Division, 'Current Status and Challenges in the Construction Industry' https://www.mlit.go.jp/policy/shingikai/content/001610913.pdf). There are 484,000 licensed construction firms (as of end of fiscal year 2024), and small and medium-sized enterprises in rural areas, which constitute the majority, face a triple burden of recruitment difficulties, aging, and lack of successors (Source: MLIT 'Reference Materials' April 3, Reiwa 8 https://www.mlit.go.jp/tochi_fudousan_kensetsugyo/content/001994097.pdf).

Rural construction firms play an essential role in maintaining regional infrastructure through road repairs, disaster recovery, water and sewage projects, residential renovations, and agricultural civil engineering. Continued closures would have widespread impacts on residents’ lives and the regional economy.

Another Key Issue: Generative AI Adoption and Use Remains Around 10% in Firms with Fewer Than 50 Employees

The use of AI (artificial intelligence systems for text generation and classification), expected to alleviate labor shortages, is less prevalent in smaller-scale enterprises. According to a survey published on September 4, 2025, by the Information and Communications Research Institute (targeting workers nationwide, with 96,156 valid responses), the adoption and utilization rate of generative AI, including experimental verification, is 8.5% in firms with fewer than 10 employees, 10.7% in firms with 10–50 employees, 15.4% in firms with 50–100 employees, and 20.0% in firms with 100–300 employees—indicating lower adoption rates in smaller firms (Source: Information and Communications Research Institute, 'Current Status and Outlook of Generative AI Adoption in Enterprises,' September 4, 2025 https://www.icr.co.jp/publicity/5325.html). The Ministry of Internal Affairs and Communications' '2025 Information and Communications White Paper' also indicates that smaller firms have lower AI utilization rates (Source: Ministry of Internal Affairs and Communications, 2025 Information and Communications White Paper https://www.soumu.go.jp/johotsusintokei/whitepaper/ja/r07/html/nd112220.html).

The '2025 White Paper on Small and Medium Enterprises' by the Small and Medium Enterprise Agency lists 'lack of applicable use cases or scenarios' and 'unclear implementation and operational costs' as top reasons for slow digitalization (Source: Small and Medium Enterprise Agency, 2025 White Paper on Small and Medium Enterprises, Part 1, Chapter 1, Section 5 https://www.chusho.meti.go.jp/pamflet/hakusyo/2025/chusho/b1_1_5.html). Among construction firms, small and medium-sized enterprises in rural areas with 5–50 employees often lack dedicated IT staff and have limited opportunities to see concrete examples of how AI can be applied to their operations. This guide was specifically compiled to fill this 'gap in practical, company-specific use cases.'

Regional Infrastructure Issue: Bankruptcy of Rural Construction Firms Leads to Regional Economic Contraction

The closure of small and medium-sized construction firms in rural areas is not merely a single company’s management issue but a structural challenge affecting both regional infrastructure maintenance and the regional economy. According to MLIT’s published materials, the decline in construction employment is particularly pronounced in rural areas, with reports of limited contractors available to respond to project bids in depopulated regions (Source: MLIT published materials https://www.mlit.go.jp/totikensangyo/const/content/001855436.pdf).

Life-critical projects such as disaster recovery, snow removal, water and sewage works, residential renovations, and agricultural civil engineering are predominantly handled by small and medium-sized construction firms in rural areas. If these firms go out of business due to lack of successors or recruitment difficulties, the ripple effects will extend beyond direct impacts on residents’ lives to include regional employment, related material suppliers, transportation companies, and youth settlement in rural areas. This guide is positioned as a practical implementation manual enabling these 'essential small and medium-sized construction firms that must remain in the region' to continue operations with limited personnel.

Voices from the Field: 5 Common Challenges in Rural Small and Medium-Sized Construction Firms (Based on Over 300 Field Observations)

From our cumulative experience of over 300 support engagements (including 8 years of individual consulting by Representative Saito, 2 years since incorporation of DeC Inc., and cases supported by contracted partners; see footnote at the end of the article for details) with rural small and medium-sized construction firms, the following five challenges are commonly reported:

- Handwritten daily site reports take over 30 minutes per day, causing weekly summaries to be delayed until the latter half of the following week - Past project data is not linked during estimate creation, making it difficult for junior staff to independently draft initial estimates - Site photos are scattered across personal smartphones, requiring half a day to organize before inspections - No internal staff is assigned to update job postings for young recruits, resulting in the same text being used for over three years - Managers routinely wait for trial balance statements from accountants to understand monthly figures

These are not isolated issues to single firms but are common across the industry.