Painting and Waterproofing Work: Concerns Over Expanding Impact of Middle East Situation, Already Constraining Material Procurement, Bankruptcy Numbers May Hit Record High Since 2000

Teikoku Databank, Ltd. conducted a survey and analysis on the bankruptcy situation in painting and waterproofing work.

From January to May 2026, there were 80 bankruptcies in the 'painting work' and 'waterproofing work' sectors, a pace second only to 2025 (87 cases by May), which saw the highest annual total since 2000. The impact of the naphtha shortage due to the Middle East situation is already affecting the delivery times and prices of paints and waterproofing materials, drawing attention to future trends.

Survey period: January 1, 2000, to May 31, 2026

Survey target: Bankruptcies with liabilities of 10 million yen or more and legal reorganizations

Bankruptcies in painting and waterproofing work continue at a high pace, second only to last year's record high since 2000.

The number of bankruptcies in the 'painting and waterproofing work' sector in 2026 was 80 from January to May (56 for 'painting work' and 24 for 'waterproofing work'). This is a high level second only to 2025 (206 cases, of which 87 were from January to May), which was the highest since 2000. By debt amount, 69 cases (approx. 86.3%) were under 100 million yen, highlighting bankruptcies among small businesses.

Painting and waterproofing work has a high proportion of small businesses and is positioned downstream in the construction process, making it susceptible to the repercussions of project delays and cost increases. Since the COVID-19 pandemic, they have been directly affected by project delays due to efficiency declines from infection control measures and delays in the delivery of housing equipment due to semiconductor shortages. Subsequently, labor shortages have become chronic due to the retirement of aging skilled workers, driving up labor and subcontracting costs. Material costs for paints and waterproofing materials have also continued to soar, squeezing profits.

On the order front, while demand for renovation-related work remains strong, the number of new housing starts is on a declining trend. Furthermore, on large-scale project sites, clients often select mid-sized or larger contractors with a certain level of personnel and financial base to ensure stable construction capacity, making it difficult for smaller businesses with less track record and scale to win large contracts. Competition to secure projects with low unit prices and short deadlines is observed for the limited available work. As a result, an increasing number of companies are falling into unprofitability and facing cash flow difficulties due to a combination of higher-than-expected labor and subcontracting costs, and project delays caused by labor shortages and high costs in preceding processes.

Since painting and waterproofing work uses many solvents derived from naphtha, and auxiliary materials such as curing sheets and containers are also made from naphtha, there are concerns that the impact of the naphtha shortage due to the Middle East situation will expand. On-site, there are already cases where the extent of price increases for paints and waterproofing materials is unclear, making it difficult to provide project cost estimates, and project delays are occurring due to delays in material procurement. If the supply concerns for naphtha products are not resolved, the number of bankruptcies could exceed that of 2025 and potentially set a new record high since 2000.