Hanwha Pursues Acquisition of US Shipyard... Targeting the '320 Trillion Won' Shipbuilding Market

Building a Global Super-Gap Defense Industry Solution

Hanwha Ocean is acquiring a U.S. shipbuilding company that supplies vessels to the North American Navy. This is a preparatory step to participate in the local ship market bidding. In the U.S., by law, vessels operating domestically must be built in domestic shipyards.

Kang Jung-kyu, head of Hanwha Ocean Central Research Institute, recently told reporters, "We are pursuing the acquisition of a local U.S. shipyard." Hanwha is seeking the company's future in the defense industry. He explained, "The cost of attracting overseas shipyards is also included in the recently announced 900 billion KRW investment in the defense sector."

To conduct vessel business in the U.S., securing a local shipyard is essential. The U.S. regulates through the Jones Act and the Merchant Marine Act that domestic vessels operating along the coast must be built in domestic shipyards. For example, a ship departing from Busan to San Francisco can be built in any country, but a ship traveling from San Francisco to New York must be built in the U.S. Additionally, the Military Cargo Preference Act requires that only U.S.-built and U.S.-flagged vessels can transport supplies to U.S. military bases stationed overseas. In other words, vessels must be built in the U.S. to supply the U.S. military and freight companies based in the U.S.

Hanwha Ocean plans to secure overseas production bases and use them as footholds to enter the overseas naval vessel and maintenance, repair, and overhaul (MRO) business. The company will expand its defense business to include equipment supply services. Through this, it aims to become a 'global super-gap defense solution provider.' The ultimate goal is to develop fourth-generation combat unmanned system solutions and secure leadership in the unmanned vessel market. Kang said, "The word Hanwha Ocean always talks about in relation to defense is 'super-gap,'" adding, "The competitive structure with domestic company H (HD Hyundai) no longer exists."

HD Hyundai is also preparing to enter the North American market but targets a different main market. Unlike Hanwha Ocean, which targets the naval vessel market, HD Hyundai is focusing on the leisure boat market through the autonomous navigation specialist company Avikus. Park Jin-won, senior researcher at Hanwha Ocean Defense Technology Research Center, said, "A global vessel market totaling 1,300 trillion KRW is expected to open over the next 10 years," adding, "Among that, the submarine and surface ship market that Hanwha Ocean is targeting is about 320 trillion KRW."

The Navy's first 3000-ton class submarine, 'Dosan Ahn Changho'. Equipped with submarine-launched ballistic missiles (SLBM), the Dosan Ahn Changho was independently developed by Hanwha Ocean and delivered to the Navy in August 2021.
[Photo by Navy]