Hanwha Group Acquires Philippine Shipyard... Foothold for Entry into US Defense Market

Supplying Over 50% of US Local Merchant Ships
Securing Government Shipbuilding and MRO Contracts Including Military
Expanding Territory from Middle East and Europe to the US

Hanwha Group announced on the 21st that it has signed a contract to acquire 100% ownership of the Philly shipyard in Philadelphia, USA, for $100 million (approximately 138 billion KRW). Hanwha Systems and Hanwha Ocean will participate in the acquisition with a 60:40 equity ratio, respectively. This is the first time a Korean company has acquired a U.S. shipyard. Through this acquisition, Hanwha has established a foothold for full-scale entry into the U.S. commercial and defense maritime markets.

Exterior view of Philly Shipyard located in Philadelphia, USA [Photo by Hanwha Ocean]

The Philly shipyard is a U.S. subsidiary of Aker, a Norwegian oil, gas, and renewable energy company. It specializes in building commercial vessels operating along the U.S. mainland coast in accordance with the U.S. Jones Act. Since its establishment in 1997 on the site of the U.S. Navy’s Philadelphia government shipyard, it has supplied about 50% of large commercial vessels built in the U.S., including petrochemical product carriers (PC vessels) and container ships.

In addition to commercial vessels such as large multipurpose training ships constructed for the U.S. Department of Transportation Maritime Administration (MARAD), the shipyard also has a track record in building various types of vessels including offshore wind installation vessels and government vessels. Repair and modification of naval transport ships is also one of its core business areas. In July last year, U.S. President Joe Biden visited the Philly shipyard to attend the steel-cutting ceremony for an offshore wind installation vessel.

The shipyard owns one 660-ton Goliath crane and two docks measuring 330 meters in length and 45 meters in width, the largest scale in the U.S. The docks are expected to be effectively utilized as business sites for warship construction and MRO (Maintenance, Repair, and Overhaul) when Hanwha Systems and Hanwha Ocean enter the U.S. warship market. The U.S. warship market currently has a need to expand shipbuilding facilities due to a shortage in production supply compared to naval fleet requirements.

Exterior view of Philly Shipyard located in Philadelphia, USA [Photo by Hanwha Ocean]

Hanwha Systems expects to collaborate in the development of autonomous commercial vessels. Based on its top-tier marine system technologies such as the integrated control system (ECS) and ship automation system (IAS), which are smart ship solutions related to commercial and naval systems, it anticipates synergy with a diverse lineup of commercial vessels. The strategy is to rapidly expand the market from commercial vessels to special vessels such as unmanned surface vehicles and warships.

Hanwha Ocean plans to diversify its sales by securing overseas production bases. The acquisition enables expansion of orders in the medium-sized tanker and container ship sectors, where the Philly shipyard has strengths, thereby further strengthening its market position. The plan is to transform the shipyard into a shipyard with technological and cost competitiveness in the North American region by integrating technologies owned by Hanwha Ocean.

Uh Seong-cheol, CEO of Hanwha Systems, said, "Through the acquisition of the Philly shipyard, we will create business synergies that can lead the global shipbuilding and defense markets. We will expand our export territory to the U.S. market beyond the Middle East, Southeast Asia, and Europe to secure new growth engines."