Expansion of US Navy Ship MRO Projects
Completion of Acquisition of Philippine Shipyard Within the Year
Jeong Gi-seon and Kim Dong-gwan Lead the Shipbuilding Industry Frontline
There are signs of a favorable wind from the U.S. blowing through the Korean shipbuilding industry. Donald Trump, the President-elect of the United States, hinted at the possibility of expanded cooperation by stating in a phone call with President Yoon Suk-yeol that "the U.S. shipbuilding industry needs the help and cooperation of Korea," raising expectations.
Attention is focused on the potential boost to the U.S. Navy ship Maintenance, Repair, and Overhaul (MRO) projects currently underway by HD Hyundai Heavy Industries and Hanwha Ocean. Hanwha Group's ongoing acquisition of a local shipyard is also expected to be completed within the year.
According to the shipbuilding industry on the 8th, HD Hyundai Heavy Industries and Hanwha Ocean are actively engaged in preparatory work to expand the U.S. Navy ship MRO business. The leaders spearheading the U.S. business are Vice Chairman Chung Ki-sun of HD Hyundai and Vice Chairman Kim Dong-kwan of Hanwha Group.
Kim Dong-kwan, Vice Chairman of Hanwha Group (right), is touring the maintenance site of the USS Wally Schirra, which is under maintenance at the Geoje project site, with Admiral Steven Koehler, Commander of the U.S. Navy Pacific Fleet (center), on October 25. Photo by Hanwha Group
On the 24th of last month, Kim Dong-kwan, Vice Chairman of Hanwha Group, met with Admiral Steven Koehler, Commander of the U.S. Navy Pacific Fleet, who visited Hanwha Ocean’s Geoje shipyard. He expressed a strong commitment to the cooperative project, stating, "Based on Hanwha Ocean’s technological capabilities and accumulated experience, and utilizing the recently acquired Philly Shipyard among other measures, we will contribute to strengthening the U.S. Navy’s capabilities."
Hanwha Ocean signed a Maintenance Service Repair Agreement (MSRA), a qualification for the U.S. Navy ship MRO business, in July and secured its first project at the end of August, the overhaul of the USS Wally Schirra. The USS Wally Schirra docked at the Geoje shipyard in September and is currently undergoing maintenance work. After four months of maintenance, it is scheduled to be delivered to the U.S. Navy in January next year.
Hanwha Group also expects to complete the acquisition of Philly Shipyard, located in Philadelphia, U.S., within the year. Established in 1997, Philly Shipyard is a leading local shipyard that has supplied about 50% of large commercial vessels such as petrochemical carriers (PC ships) and container ships built in the U.S.
In June, Hanwha Systems and Hanwha Ocean signed a contract to acquire 100% of Philly Shipyard’s shares for $100 million (approximately 138 billion KRW), and are currently undergoing approval procedures with the U.S. government authorities.
A Hanwha Ocean official explained, "We are proceeding with administrative procedures and expect final approval as early as this year," adding, "We plan to use Philly Shipyard as a base for shipbuilding and MRO operations when entering the U.S. naval market."
Jeong Gi-seon, Vice Chairman of HD Hyundai (second from the left in the front row), is introducing the HD Hyundai Heavy Industries special shipyard and the warships under construction to Carlos Del Toro, U.S. Secretary of the Navy, on February 27. Photo by HD Hyundai
Vice Chairman Chung Ki-sun of HD Hyundai also met with the U.S. Ambassador to Korea, who visited HD Hyundai Heavy Industries’ Ulsan shipyard, as well as Carlos Del Toro, U.S. Secretary of the Navy, to discuss cooperation plans.
HD Hyundai Heavy Industries obtained the MSRA earlier this year and has been expanding related businesses by signing agreements to strengthen cooperation in the ship MRO business with the American Bureau of Shipping (ABS), domestic maintenance specialists, and mid-sized shipyards. However, they have not yet secured their first contract.
Additionally, HD Hyundai Heavy Industries is expected to enter the U.S. naval shipbuilding market based on its competitive technology in warship construction. In 2022, HD Hyundai Heavy Industries secured orders for a total of 14 overseas naval vessels, including 10 ships under the Philippine ‘Horizon’ project.
Due to the Jones Act, which requires all vessels operating along the U.S. coast to be built in the U.S., owned by Americans, and operated by American crews, it is impossible to secure orders for vessels operating on the U.S. mainland. However, orders for vessels operating outside the U.S. mainland are considered feasible. HD Hyundai Heavy Industries is also promoting talent development projects in the shipbuilding industry in cooperation with the University of Michigan and Seoul National University to nurture skilled shipbuilding personnel in the U.S.
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