[Chodong Perspective] The Prerequisites for a Golden Era in Shipbuilding

We Must Consider the Opportunity Costs of Expanding Investment in the United States
A National Long-Term Plan is Needed to Safeguard Technological Sovereignty

The shipbuilding industry is emerging as a key player in South Korea's trade, expanding its presence on the stage of strategic tariff negotiations with the United States. As the U.S. administration has begun to engage in tariff negotiations on major industrial products with its allies, the shipbuilding sector has become South Korea's most powerful bargaining chip. Taking advantage of his visit to Korea for the Asia-Pacific Economic Cooperation (APEC) Ministerial Meeting held in Jeju, Jamieson Greer, the U.S. Trade Representative (USTR), met consecutively with Chung Ki-sun, Vice Chairman and CEO of HD Hyundai, and Kim Heecheol, CEO of Hanwha Ocean, on May 16 to express his willingness to cooperate. This meeting was arranged at the request of the U.S. side, and despite a packed schedule of back-to-back 10-minute meetings with representatives from APEC member countries, Greer dedicated two hours to discussions with the heads of Korean shipbuilding companies.

This is underpinned by the unrivaled technological prowess and production capacity of Korean shipbuilders, as well as the structural limitations facing related industries in the United States. South Korea currently accounts for more than half of the global market for high-value-added vessels such as liquefied natural gas (LNG) carriers. In particular, the three major shipbuilders?Hyundai Heavy Industries, Samsung Heavy Industries, and Hanwha Ocean?have achieved world-class status in eco-friendly vessels and automation facility technology, elevating their capabilities from mere competitiveness to a form of 'hegemony.'

In contrast, despite being the world's largest maritime security and energy transport nation, the United States has seen its domestic shipbuilding base collapse. With the exception of naval vessels and special-purpose ships, the majority of commercial vessels are now built by foreign shipyards. The United States faces a dilemma: it must maintain its domestic shipbuilding ecosystem while also absorbing a certain degree of overseas technological expertise and production capacity.

At first glance, the Korean shipbuilding card seems highly effective. Valuations are soaring, investment is pouring in, and it feels as if the golden era of the 2000s is set to return. However, there are significant concerns that prevent unbridled optimism. The United States is demanding not only simple market access, but also joint production, technology cooperation, and, furthermore, multilayered requirements for Korean companies to invest in U.S. shipyards. In the long term, potential side effects such as technology leakage and a decline in price competitiveness must also be considered. For negotiations with the United States to proceed under the principle of 'mutual benefit,' it is necessary to clearly define conditions such as joint technology development, eco-friendly vessel certification, and support for infrastructure construction. It is also essential to carefully weigh the opportunity costs of expanding investment in the United States.

In 1937, as the United States struggled to recover from the scars of the Great Depression, President Franklin Roosevelt and the Maritime Commission made a strategic decision to launch the Long Range Shipbuilding Program (LRSP). Based on the Merchant Marine Act of 1936, the United States codified the philosophical and binding principle that "American ships must be built in American shipyards by American citizens." The program set a concrete goal of building more than 500 vessels over ten years, expanding the production base through direct subsidies to private shipyards and government orders. It also supported standardized design, workforce training, and low-interest loans. As a result, by the mid-1940s, the U.S. shipbuilding industry dominated the global market and entered its golden age. The necessary condition for a new leap forward in Korean shipbuilding is not merely its presence as a U.S. partner, but rather the government's consideration of industrial protection and technological sovereignty through a Korean-style LRSP.