Domestic shipbuilding rivals Hanwha Ocean and HD Hyundai Heavy Industries have entered the business of maintaining, repairing, and overhauling (MRO) U.S. Navy vessels, but early order results have shown a significant victory for Hanwha Ocean. From last year until early this month, the U.S. Navy conducted bids for a total of four MRO projects, of which one was won by a Singaporean company and the other three were secured by Hanwha Ocean. HD Hyundai Heavy Industries participated twice but failed to win any, leading to various analyses in the defense industry.
According to industry sources on the 22nd, multiple entities, including Hanwha Ocean, HD Hyundai Heavy Industries, and Japanese companies, participated in the maintenance project for the U.S. Navy's 7th Fleet logistic support vessel "Charles Drew," which was secured by Hanwha Ocean earlier this month. Hanwha Ocean first obtained the MRO rights for the 40,000-ton logistic support vessel "Wally Schirra" in August last year, and in November of the same year, it secured the maintenance project for the 31,000-ton refueling vessel "Yukon."
HD Hyundai Heavy Industries began actively participating in U.S. Navy MRO projects this year. Until last year, all special ship docks (Dock) within the shipyard were occupied, and it was judged that profitability was low. However, starting this year, the company set a policy to secure orders and participated twice, but lost to Singaporean firm ST Engineering in March and to Hanwha Ocean in July. In the case of the MRO project won by the Singaporean company, Hanwha Ocean abandoned the project midway due to a lack of business viability.
As the order results for Hanwha Ocean and HD Hyundai Heavy Industries diverged, analyses emerged that there were differences in requirements beyond the essential conditions for participating in MRO projects, such as operational methods. However, both companies were reported to have equal qualifications, having signed the Master Ship Repair Agreement (MSRA) with the U.S. government, which was a prerequisite. It is said that MRO projects do not require complex certification procedures, focusing instead on hull maintenance, unlike shipbuilding.
There were also analyses suggesting that HD Hyundai Heavy Industries proposed higher prices than other companies. For projects that are small in scale and do not require high levels of technology, low-cost contracts can be made. A government official noted, "Even if companies propose low prices, they consider whether business goals can be reliably met and whether deadlines can be adhered to." Hanwha Ocean also stated that they did not engage in low-cost bidding.
Industry insiders believe that Hanwha Ocean's early entry into the U.S. Navy MRO market has provided significant benefits in capturing the market. One insider said, "It seems that Hanwha Ocean has well-structured strategies for entering the U.S. shipbuilding market, such as the acquisition of the Philippine shipyard."
The reason Hanwha Ocean and HD Hyundai Heavy Industries continue to participate in the U.S. Navy MRO business is that they have their sights set on shipbuilding as well. It is known that more U.S. Navy MRO projects are expected this year. Hanwha Ocean aims to secure contracts for up to six vessels, while HD Hyundai Heavy Industries has set a goal of obtaining contracts for two to three vessels.