The government and the Democratic Party of Korea are reviewing a plan to establish a dedicated shipyard as part of the shipbuilding cooperation between Korea and the United States to handle maintenance, repair, and overhaul (MRO) of U.S. naval vessels. Candidates mentioned include Korea's K Shipbuilding in Jinhae, HJ Shipbuilding & Construction in Busan, and HD Hyundai Heavy Industries' shipyard in Gunsan.
According to the shipbuilding industry on the 11th, the government and the ruling party are preparing an action plan for the shipbuilding cooperation project proposed to the U.S., named Make America Shipbuilding Great Again (MASGA).
Lee Un-joo, a member of the Democratic Party of Korea, proposed a bill on the 31st of last month to enhance and support cooperation in the shipbuilding industries between Korea and the U.S. The main content includes designating a specialized complex for MRO of U.S. naval vessels and establishing a fund to promote shipbuilding industry cooperation through government contributions.
A proposal to acquire a medium-sized shipyard led by the government to take over MRO and ship construction for the U.S. Navy is being strongly considered. The plan is to start with the MRO business that can be initiated immediately, followed by revisions to U.S. laws to eventually include the construction of U.S. naval vessels.
The Ministry of Trade, Industry and Energy reportedly began considering the acquisition of K Shipbuilding with funds generated from viewing shipbuilding as a key negotiation card months before finalizing the Korea-U.S. tariff agreement. The plan is to utilize government funds to acquire K Shipbuilding and then take over the MRO business for the U.S. Navy. K Shipbuilding is evaluated to have significant locational advantages as it is located in Jinhae, Changwon City, where a U.S. Navy base is situated.
UAMCO and KHI Consortium, the largest shareholders of K Shipbuilding, are currently pursuing the sale of K Shipbuilding. UAMCO, which is practically exercising management rights, is leading the sale. UAMCO holds a 30% stake from the government side (Korea Development Bank, IBK Industrial Bank, The Export-Import Bank of Korea).
K Shipbuilding is reportedly viewed positively by the government for conversion into an MRO base, as long as there is a steady flow of work for MRO jobs. An official noted, "MRO is less profitable than ship construction, but as long as there is continued work, it's acceptable."
HJ Shipbuilding & Construction is also being mentioned as a candidate. Since March, HJ Shipbuilding & Construction has been pushing for the signing of the Master Repair Ship Agreement (MRSA), which is a qualification requirement for MRO, with the U.S. Navy Supply Systems Command. In April, Neil Coprofski, the U.S. Navy Commander in Korea, visited the Busan Yeongdo shipyard of HJ Shipbuilding & Construction to check the preparations for the MRO business. Last month, HJ Shipbuilding & Construction also formed a consultative body for creating a cluster for ship MRO industries with 10 corporations related to ship repair and maintenance in Busan and Gyeongnam.
HJ Shipbuilding & Construction confirmed that while it is preparing to participate in the U.S. Navy MRO business, there are no plans for a sale of the company. HJ Shipbuilding & Construction said, "There is no possibility that the largest shareholder, Dongbu Corporation, will sell its equity."
Jeollabuk-do and Gunsan are pushing a plan to develop Gunsan Port into an MRO complex for the U.S. Navy. In this process, utilizing HD Hyundai Heavy Industries' Gunsan shipyard as an MRO dedicated base is also being discussed. HD Hyundai Heavy Industries has been producing ship blocks at the Gunsan shipyard since its restart at the end of 2022. From the U.S. perspective, Gunsan Port has advantages in terms of monitoring and deterring China, although there are predictions that it may provoke China, making the feasibility low.
HD Hyundai Heavy Industries is scheduled to perform MRO on the U.S. Navy supply support ship USNS Alan Shepard at the Ulsan shipyard. An official from HD Hyundai Heavy Industries stated, "We have not received any requests from the government regarding the conversion into an MRO base at the Gunsan shipyard."