As the Korea-U.S. tariff negotiations drag on and the "MASGA (Make American Shipbuilding Great Again)" project remains adrift, Korea's shipbuilding industry is preparing to enter the U.S. market for when the talks conclude. The MASGA project is a Korea-U.S. shipbuilding cooperation initiative under which Korean shipbuilders will pursue U.S. naval vessel maintenance, repair and overhaul (MRO) contracts, local investment, technology cooperation, and workforce training.
Hanwha Ocean acquired Philly Shipyard in Philadelphia and has steadily won U.S. naval MRO contracts, drawing attention as a key shipbuilder to carry out MASGA. Hanwha Ocean last year won maintenance contracts for the U.S. Navy's logistics support ship USNS Wally Schirra and the 7th Fleet oiler USNS YUKON. This year, it is targeting awards for MRO work on five to six U.S. naval vessels.
At the group level, new opportunities are also being sought. Hanwha Group's U.S.-based shipping affiliate Hanwha Shipping is creating new workload by ordering 10 medium-range (MR) tankers and one LNG carrier from Philly Shipyard. Earlier in Aug., it also announced an additional $5 billion (about 7 trillion won) investment in the United States.
HD Hyundai Heavy Industries posted its first result in Aug., winning maintenance for the U.S. Navy 7th Fleet's USNS Alan Shepard. It has laid the groundwork for entry into the local market by signing technology agreements with U.S. shipbuilders Huntington Ingalls and Edison Chouest Offshore. It is also continuing to review overseas shipyard acquisitions.
If the ongoing merger of HD Hyundai Heavy Industries and HD Hyundai Mipo is completed within the year, the competitiveness of U.S. naval MRO operations is expected to strengthen further. HD Hyundai Heavy Industries had an MSRA (master ship repair agreement), a prerequisite for entering the U.S. naval MRO business, but lacked dock (dock, shipbuilding facility) capacity for U.S. naval maintenance due to a heavy existing workload. Once the merger is completed, it will be possible to use HD Hyundai Mipo's dock space for U.S. naval maintenance.
Samsung Heavy Industries has formed a task force (TF) for U.S. entry and is preparing technology exchanges and business agreements with local shipyards. Lacking an MSRA, Samsung Heavy Industries is considering entry into non-combatant ship MRO. Previously, an MSRA was required to participate in U.S. naval MRO projects, but since Jan. this year, the rules have changed to allow bidding on logistics support ship MRO without an MSRA.
Mid-sized shipbuilders see U.S. naval MRO as a key future revenue source. While MRO has lower margins than newbuilding (newly built), the high maintenance demand can provide a stable workload over the long term.
HJ Shipbuilding & Construction is in the final stage of signing an MSRA. Last month, a Naval Sea Systems Command (NAVSEA) inspection team visited the Busan Yeongdo Shipyard to review its production capacity. HJ Shipbuilding & Construction is Korea's first defense contractor for naval vessels and has experience building special-purpose ships such as patrol craft and warships. It expects to be able to sign the MSRA around Nov.
K Shipbuilding in Jinhae, South Gyeongsang, is mentioned as a candidate MRO base due to its proximity to U.S. Navy facilities. It also has experience building naval vessels. UAMCO, the largest shareholder of K Shipbuilding, is pursuing a sale of its equity, including management control.
SK oceanplant has also officially declared its entry into U.S. naval MRO. It is designated as a defense contractor for shipbuilding and has delivered dozens of vessels to the Navy and Coast Guard. SK ecoplant, the largest shareholder of SK oceanplant, is pursuing a sale of its equity, including management control, and has selected the DIOcean consortium as the preferred bidder.
A shipbuilding industry official said, "Although the Korea-U.S. tariff negotiations have struggled and the MASGA project has gone quiet, if the United States is to rebuild its shipbuilding industry, it needs Korean corporations. Mid-sized shipbuilders are also steadily preparing with future workloads in mind."