As the U.S. Navy ship maintenance, repair, and operations (MRO) business emerges as a new revenue source for Korea's shipbuilding industry, more companies are seeking to sign master ship repair agreements (MSRA) with the U.S. Navy. They cite advantages such as being able to take part in maintenance for high-complexity vessels like warships and being exempted from some of the documentation required for MRO work.
On the 18th, the shipbuilding industry said mid-sized shipbuilder HJ Shipbuilding & Construction was selected by the U.S. Navy that day as an MSRA signatory candidate. The agreement will be valid from the 23rd to Jan. 22, 2031. HJ Shipbuilding & Construction said it was able to secure the deal thanks to favorable marks in a port security assessment conducted by security experts from the Naval Criminal Investigative Service at the Yeongdo Shipyard in Busan on the 5th.
The MSRA is a ship maintenance qualification certified by the U.S. Navy, and shipyards that sign the agreement can take part in MRO work for key U.S. Navy vessels, including warships and frigates. Another advantage is that the U.S. Navy exempts shipyards with an MSRA from some of the documentation required for MRO work on logistics support ships.
HJ Shipbuilding & Construction is not the only one pursuing an MSRA. Mid-sized shipbuilder K Shipbuilding Co., Ltd. on the 1st created a "future technology strategy team" and is carrying out the paperwork needed to sign an MSRA. Daehan Shipbuilding is reviewing whether to push ahead with an MSRA, and SK oceanplant, an offshore plant company, submitted documents to the U.S. Navy and is now in the final stages.
Among large shipbuilders, HD Hyundai Heavy Industries and Hanwha Ocean obtained MSRAs in Jul. 2024. Samsung Heavy Industries was recently said to have begun preparations to sign an MSRA.
Official guidance from the U.S. Navy stipulates that "a shipbuilder entering into an MSRA must be able to perform more than 55% of the overall maintenance work with its own facilities and workforce." In addition, to be qualified, it must own or have guaranteed exclusive use and access to a pier required for the work, and lease a dry dock (dock, shipbuilding facility) certified by the Naval Sea Systems Command (NAVSEA).
It takes about eight months to one year from the time documents, including an application, are submitted to the Naval Supply Systems Command (NAVSUP) to complete an MSRA. The application must include information on shipyard information and security, technical and workforce composition, MRO performance, detailed ship repair processes, and facilities and equipment. Relevant U.S. authorities then conduct an on-site inspection of the shipyard and decide on final approval.
Korean shipbuilders are investing effort in signing MSRAs because the U.S. Navy ship MRO business has recently emerged as a new growth engine. In particular, small and mid-sized shipyards are turning to MRO as they struggle to compete with Chinese firms bidding low in new shipbuilding projects.
A shipbuilding industry official said, "In new shipbuilding, Chinese shipyards are winning orders at prices more than 20% lower, making competition difficult and hurting profitability," adding, "We are moving to target the MRO market, which can generate stable revenue over the long term."