As the U.S. Navy's maintenance, repair, and operations (MRO) business for American warships emerges as a new revenue source for Korea's shipbuilding industry, more companies are seeking to sign master ship repair agreements (MSRA) with the Navy. The draw is that they can take part in maintenance of high-difficulty vessels such as warships and are exempted from some document submission requirements needed for MRO projects.
According to the shipbuilding industry on the 18th, midsize shipbuilder HJ Shipbuilding & Construction was selected by the U.S. Navy that day as a candidate to sign an MSRA. The agreement will be valid from the 23rd through Jan. 22, 2031. HJ Shipbuilding & Construction said it was able to secure the deal thanks to strong marks in a port security assessment conducted on the 5th at the Busan Yeongdo Shipyard by security experts from the Naval Criminal Investigative Service.
An MSRA is a ship maintenance qualification certified by the U.S. Navy, and shipyards that sign the agreement can participate in all MRO projects for key Navy vessels, including warships and frigates. Another advantage is that the 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. Midsize shipbuilder K Shipbuilding Co., Ltd. created a "future technology strategy team" on the 1st and is working on the paperwork needed to sign an MSRA. Daehan Shipbuilding is reviewing whether to pursue an MSRA, and offshore plant company SK oceanplant has submitted documents to the U.S. Navy and is now in the final stages of the process.
Among large shipbuilders, HD Hyundai Heavy Industries and Hanwha Ocean obtained MRSAs in Jul. 2024. Samsung Heavy Industries has also recently begun preparations to sign an MSRA.
In its official guidelines, the U.S. Navy stipulates that "a shipyard signing an MSRA must be able to perform more than 55% of total maintenance work with its own facilities and personnel." It also recognizes eligibility only if the shipyard owns a pier needed for the work or has guaranteed exclusive use and access to one, and leases a dry dock certified by the Naval Sea Systems Command (NAVSEA).
It takes about eight months to a 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 details on shipyard information and security, technology and workforce, MRO project performance, specifics of the ship repair process, and facilities and equipment. Relevant U.S. authorities then conduct an on-site inspection of the shipyard before deciding on final approval.
Korean shipbuilders are focusing on signing MRSAs because the U.S. warship MRO business has recently emerged as a new growth driver. As new shipbuilding has run into difficulty amid competition from Chinese firms bidding at low prices, domestic companies are turning their attention to MRO work.
An industry official said, "For new shipbuilding, Chinese shipyards are winning orders at prices more than 20% lower, making it difficult to compete and hurting profitability," adding, "We are moving to target the MRO market, which can generate stable revenue over the long term."