Korea can finish in six months a ship that would take the United States 40 months to build and cost $334.5 million (about 480 billion won) for $55 million (about 80 billion won). The revival of U.S. shipbuilding is an expensive illusion, and using shipyards in allied countries such as Korea is the only security alternative.
According to the shipbuilding industry on the 4th, Colin Grabow, a researcher at the Cato Institute, which is considered one of the three most influential think tanks in the United States, directly criticized the U.S. government's shipbuilding revival policy and made this argument in a contribution to the Center for International Maritime Security (CIMSEC) on the 28th of last month (local time).
He noted that America's obsession with "Made in USA" is undermining security efficiency and dismissed attempts to restore the collapsed supply chain with subsidies as unrealistic.
Instead, his assessment is that making Korea and Japan, which already have world-class capabilities, partners of the U.S. Navy is the only solution to support America's degraded security. Recently, this pragmatic view has been raised across the U.S., including by the Congressional Budget Office (CBO).
◇ "U.S. shipbuilding has lost competitiveness... expense 6 times higher, time 7 times slower"
The collapse of U.S. shipbuilding is starkly evident in the general merchant ship sector, which does not require highly advanced technology, where the gap with Korea and China has widened to an incomparable level.
Grabow pointed out, "The per-ship construction expense of the Aloha-class (3,600 TEU) container ships currently being built in the United States reaches $334.5 million (about 480 billion won)," adding, "That is six times the price in China, and the construction speed is seven times slower than in Korea."
Citing that U.S. shipyards account for only 0.04% of global merchant ship construction, he said, "Keeping an industry alive with taxes after it has completely lost competitiveness in price and delivery is not a security strategy but a waste of budget."
Some are also expressing skepticism about the "SHIPS Act," which Washington's political circles and the Trump camp are pushing in a bipartisan manner. The bill aims to invest $25 billion (about 36 trillion won) in federal funds to rebuild outdated shipyard infrastructure and increase the U.S. Navy's fleet from about 290 ships to 355.
Eric Labs, senior analyst for naval affairs at the Congressional Budget Office, said in a recent report, "Unless the shortage of skilled workers is resolved, increasing the budget will not make it possible to meet shipbuilding targets." Grabow also said, "With no skilled welders and engineers to build ships and no ecosystem in the United States to supply parts, injecting subsidies is pointless."
◇ "Hanwha's entry is not a panacea… structural barriers are high"
Grabow also urged caution on Korean shipbuilders' entry into the United States. Despite heightened expectations for the Philadelphia shipyard acquired by Hanwha Systems and Hanwha Ocean for $100 million (about 144 billion won), the structural flaws burdening U.S. shipbuilding pose formidable barriers.
He warned that it is a mistake to believe that the chronic ills of U.S. shipbuilding will be solved just because foreign capital and technical expertise flow in, saying that the high-cost structure and collapsed supply chain are not problems that can be overcome in the short term.
In fact, there have been cases where foreign corporations entered U.S. shipbuilding and had a bitter experience. In the 1990s, Kvaerner Group, then Europe's largest shipbuilder, reopened the Philadelphia shipyard in 1997 with advanced technology and capital, but it failed to overcome America's uniquely hard-line union culture and inefficient parts supply chain. Despite substantial state government subsidies at the time, Kvaerner failed to secure cost competitiveness and ultimately had to dispose of its equity and withdraw within a few years.
From the U.S. perspective as well, bringing in Korean technology does not solve every problem. Security experts at think tanks such as the Hudson Institute cite the failed program for the U.S. Navy's next-generation frigate, the "Constellation class." In 2020, the Navy adopted an excellent design from Italy's Fincantieri and began construction, but due to U.S. supply chain issues and a shortage of skilled workers, construction has been delayed by more than three years and expenses have surged.
Regulations such as the "Buy American" law, favored by U.S. hard-liners, are also serving as barriers to entry. The United States requires 60% to 75% of goods procured by the federal government to be domestically produced, but in reality, dependence on foreign-made core components is overwhelming.
Grabow argued, "Even for cargo ships currently being built in the United States, the engine—the core heart—is imported from Korea and the propeller from China for assembly," adding, "Even if the United States insists on building on the mainland, the structural limit is clear: if the global supply chain is cut off, the ship cannot be completed."
◇ "To protect security, relax the Jones Act and use allies"
Given these practical limits, he stressed that leveraging allies through deregulation is the only alternative. To quickly reinforce force in a contingency, shipyards in Korea and Japan with overwhelming construction capacity should be actively used as partners of the U.S. Navy.
He added, "The Jones Act, which insists on construction within the United States, has instead blocked competition and eroded industrial competitiveness," arguing that legal revisions are urgent. Enacted in 1920, the Jones Act requires that only U.S.-built and -operated vessels be used for domestic transport of goods, and it is cited as a key reason entrenching the high-cost structure of U.S. shipping and shipbuilding.
Grabow said, "What the United States should do for security is not insist on inefficient domestic production, but actively leverage the capabilities of allies such as Korea and Japan," adding, "Insisting on domestic production in the United States is not a rational industrial strategy but nostalgia for a bygone manufacturing era."