To effectively target the United States, which has recently emerged as a new growth engine for Korea's shipbuilders, they should focus on securing contracts for logistics support ships or maintenance, repair and overhaul (MRO) for naval vessels rather than building warships, according to a new argument. Because strategic warships such as nuclear submarines have stringent weapons systems security, it is realistic to first capture MRO demand that can be entered immediately.
Kim Se-jin, head of the trade and industrial policy center at Shin & Kim LLC, said at the "Korea-U.S. shipbuilding cooperation and business opportunities seminar" held at Shin & Kim LLC's headquarters in Jung-gu, Seoul, on Apr. 2, "Logistics support ships are the most similar to commercial vessels, where Korean shipbuilders rank No. 1 in the world," adding, "Korea is most likely to win such orders on its own and will be highly competitive."
The likelihood of winning MRO contracts for non-combat ships was forecast even higher. Kwon Hyo-jae, a researcher at the Institute of Marine Systems Engineering at Seoul National University, said, "It is known that the laundry room and bathrooms on the U.S. Navy's aircraft carrier Ford had problems during the recent U.S.-Iran war," adding, "I heard the expense to repair them would be 4 trillion won and take three years." Kwon added, "Within the United States, calls are growing to entrust MRO to overseas shipbuilders."
According to the shipbuilding industry, MRO for the U.S. 7th Fleet is currently carried out mainly in Japan, but Southeast Asian countries including Korea, Singapore, Thailand, Vietnam and the Philippines are also jumping into the bidding race. Kwon said, "Japan, where the U.S. 7th Fleet calls, is likely to monopolize combat ship MRO, but demand for non-combat ships is fully within reach," stressing, "We must compete with Japan while also cooperating."
Kwon also assessed that building strategic warships is difficult at present. He said, "Fincantieri, a European shipbuilder, agreed to receive orders for about 20 warships and acquired a local U.S. shipyard, but actual orders amounted to only two, and expense surged, ultimately leaving it as a failure case," advising, "Taking this as a 'lesson learned,' domestic companies should approach the market centered on logistics support ships, not strategic warships."
Participants agreed that it would be difficult to revise the U.S. Jones Act, which requires "cargo transport within the United States to be carried out by ships built in the United States." However, since there was a precedent in which enforcement of the Jones Act was deferred for the first time ever due to the recent rise in international oil prices, there was also an outlook that the situation could change if a sense of crisis over the decline of shipbuilding in the United States grows.