Posted on September 25, 2024
The United States is facing major challenges in its shipbuilding industry, which could harm the Navy’s ability to maintain global superiority. In response, the United States has turned on its allies, especially South Korea, to strengthen its naval shipbuilding capabilities.
South Korean shipbuilding giant Hanwha Ocean Co. has taken major steps to fill this gap. In June, the company acquired the Philly Shipyard for $100 million and has already secured a contract with the United States Navy to repair a navy vessel—Korea’s first such agreement.
The acquisition makes it possible to invest more in American shipbuilding and signifies Hanwha’s increasing presence in the country’s naval sector.
The shipbuilding industry in the United States has suffered from years of delays, cost overruns, and a lack of capacity, while China’s shipbuilding prowess grows. China now has the world’s largest shipbuilding industry, manufacturing over half of the world’s ships and exceeding the United States Navy in fleet size. China had about 1,800 large commercial vessel orders at the start of 2023, compared to only five in the United States.
According to Deputy Secretary of State Kurt Campbell, the disparity between US and Chinese shipbuilding capability is concerning. In July, Campbell warned a Senate committee that the United States must improve or risk losing its status as the world’s leading naval power.
The United States has been asking for help from allies like South Korea and Japan, which have the greatest shipbuilding industries other than China. In April, US Navy Secretary Carlos Del Toro visited shipyards in South Korea and Japan to encourage investment in American shipbuilding.
Del Toro praised the efficiency and technology of South Korean and Japanese shipyards, which can manufacture ships at a lower cost and faster than US firms.
Hanwha’s acquisition of Philly Shipyard is an important accomplishment. David Kim, executive vice president of Hanwha Defense USA, stated that the procurement will help the US Navy achieve its long-term goals.
Kim stated during a recent ship christening ceremony that the shipyard’s revival would create jobs, increase local investment, and integrate advanced technology into US shipbuilding.
Despite Hanwha’s confidence, there remain concerns about foreign investment in US industries due to the recent controversy involving Nippon Steel Corp.’s attempted acquisition of US Steel Corp.
Experts including Colin Grabow, an associate director at the Cato Institute, believe Hanwha’s acquisition will avoid such an outcome because South Korea is a US ally, and foreign companies like as Italy’s Fincantieri SpA and Australia’s Austal Ltd. already build ships for the US Navy.
The Philly Shipyard has struggled financially, with losses in five of its past six years, and the labor shortage is extreme. Training skilled workers, such as as welders, can take years, and experts agree that reestablishing the United States’ shipbuilding sector to compete with China will require long-term investment and support.
One of the major obstacles is the century-old Jones Act, which requires that vessels transporting goods between U.S. ports be built, owned, and crewed by Americans. Critics believe that this protectionist approach raises costs and reduces competition, contributing to the decline of US shipbuilding.
Meanwhile, the United States is increasing its efforts to protect maritime interests and counter China’s dominance. In July, the United States, Canada, and Finland announced plans to build icebreakers to compete with Russia and China in the Arctic Ocean. The Biden administration has also initiated an investigation into alleged unfair Chinese shipbuilding practices.
China has responded to these claims, stating that the United States is blaming Beijing for its own industrial failures. The Chinese Ministry of Commerce said that overprotection harmed the competitiveness of the US shipbuilding industry.
In July, the United States, Japan, and South Korea announced plans for military cooperation, including regular training, policy consultations, and information exchange.
The Pentagon is also exploring the possibility of establishing military repair facilities in Australia, the Philippines, Japan, Singapore, and South Korea.
Rahm Emanuel, the US ambassador to Japan, has expressed support for using allied shipyards to repair US naval vessels. Emanuel has stated that collaborative maintenance and repair efforts between the United States, Japan, and South Korea are a “smart way” to address the issues posed by the decline of the US shipbuilding sector.
