K-Shipbuilding Now Competes for U.S. Navy Contracts [Yang Nakgyu's Defence Club]

U.S. Government Reaches Out to Allies with Bridge Strategy
Impact on Korea-U.S. Shipbuilding Cooperation Hinges on Congressional Agreement

Yonhap News

The three major Korean shipbuilders have begun a tense rivalry over securing contracts to build U.S. Navy vessels. While the scope of utilizing overseas shipyards will ultimately be determined by the movement of the U.S. Congress, it is assessed that the U.S. government’s Requests for Information (RFI) sent to Korean shipbuilders for combat ships and replenishment oilers have brought these contract opportunities into full view.

Unlike the House, the Senate Allows Certain Ships to Be Built Overseas

According to the shipbuilding industry, the U.S. government is pushing a “bridge strategy” to promote cooperation with allied countries for naval shipbuilding. The U.S. aims to pursue both the protection of its domestic shipbuilding industry and the expansion of naval power. However, obstacles have arisen. On June 5, the House Armed Services Committee (HASC) passed an amendment to the National Defense Authorization Act (NDAA) for fiscal year 2027, proposed by Representative Jared Golden. If the House’s amendment is finalized as is, it will directly conflict with the U.S. strategy of cooperation with allied countries. This reflects differing perspectives within Congress about how far to allow the utilization of overseas shipyards.

Nevertheless, there is some optimism. On June 11, the Senate Armed Services Committee approved a bill permitting the construction of up to two oil replenishment ships and up to two transport ships at overseas shipyards. While the House is taking a stance of fundamentally restricting overseas construction, the Senate has acknowledged the need to utilize allied shipyards for certain auxiliary vessels. The outcome of future discussions between the two chambers is expected to have a significant impact on the Korean shipbuilding industry’s U.S. strategy.

The Trump Administration Turns to Korean Shipbuilders to Close the Gap with China

The urgency lies with the U.S. government. The Trump Administration has recently decided to implement a Maritime Action Plan (MAP) to narrow the gap with China. According to the Center for Strategic and International Studies (CSIS), the U.S. accounts for just 0.1% of the global shipbuilding output, while China claims a 53.3% share. Eighty-two percent of new U.S. Navy ships have faced construction delays, and China’s shipbuilding capacity is said to be more than 200 times that of the United States.

President Donald Trump is also personally involved. President Lee Jaemyung stated that, at the Group of Seven (G7) Summit last month, President Trump asked, “Can you quickly build 10 U.S. Navy vessels?” Rapid progress is occurring on a practical level as well. The U.S. Department of Defense (War Department) and the Navy have recently sent RFIs regarding combat ships and oil replenishment ships to Korean shipbuilders. An RFI is a process by which the government gathers information on prices, delivery timelines, and other market data for planning purposes. This marks the first time since President Trump’s inauguration and the official launch of Korea-U.S. shipbuilding cooperation discussions that the U.S. has approached Korean shipyards about their naval capabilities through an RFI.

Korea’s Top 3 Shipbuilders Respond Swiftly to U.S. RFIs

Korean shipbuilders such as Hanwha Ocean, HD Hyundai Heavy Industries, and Samsung Heavy Industries have submitted their combat ship design and construction capabilities to the U.S. Department of Defense. They reportedly provided comprehensive data on their construction experience, design staff and expertise, and annual construction capacities.

With only the U.S. government’s selection remaining, industry observers believe Hanwha Ocean has the upper hand in winning U.S. naval contracts. This is because Hanwha faces the least regulatory constraints from the U.S. Congress. In addition to acquiring the Philly Shipyard in Pennsylvania, Hanwha is in the process of obtaining a license to build combat ships in the U.S. Currently, offshore construction of U.S. Navy vessels is effectively blocked by the Burns-Tollefson amendment, but Hanwha Ocean is the only Korean company not subject to these restrictions.

Hanwha Ocean Stands Out as the Only Korean Firm with a Local Shipyard Acquisition

HD Hyundai Heavy Industries and Samsung Heavy Industries, on the other hand, have remained at the level of cooperation. They have each formed partnerships with local U.S. shipbuilders, Huntington Ingalls and General Dynamics NASSCO, respectively. HD Hyundai Heavy Industries agreed with Huntington Ingalls, a U.S. defense contractor, to build the Navy's next-generation logistics support ships, but this remains a cooperative venture. Furthermore, while they have jointly agreed to invest in acquiring or establishing ship production facilities in the U.S., this is expected to be a lengthy process.

Samsung Heavy Industries has decided, together with NASSCO and DSEC, to participate in the design of America’s next-generation logistics support ships. The company plans to provide conceptual design support for the U.S. Navy’s Next Generation Logistics Ship (NGLS) project. Rather than building U.S. naval vessels directly, Samsung Heavy Industries intends to focus on providing technical support.

This content was produced with the assistance of AI translation services.