South Korea's Hanwha Ocean targets US Navy orders as Trump seeks shipbuilding ties

Reuters

05-05-2025

Summary
Companies
Targets $2.9 billion in overseas military revenue by 2030
Acquired Philadelphia shipyard to expand U.S. presence
Plans to modernise U.S. facilities, train workers for efficiency
SEOUL, May 5 (Reuters) - South Korean shipbuilder Hanwha Ocean aims to boost its revenue from overseas military vessels to around 4 trillion won ($2.91 billion) by 2030 and hopes to pick up more repair orders from the U.S. Navy, a senior executive told Reuters.
The Asian country is a major global shipbuilder and trade talks with the U.S. on tariffs brought up possible cooperation in the sector after U.S. President Donald Trump signed an executive order to restore U.S. shipbuilding.
Hanwha Ocean, formerly Daewoo Shipbuilding, is one of the largest shipbuilders in the world with an order book of $31.43 billion as of the end of March. It acquired a U.S. shipyard, opens new tab in Philadelphia last year to expand in the market. (042660.KS), opens new tab
Its naval ships business, which has built dozens of submarines and surface vessels used by the South Korean Navy, has won two orders from the U.S. Navy since last year to repair and overhaul its ships for the first time.
"I think we may be the biggest shipyard in the world that has taken on these maintenance, repair and overhaul orders from the U.S. Navy," said Steve SK Jeong, head of the Naval Ship Global Business at Hanwha Ocean, days after U.S. Secretary of the Navy John Phelan visited its shipyard.
"It is not very profitable, but learning the process of working with the U.S. Navy is valuable, which will help if we win newbuild orders."
Hanwha Ocean hoped to win a double-digit number of U.S. Navy maintenance and repair orders before 2030, Jeong said.
Trump has vowed to spend "a lot of money on shipbuilding" to restore U.S. capacity, and cited concern over how his country has fallen behind in an industry that is also dominated by China.
Still, U.S. laws can make it harder for foreign shipyards even if they have U.S. operations. They are prohibited from building U.S. Navy vessels, due to the Byrnes-Tollefson Amendment of the U.S. Department of Defense Appropriations Act.
TRANSPLANTING PROCESSES
Hanwha Ocean's Philadelphia Shipyard is trying to get a licence that clears it to build U.S. Navy vessels, but transplanting cutting-edge manufacturing processes honed from competition with other South Korean and Chinese shipyards is not as simple as bringing in some automated welding machines, Jeong said.
"I think the U.S. shipbuilding industry hasn't had to compete very much. Facilities are old, and there's a shortage of technicians," Jeong said.
"We are looking to modernise facilities, train and equip workers, and bring in our manufacturing process that can build the same ship in, I think, two-thirds the time or less as that of a U.S. shipyard."
Jeong said the company is investing in South Korea to use existing facilities and expand naval ship capacity to build five submarines and three surface vessels at the same time by 2029, from two submarines and two surface vessels now.
Despite building 17 submarines for the South Korean Navy since 1987, Hanwha Ocean has only actively competed for overseas orders in the last few years as South Korea's low birthrate and shrinking military-age population risk cooling local demand.
It is competing to export submarines to Poland and Canada, a frigate to Thailand as well as knocking on the door in markets in the Middle East, South America, North Africa and Southeast Asia, to build up a sustained flow of orders that would bring foreign sales to 4 trillion won by 2030, Jeong said.
That would be about four times the size of its 1.05 trillion won of revenue in 2024.
($1 = 1,376.08 won)