The United States, seeking to rejuvenate its ailing shipbuilding industry, has turned to its Asian allies for support. A significant step in this direction is the recent contract awarded to Hanwha Ocean, a major player in South Korea’s shipbuilding sector, which makes it the first South Korean company to secure a maintenance, repair, and overhaul (MRO) contract for a U.S. vessel. This deal marks a turning point for both Hanwha Ocean and the U.S. Navy, underlining the growing importance of Asian partnerships in maintaining the maritime superiority of the United States.
Hanwha Ocean’s new role as the first South Korean shipyard to obtain an MRO contract from the U.S. Navy involves overhauling a 40,000-ton dry cargo and ammunition ship. This undertaking will see the U.S. Navy ship dock at Hanwha Ocean’s Geoje shipyard, where it will undergo comprehensive maintenance and inspection. Additionally, onshore overhaul work will be executed using the shipyard’s floating shipbuilding facilities, ensuring that the ship is brought up to optimal operational standards.
This landmark contract follows Hanwha Ocean’s signing of a Master Ship Repair Agreement (MSRA) with the U.S. Naval Supply Systems Command on July 22. The MSRA framework is pivotal, as it signifies official recognition by the U.S. Navy of a company’s capability to perform high-level ship repair and maintenance. Through this agreement, Hanwha Ocean is set to join a select group of international entities involved in U.S. naval maintenance, highlighting the strategic role South Korea is poised to play in the future of U.S. naval operations.
With this contract, Hanwha Ocean makes a significant entrance into the international maritime defense industry, tapping into the lucrative U.S. Navy maintenance and repair market, estimated to exceed $20 trillion annually. This strategic move not only provides Hanwha Ocean with substantial business opportunities but also signals a broader shift in global defense partnerships. As noted by a company representative, entering the U.S. Navy maintenance market is expected to serve as a significant stepping stone for Hanwha Ocean’s growth and international expansion.
The strategic importance of Hanwha Ocean’s role is further underscored by its recent acquisition of the Philadelphia Shipyard, a move that Secretary of the U.S. Navy, Carlos Del Toro, has described as a “game-changing milestone in our new Maritime Statecraft.” This acquisition, coupled with MSRA accreditation, positions Hanwha Ocean as a formidable force in the international defense export market, especially at a time when South Korean shipbuilders are aggressively seeking entry into the U.S. MRO market amid the growing strategic threats posed by China.
In response to China’s rapid naval expansion, the United States has sought to revitalize its shipbuilding capabilities by collaborating with Asian allies. South Korean companies like Hyundai Heavy Industries and Hanwha Ocean have been proactive in seeking partnerships and acquisitions with U.S. shipyards, aiming to play a vital role in the repair and construction of American warships. These efforts reflect the shared security concerns of the U.S. and South Korea in maintaining regional stability and counterbalancing Chinese influence.
The contract awarded to Hanwha Ocean is not merely a business transaction but is indicative of the close defense cooperation between South Korea and the United States. The agreement was secured with strong backing from South Korea’s Ministry of National Defense and the Defense Acquisition Program Administration, highlighting the alignment of interests between the two nations in bolstering their naval capabilities and securing strategic maritime interests.
This development, however, also sheds light on the critical deficiencies in the U.S. shipbuilding industry. Once a dominant force, the U.S. has seen its shipbuilding capabilities decline significantly over the past few decades. The U.S. Navy now relies on the advanced facilities of its Asian allies to maintain and repair its fleet, a necessity driven by the pressing need to match China’s rapidly expanding shipbuilding capacity.
The U.S. strategy focuses on leveraging Asian financial resources, engineering expertise, and shipbuilding experience to enhance its naval capabilities. The visits by U.S. Navy Secretary Carlos Del Toro to shipyards in South Korea and Japan earlier this year underscore the importance of these partnerships. The delegation of MRO work to these allies comes amid growing concerns over reduced shipbuilding capacity in the U.S., exacerbated by delays and cost overruns in major military programs, including those for submarines and aircraft carriers.
The decline in U.S. shipbuilding capacity is stark. Once boasting 13 public naval shipyards, the country now has only a handful remaining, with many having been shuttered over the years. This decline poses a significant challenge to the U.S. and its allies, as China continues to expand its shipbuilding industry at an unprecedented rate. Chinese naval vessels, capable of projecting power across distant seas, present a looming threat to U.S. interests, particularly in the strategically crucial Indo-Pacific region.
The use of MRO facilities in South Korea and Japan offers a practical solution to maintaining U.S. naval readiness. As Secretary Del Toro noted, these facilities allow for repairs to be conducted closer to potential conflict zones, reducing the time and resources required to transport damaged vessels back to the United States. By relieving pressure on American shipyards, which can then focus on building new ships, this strategy enhances the overall efficiency and responsiveness of the U.S. Navy.
In addition to South Korea and Japan, the United States has also been exploring partnerships with India for naval MRO work. This interest was highlighted in a joint statement by Indian Prime Minister Narendra Modi and U.S. President Joe Biden, emphasizing the strategic role India could play in maintaining U.S. naval equipment. Several Indian shipbuilders have already signed MSRAs with the U.S. Navy, signaling India’s emerging role as a logistical center for the U.S. military and its Indo-Pacific allies.
The involvement of South Korea, Japan, and potentially India in U.S. naval MRO activities reflects a broader strategy of building a network of capable allies to counterbalance China’s growing naval power. By leveraging the shipbuilding expertise and infrastructure of these Asian allies, the United States aims to maintain its maritime dominance and ensure rapid deployment and maintenance of its naval forces in the Indo-Pacific region.
As the U.S. navigates the challenges posed by China’s maritime ambitions, the role of Asian allies like South Korea will become increasingly crucial. The partnership with Hanwha Ocean is just one example of how the U.S. is seeking to enhance its naval capabilities through strategic collaborations, ensuring that it remains a formidable force on the high seas. This cooperative approach not only strengthens the U.S. Navy but also contributes to regional stability, fostering a united front against common security threats.
