【By Observer Net, Shao Yun】

Face with the rise of China's shipbuilding industry, the United States and South Korea, who share common strategic anxieties, have "come together" to try to "counterbalance" China's global dominance. According to a report by Nikkei Asia on July 4, South Korean companies are boarding the "trend" of the U.S. revitalizing its domestic shipbuilding industry. Under the promotion of both governments, top South Korean shipbuilders such as Hyundai Heavy Industries and Hanwha Ocean have recently signed cooperation agreements with American companies to build ships in the U.S.

"Actively support the United States"

Hyundai Heavy Industries announced last month that it had signed an agreement with Edison Chouest Offshore (ECO), a U.S. company, to establish a "comprehensive strategic partnership for building U.S. commercial ships", jointly constructing mid-sized LNG dual-fuel container ships at ECO's large shipyard Tampa Ship. The first batch of ships is expected to be delivered by 2028.

"The United States is our reliable ally and an important business partner," wrote the group's relevant person in the statement, "We plan to actively support the U.S. efforts to revitalize the shipbuilding industry and strengthen national security through our cooperation with ECO."

According to South Korean media, this collaboration was initiated by ECO. According to Nikkei Asia and the Chosun Ilbo, ECO operates five shipyards, which has sufficient experience in the construction of offshore support vessels (OSVs), but lacks the capability to build container ships, which are the cornerstone of global commercial shipping. Due to a decline in orders in recent years, ECO seeks external cooperation, while Hyundai Heavy Industries sees this as an opportunity to expand its business in the U.S.

June 22, Hyundai Heavy Industries signed the agreement with ECO. Hyundai Heavy Industries

According to Hyundai Heavy Industries, if the plan proceeds as scheduled, this project will become the first new container ship project obtained by a U.S. shipyard since 2022, "filling the gap". According to data from Clarkson Research, a shipping market analysis institution, U.S. shipyards only received orders for three 3,600 TEU class medium-sized container ships between 2022 and 2024.

About the specific form of cooperation, Hyundai Heavy Industries said that it would mainly provide technical support, including responsible for the design of the container ship order, procurement of specialized equipment, construction technical support, etc., participate in the construction of some ship body segments, and invest in related technical assets to enhance the production capacity of Tampa Ship.

The Hankyoreh Daily said that the reason for choosing this "South Korea provides technology, the U.S. provides site" cooperation model is because the U.S. law has strict regulations for merchant ships sailing between U.S. waters and ports, unless authorized by the president or other high-level officials, only ships built by U.S. shipyards can be used, including commercial ships and warships. In addition, the construction and maintenance of U.S. warships are also limited to within U.S. shipyards.

South Korea and the U.S. "mutual pursuit"?

Hyundai Heavy Industries said that this move continues its "continuous deepening of the concept of cooperation with U.S. maritime and defense interest parties".

Nikkei Asia pointed out that Hyundai Heavy Industries has already initially established multiple collaborations with American companies in this field. Hyundai Heavy Industries applied for ship repair qualification certification for the U.S. Navy in 2023 and passed the on-site inspection in early 2024. Last July, Hyundai Heavy Industries became the first South Korean company to sign a ship repair agreement (MSRA) with the U.S. Navy, entering the ship maintenance, repair, and overhaul (MRO) business.

This April, Hyundai Heavy Industries also signed a memorandum of understanding with Huntington Ingalls Industries (HII), the largest U.S. warship manufacturer, "integrating their respective expertise in warship construction". At that time, some U.S. media claimed that this meant it may one day build warships for the U.S., "helping the U.S. Navy win the shipbuilding competition against the Chinese Navy". In addition, the company is also jointly developing unmanned surface ships with the U.S. Anduril Industries.

In fact, not only Hyundai Heavy Industries, but also the second-largest South Korean shipbuilder Hanwha Ocean is also shifting its business focus to the U.S. In March this year, the company completed a seven-month routine overhaul of the U.S. Navy's dry cargo ship "Wally Schiller". This year, Hanwha Ocean plans to provide MRO services for five to six U.S. Navy vessels.

Additionally, South Korean companies have already started to cultivate relevant talents to meet the needs of the U.S. market. According to reports, Hyundai Heavy Industries held a "Shipbuilding Leaders Forum" at its research center last week, and Seoul National University, University of San Diego, and Hyundai Heavy Industries announced that they would cooperate to cultivate talents. Starting from 2026, each year, 20 to 30 shipbuilding engineers from U.S. universities will be invited to study short-term in Seoul National University.

The report believes that these series of developments are closely related to the frequent visits of U.S. political figures. Since late February last year, the then U.S. Secretary of the Navy Carlos Del Toro visited South Korea and Japan continuously, examining allied shipbuilding enterprises, including Hyundai Heavy Industries and Hanwha Ocean. In February this year, U.S. Senator Mark Kelly visited the Philadelphia Shipyard, which was acquired by Hanwha Ocean last December, emphasizing that the U.S. and South Korea should strengthen cooperation to "respond to the rise of China".

April 30, Fei Lin (second from left) visited the shipyard at Hyundai Heavy Industries' Ulsan headquarters. Yonhap News Agency

Lee Seong-ryeol, Director of the Industry Policy Division of the Ministry of Trade, Industry and Energy, recently confirmed that under Trump, the U.S. and South Korea have formally launched bilateral discussions on cooperative shipbuilding.

This April, the current U.S. Secretary of the Navy John F. Richardson visited the shipyard of Hyundai Heavy Industries in Ulsan and toured the "King Jeongjo" and the latest Aegis destroyer "Chasa Daejeong" built by Hyundai Heavy Industries. According to Yonhap News Agency, when receiving him, the vice chairman of Hyundai Heavy Industries, Jung Ki-seon, said that Hyundai Heavy Industries would contribute to revitalizing the U.S. shipbuilding industry with its "best technological strength and shipbuilding capabilities."

Key issues remain unresolved

Data from Clarkson Research shows that China won 70% of the global shipbuilding orders last year, while South Korea only accounted for 17%. However, after Trump took office in early 2024, he implemented the "America First" agenda, viewing curbing China's shipping industry as an important goal, giving South Korean shipbuilders an opportunity to enter new markets and fill the gap.

Researcher Lee Eun-chang of the Korea Institute for Industrial Economics once frankly admitted that South Korean shipbuilders were "clearly lagging behind their Chinese competitors in cost competitiveness," but Trump's vision of "making the U.S. shipbuilding industry great again" "provided Koreans with long-term survival opportunities." South Korean media said that considering the insufficient domestic shipbuilding capacity in the U.S., even if the U.S. government sanctions Chinese shipbuilding companies and reduces the number of ship orders to China, U.S. shipyards would "not be able to handle" this share, and the world's second-ranked South Korean enterprise may benefit.

However, some analysts believe that the cooperation between the two sides also faces some obstacles. Professor Albert Veenstra of Erasmus University Rotterdam in the Netherlands previously believed that the U.S. currently does not have a "reliable steel manufacturing industry", so it is difficult to continue participating in the shipbuilding competition. The South Korean industry had concerns that if the U.S. government banned the use of Chinese steel in shipbuilding, or imposed other restrictions, it would increase the project cost burden.

In February this year, U.S. Republican Senators Mike Lee and John Curtis submitted proposals such as the "Naval Readiness Assurance Act", requiring "allowing the construction of U.S. Navy warships to be entrusted to allies such as South Korea". The proposal clearly stipulates that as a detail condition, the construction costs of foreign shipyards must be lower than those of U.S. shipyards, and "foreign shipyards building U.S. warships must not be owned by or receive investment from China" etc.

Additionally, some experts believe that delegating the daily maintenance and regular main ship construction work of the U.S. Navy to allies cannot solve the key problem of slow progress in the construction of U.S. naval vessels.

Experts point out that the U.S. plan is that this measure can both alleviate the "maintenance difficulty" issue of the U.S. navy ships, and allow the U.S. domestic shipyards to focus on building core warships such as nuclear aircraft carriers and nuclear submarines with higher confidentiality and importance. However, South Korea can only build the hull of destroyers, and the key Aegis radar system still needs to be provided by the U.S., and the supply of supporting equipment is one of the key factors causing the slow progress in the construction of U.S. warships.

This article is an exclusive article of Observer Net. Without permission, it cannot be reprinted.

Original: https://www.toutiao.com/article/7523232402743869967/

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