【By Observer News, Shanmao】At the end of last year, South Korea's Hanwha Group acquired a shipyard in the United States that was originally owned by a Norwegian owner—the Philadelphia Shipyard—for $100 million. The shipyard was immediately renamed Hanwha Philadelphia Shipyard, which became the first shipbuilding facility operated by South Korean capital on U.S. soil. In July this year, an American observer noticed that the overhead cranes at the factory had been repainted in the same orange color used by South Korean shipyards, seemingly marking a new era for American shipbuilding.
The overhead cranes at the Philadelphia Shipyard have been repainted in Hanwha Group's orange color and marked with the Hanwha Ocean logo
Newly appointed CEO of the shipyard, David Kim, former Executive Vice President of Hanwha Defense USA, said during a visit by U.S. media last month that they had added more than 600 employees after acquiring the shipyard and planned to enter the U.S. Navy shipbuilding sector. David Kim mentioned at the beginning of the month that they were already discussing various cooperation opportunities with the U.S. Navy because the U.S. Navy and shipbuilding industry urgently needed to increase production capacity. At the same time, there is a serious crisis where the number of warships will be surpassed by China, while almost all shipbuilding projects are delayed by 1 to 3 years and continue to be extended, and each project exceeds its budget.
On the other hand, the U.S. commercial shipping and maritime industry also needs more ships, so David Kim said he hopes their shipyard can become a "major player" in both military and commercial shipbuilding. There are similar "military-civilian dual-use" shipyards in the U.S., such as General Dynamics NASSCO in San Diego, California, which builds auxiliary naval vessels for the U.S. Navy and oil tankers and container ships for commercial shipping companies. David Kim also said he hopes his shipyard will eventually enter the combat shipbuilding field, but realistically, building auxiliary ships for the U.S. Navy may be a better starting point.
Currently, the annual production capacity of Hanwha Philadelphia Shipyard is between 1 and 1.5 ships. Its current business scope includes government orders from the U.S. Maritime Administration, "National Security Multi-Mission Ships" used for training at maritime academies, and civilian ships such as rock-laying ships and container ships, with about seven ships in the backlog. David Kim believes that, given the size of the Philadelphia Shipyard, it has the potential to produce six ships per year. His future vision is to reach a production rate of ten ships per year within ten years, which is a speed no U.S. shipyard has achieved in recent decades. However, he did not disclose the ratio of military and civilian ships among the ten ships.
David Kim said: "In our South Korean shipyards, we can build a ship almost every week, while here we can only build 1.5 ships a year. South Korean shipyards can build 40 ships a year, while the total output of all U.S. shipyards combined has not exceeded 10 ships in some years. Therefore, we can fully leverage the advanced expertise, craftsmanship, practical experience, and technology of the South Korean shipbuilding industry in U.S. projects." Hanwha has already dispatched workers from its domestic shipyards to serve as rotating training instructors to provide technical guidance to U.S. workers. In the future, it also includes introducing automated equipment to streamline welding processes, modern workshop facilities equipped with steel plate handling robots, etc. In addition, Hanwha is also in contact with the Philadelphia local government to explore the possibility of expanding available areas at the factory and studying plans for constructing new office buildings and logistics storage facilities externally.
(Photo: Hanwha Ocean's massive Gijang Shipyard's busy liquefied natural gas (LNG) carrier production line)
In recent years, as the demand for revitalizing the U.S. shipbuilding industry and the anxiety of "keeping up with China's industrial strength," the practice of seeking help from allied countries like South Korea has attracted attention from both parties in Congress. Both former Secretary Carlos Del Toro and current Secretary John H. Furlong have expressed support for this. Previously, Hanwha also cooperated with the U.S. in other areas, such as repairing U.S. Navy warships at its domestic shipyards. Kim said that Hanwha is prepared to enhance the production capacity of U.S. shipyards through modernization and automation. The company had started seeking related acquisition deals even before Trump won the election last year. Now that the Philadelphia shipyard has completed the acquisition, Hanwha Systems and Hanwha Ocean, both under Hanwha Group, own 60% and 40% respectively. To achieve the goal of producing ten ships per year, Hanwha said it would need to hire an additional 3,000 employees, which is equivalent to the total number of employees currently employed by all shipyards and naval facilities in Philadelphia by the U.S. Navy.
In September 2024, the U.S. Navy's Lewis and Clark-class dry cargo ship T-AKE-8 "Wally Schirra" entered Hanwha Ocean's Gijang Shipyard for repairs, marking the first time a South Korean shipyard has provided maintenance for a U.S. Navy vessel.
Aside from being the general contractor for the entire ship, David Kim also said that the Philadelphia Shipyard can act as a subcontractor for larger shipbuilding projects. They are now very interested in building submarine segments, similar to the work undertaken by Austal USA in Mobile, Alabama. The Philadelphia Shipyard is not far from major warship builders like Bath Iron Works and Newport News Shipbuilding.
However, even with the support of South Korean shipbuilding capabilities, Hanwha has set a relatively distant production target of ten ships per year for the Philadelphia Shipyard. For the U.S., relying on the "capital foreign aid" of a shipbuilding power among allies to support the construction of U.S. Navy vessels and bring the U.S. shipbuilding level up to par with its allies is indeed an extremely tempting option, and one of the foundations for the successful completion of this Hanwha acquisition.
Hanwha is not the first foreign shipbuilder to invest in a shipyard in the U.S. Since the late 20th century, foreign capitals such as Australia's Austal and Italy's Fincantieri have begun their shipbuilding operations in the U.S. through the acquisition of shipyards. Among them, the Marinette Marine Shipyard, which was acquired by Fincantieri, has been building the Freedom-class littoral combat ships (LCS), with a construction speed that is not particularly slow. However, the warships themselves have been retired shortly after commissioning. Similarly, the first ship built at the same yard, the "Constellation"-class frigate, which was highly anticipated by the U.S. Navy, despite its prototype being a well-established FREMM multi-mission frigate at Fincantieri's Italian factory, has now reached a rather embarrassing "half-dead" state due to changing requirements of the U.S. Navy.
All these signs seem to indicate that, although the foreign capital is "naturalized" as American under the "American ship, American made" regulation, the production conditions will still mainly be constrained by the domestic situation in the U.S., rather than the convenient environment of the foreign country. Many shipbuilding problems go beyond what the enterprise's production side can decide, making the attempt to quickly improve team performance by bringing in a few "naturalized players" questionable in terms of effectiveness.
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