The United States Navy needs help repairing and maintaining its fleet of ships. Fortunately, help is on the way in the form of two companies from South Korea, Hanwha Ocean and HD Hyundai Heavy Industries.
The new partnership should bring a significant boost to the United States’ sea lift capacity. Currently, the Navy faces a backlog of repairs that could take about 20 years to clear at the current pace.
The United States Navy is no longer the largest in terms of the number of ships. However, it remains the largest in terms of tonnage, meaning the U.S. has the biggest ships and more of them than any other country.
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But big ships require big spaces for big repairs, and the U.S. is running short on both repair facilities and companies capable of handling these tasks. This is why the news of two South Korean companies entering the market is so significant.
HD Hyundai Heavy Industries was the first to do so. On July 11, HD Hyundai signed a Master Ship Repair Agreement (MSRA) with the U.S. Naval Supply Systems Command. This MSRA grants HD Hyundai—the world’s largest shipbuilding company—the right to bid on maintenance, repair and operations (MRO) projects for the next five years.
On July 22, Hanwha Ocean signed a similar deal. Formerly known as Daewoo Shipbuilding and Marine Engineering, the company was acquired by Hanwha—a defense contractor in South Korea. Daewoo brought a long history of naval shipbuilding expertise to Hanwha.
Hanwha said the approval process for its MSRA went exceptionally fast. The application was submitted in January, followed by an on-site inspection in April at its Geojae shipyard. Certification then arrived in late July.
When signing its MSRA agreement, HD Hyundai estimated the naval repair and maintenance market’s value at $14.5 billion. The expanding relationship between the U.S. Navy and South Korea comes at a time of broader partnerships in the Indo-Pacific to counter the rising threat from China.
Both HD Hyundai and Hanwha view their MSRA certifications as an entry point into the broader U.S. naval shipbuilding market. HD Hyundai is an established warship builder, exporting 18 different vessels to countries like the Philippines.
Hanwha recently reached an agreement to purchase the Philly Shipyard in Pennsylvania. This is further proof of what the company said is its “intent to accelerate expansion into the global defense market, focusing on technological innovation and quality improvement.”
While the next five years may focus on helping the U.S. Navy maintain its current fleet, South Korea could help the United States develop the next generation of maritime innovations in the next 25 years. Upgrades include increasing the number and capabilities of unmanned surface vessels. USVs are smaller than traditional ships, but in the era of great power competition, navies need to be nimble too.
[RYAN ROBERTSON]
THE UNITED STATES NAVY NEEDS HELP REPAIRING AND MAINTAINING ALL OF ITS SHIPS, AND HELP IS ON THE WAY IN THE FORM OF TWO SOUTH KOREAN COMPANIES.
THE NEWS IS A MUCH NEEDED BOOST TO THE UNITED STATES’ SEA LIFT CAPACITY BECAUSE AS IT STANDS RIGHT NOW, THE NAVY HAS SO MANY REPAIRS TO MAKE IT’LL TAKE ABOUT 20 YEARS TO GET THROUGH THEM ALL BASED ON THE CURRENT LEVELS.
WE COVERED THIS ON MY SHOW ‘WEAPONS AND WARFARE,’ SO BE SURE TO CHECK OUT OUR ARCHIVED EPISODES AT SAN.COM FOR MORE.
TO SUM IT UP QUICKLY, THE UNITED STATES NAVY IS NO LONGER THE WORLD’S LARGEST IN TERMS OF NUMBER OF SHIPS. IT IS STILL THE LARGEST IN TERMS OF TONNAGE, MEANING WE HAVE THE BIGGEST BOATS, AND MORE OF THEM THAN ANYONE ELSE AND IT’S NOT EVEN CLOSE.
BUT, BIG BOATS NEED BIG SPACES TO MAKE BIG REPAIRS, AND THE UNITED STATES IS RUNNING SHORT ON PLACES TO MAKE THE REPAIRS AND COMPANIES TO DO IT.
WHICH IS WHY NEWS OF TWO SOUTH KOREAN COMPANIES ENTERING THE MARKET IS SUCH A BIG DEAL.
HD HYUNDAI HEAVY INDUSTRIES WAS THE FIRST TO DO SO. ON JULY 11TH, HD HYUNDAI SIGNED A MASTER SHIP REPAIR AGREEMENT WITH THE US NAVAL SUPPLY SYSTEMS COMMAND. THE MSRA GIVES HD HYUNDAI–THE WORLD’S LARGEST SHIPBUILDING COMPANY–THE RIGHT TO BID ON MAINTENANCE, REPAIR AND OPERATIONS PROJECTS FOR THE NEXT FIVE YEARS.
ELEVEN DAYS LATER, HANWHA OCEAN SIGNED THE SAME SORT OF DEAL. THE COMPANY USED TO BE DAEWOO SHIPBUILDING AND MARINE ENGINEERING BEFORE IT WAS ACQUIRED BY HANWHA, A DEFENSE CONTRACTOR IN SOUTH KOREA.
THE COMPANY SAYS ITS MSRA APPROVAL PROCESS WENT EXTREMELY FAST. THE APPLICATION WAS SUBMITTED IN JANUARY, THERE WAS AN ON-SITE INSPECTION IN APRIL AT ITS GEOJAE SHIPYARD, WITH CERTIFICATION COMING IN LATE JULY.
WHEN HD HYUNDAI SIGNED ITS MSRA AGREEMENT, THE COMPANY SAID THE NAVAL REPAIR AND MAINTENANCE MARKET WAS VALUED AT $14.5 BILLION.
BUT BOTH HD HYUNDAI AND HANWHA VIEW THEIR MSRA CERTIFICATIONS AS AN ENTRY INTO THE LARGER US NAVAL SHIPBUILDING MARKET. HD HYUNDAI IS AN ESTABLISHED WARSHIP BUILDER, EXPORTING 18 DIFFERENT VESSELS TO FOREIGN MARKETS LIKE THE PHILIPPINES. AND HANWHA JUST REACHED AN AGREEMENT TO BUY THE PHILLY SHIPYARD IN PENNSYLVANIA. PROOF, THE COMPANY SAYS, OF ITS INTENTIONS TO ACCELERATE EXPANSION INTO THE GLOBAL DEFENSE MARKET BASED ON TECHNOLOGICAL INNOVATION AND QUALITY IMPROVEMENT.
SO, WHILE THE NEXT FIVE YEARS MAY MEAN HELPING THE US NAVY KEEP ITS CURRENT FLEET OF WARSHIPS ON THE WATER, OVER THE NEXT 25 YEARS SOUTH KOREA COULD HELP THE UNITED STATES DEVELOP THE NEXT GENERATION OF MARITIME INNOVATIONS. WHICH WILL INCLUDE MANY MORE UNMANNED SURFACE VESSELS, WHICH ARE SMALLER THAN TRADITIONAL SHIPS, BECAUSE WHILE BIG BOATS ARE STILL NECESSARY IN THE ERA OF GREAT POWER COMPETITION NAVIES NEED TO BE NIMBLE AS WELL.
FOR STRAIGHT ARROW NEWS, I’M RYAN ROBERTSON. FOR MORE OF OUR REPORTING ON THE US NAVY, CHINA AND THE AGE OF GREAT POWER COMPETITION–
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