After six months of repair work on the USNS Wally Schirra on the South Korean island of Geoje, SK Song was ready to hand the 210-metre cargo and ammunition vessel back to the US Navy.
“There was so much rust it was almost like a ghost ship,” said Song, who manages shipbuilder Hanwha Ocean’s naval maintenance, repair and operations (MRO) team at its 5mn square metres shipyard. “It had 15 years left of life, but now it has another 30.”
Two MRO contracts secured by Hanwha Ocean last year mark the first time a South Korean shipyard has conducted such work for the US Navy, illustrating growing recognition in Washington of the need to harness its Asian allies’ shipbuilding expertise to keep pace with China’s naval build-up.
“Korean and Japanese shipyards offer world-class capabilities that are either rare or non-existent in the US,” said Colin Grabow, associate director at the Cato Institute’s Herbert A Stiefel Center for Trade Policy Studies.
“Failing to leverage allied shipbuilding capabilities means delayed vessel construction and higher costs, both of which are antithetical to an expanded US presence in the east Asian maritime domain.”
Asian shipbuilders have been buoyed by indications that US President Donald Trump may be willing to outsource the production of naval vessels while he seeks to revive his country’s moribund shipbuilding industry.
“We need ships, and we may have to go a different route than you would normally go,” Trump said during a radio appearance ahead of his inauguration in January. “We may have to go to others, bid them out, and it’s OK to do that. We’ll bid them out until we get ourselves ready.”
During his address to Congress last week, Trump vowed to create a White House office for shipbuilding “to bring this industry home to America where it belongs”.
But many experts consider his ambition far-fetched, given the US has a total manufacturing capacity of just 100,000 tonnes compared with more than 23mn in China. US shipyards had just five ships under construction in 2023, according to the Congressional Research Service, compared with 1,749 in China.
Meanwhile, China’s naval fleet is projected to increase from 370 vessels to 475 in a decade. The US Navy’s ageing fleet is only forecast to increase from 297 to between 305 and 317 over the same period, with all its major shipbuilding programmes behind schedule, according to the US defence department.
“Every shipbuilding delay, every maintenance backlog and every inefficiency is an opening for our adversaries to challenge our dominance,” John Phelan, Trump’s nominee for navy secretary, told a Senate confirmation hearing last month.
Several senators have proposed legislation to loosen restrictions on foreign involvement in US shipbuilding. Hanwha in December acquired the Philly Shipyard in Philadelphia, anticipating more MRO and shipbuilding contracts from the US. It has set a target of securing MRO contracts for five to six US Navy vessels this year.
While the MRO contracts are “not that lucrative”, they could act as a “stepping stone” towards US orders in the naval and commercial sectors, said Lee Eun-chang of the Korea Institute for Industrial Economics and Trade.
South Korea’s state trade promotion body Kotra estimates the US Navy plans to invest $1.1tn to expand its fleet to 381 vessels by 2054. It forecasts the global shipbuilding industry will grow from $150.4bn last year to $203.8bn in 2033.
South Korean shipbuilders together accounted for 17 per cent of global orders last year, according to Clarksons, while China accounted for 70 per cent and Japan 5 per cent.
Lee Eun-chang said while South Korean companies secured record orders last year, “they clearly lag Chinese rivals in terms of cost competitiveness”.
“The US wanting to revive its shipbuilding industry and talking about unfair practices by Chinese shipbuilders gives the Koreans an opportunity for long-term survival,” he said.
Yoshinori Kanehana, chair of Kawasaki Heavy Industries, one of Japan’s major shipbuilders, said Japanese yards were gearing up for requests from Washington to repair and overhaul naval vessels.
While no Japanese company has recent experience selling naval ships to foreign nations, Mitsubishi Heavy Industries, Japan’s largest defence group, is competing with Germany’s Thyssenkrupp to land a multibillion-dollar contract to supply Australia with frigates.
The “Sea 3000” contract, which would be the largest military export deal in Japan’s postwar history, could be the “gateway” for Japan to become a bigger shipbuilding partner to others such as the US, said Tomohisa Takei, a retired Japanese admiral who is now senior fellow at the Sasakawa Peace Foundation think-tank.
Peter Lee, a research fellow at the Asan Institute for Policy Studies in Seoul, said shipbuilding co-operation between the US and its Asian allies could be broadened to include joint allied shipyard investments and joint development of a new generation of unmanned vessels.
The “holy grail”, he said, would be “simultaneous construction of a single class of surface combatants by multiple allied shipyards”, similar to the nuclear submarine programme between the US, UK and Australia. Overcoming the objections of US labour unions and shipyards, however, “will be no easy task”, said Grabow of the Cato Institute.
Still, the combination of US technology, South Korean and Japanese industrial capabilities and Philippine labour make for an attractive proposition, said Peter Lee.
“These are all things that China already has under one roof,” he said. “If you don’t see China as any sort of imminent military threat over the next decade . . . then the case for this kind of co-operation goes out the window.
“But many people in the US obviously do see it this way, which is motivating them to consider unorthodox steps.”
Back at the Geoje shipyard, Hanwha Ocean’s Song said he was happy to continue what he regarded as a family legacy.
“My uncle and my grandfather both did work giving logistical support to the US Navy in the past,” said Song. “My relatives received a salary from the Americans, and now I am paying it back.”
Additional reporting by Nic Fildes in Sydney and Malcolm Moore in London and data visualisation by Haohsiang Ko
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