Hanwha Ocean signed an agreement with the U.S. Navy today, July 21, making it the second South Korean shipbuilder to be certified to compete for U.S. Navy maintenance and repair work contracts. The certification signals a heating up of competition for the Navy work as less than two weeks ago Hanwha’s chief rival HD Hyundai signed a similar agreement with the U.S.
Discussing the importance of the agreement, an executive from Hanwha Ocean said the company plans to accelerate its expansion into the global defense market by building on its cooperation with the U.S. Navy. The company highlighted the agreement as “an important achievement that solidifies Hanwha Ocean’s position in the global defense industry market by strengthening cooperation with the U.S. Navy.”
Last year, Hanwha, which is a defense contractor already supplying naval systems, won the right to acquire Daewoo Shipbuilding & Marine Engineering (DSME) which had a heritage in naval shipbuilding. During the approval process for the acquisition, competitors raised concerns that the company could have an unfair advantage in the segment with Korean regulators imposing restrictions to maintain a level playing field.
Hanwha Ocean highlights that it was rapidly accepted into the U.S. program having only made its application to the U.S. Navy in January 2024 and receiving approval in seven months versus typically a year or more. The company says it received high scores for its shipbuilding technology and maintenance infrastructure during an on-site inspection of its Geoje plant in April. By comparison, HD Hyundai said it filed in May 2023 and signed its agreement in July 2024 after three inspections.
The yard is certified for a Master Ship Repair Agreement with the U.S. Naval Supply Systems Command. Hanwha Ocean is qualified for the next five years to bid on maintenance and repair contracts. When HD Hyundai signed its agreement on July 11, the company said it estimated the market valued at $14.5 billion annually for both MSTS support ships and the Navy’s warships.
Gaining the qualification furthers Hanwha’s ambition to increase its share of the U.S. market. The company also recently entered into an agreement to acquire Philly Shipyard based in Pennsylvania which is a contractor for the U.S. government. In addition, Hanwha has approached Australia-based Austal about an acquisition. Austal is a builder for the U.S. Navy and in 2022 won the contract from the U.S. Coast Guard for the next offshore patrol cutter series.
U.S. Secretary of Navy Carlos Del Toro in February 2024 toured Hanwha Ocean’s facilities in South Korea. He highlighted the global industry standard at South Korea’s yard and shared a message encouraging the companies to become more involved with U.S. shipbuilding. According to Del Toro, both Hanwha CEO Dong Kwan Kim and HD Hyundai CEO Kisun Chung were being invited to visit the U.S. Pentagon for follow-up talks.
