US Navy Collaborates with Allies’ Shipyards to Counter China’s Maritime Expansion

(Bloomberg) In any high-stakes military conflict with China, the US Navy will be critical to winning. But America’s shipbuilding industry is far from able to support what the Navy needs.

Enter South Korean shipbuilding powerhouse Hanwha Ocean Co. The company is buying a former Navy shipyard in Philadelphia and recently secured Korea’s first ever contract to overhaul a US naval vessel. These steps pave the way for the company to play a bigger role in the US naval shipbuilding sector and could herald the start of a new wave of investment.

America’s shipbuilding industry has virtually collapsed over the last generation, with years-long delays and cost overruns making it hard for the Navy to build the ships and submarines it needs. In contrast, China’s navy — supported by the world’s largest shipbuilding sector which produces more than half of merchant ships globally — is rapidly growing and now has a larger fleet than the US.

“Look at the difference in shipbuilding between the United States and China — deeply concerning,” Deputy Secretary of State Kurt Campbell said a July testimony to a Senate committee. “We have to do better in this arena or we will not be the great naval power that we need to be for the 21st century.”

To address this shortfall, the US is seeking investment from allies, particularly South Korea and Japan. Their companies are the world’s biggest shipbuilders outside China and can produce both commercial and naval vessels more quickly and cost-effectively than American firms.

Secretary of the Navy Carlos Del Toro visited Japan and South Korea in April, where he toured Mitsubishi Heavy Industries Ltd.’s shipyard in Yokohama, as well as Hanwha’s and HD Hyundai Heavy Industries Co.’s facilities. He praised their efficiency and technology, and encouraged them to invest in America.

Read more: US Navy Secretary Looks to Asia to Revive Shipbuilding at Home

Hanwha was one of the first to respond to the plea. In June, it announced the acquisition of Philly Shipyard in a deal valued at $100 million. The following month, it secured an agreement with the US Navy that allows it to handle maintenance and repair projects for Navy vessels, leading to its first contract.

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