November 13, 2024

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Donald Trump (second from right) looks around the Okpo shipyard of Daewoo Shipbuilding & Marine Engineering, now rebranded as Hanwha Ocean, in Geoje, South Gyeongsang Province, in 1998. (Yonhap)

Korean shipbuilders are raising hopes to expand their presence in the US, following President-elect Donald Trump’s call for more bilateral cooperation in the shipbuilding sector.

According to Seoul’s presidential office, President Yoon Suk Yeol and Trump had a 12-minute phone call Thursday morning after Trump won a second nonconsecutive presidential term. After exchanges of congratulations and gratitude, Trump specifically mentioned Korea’s shipbuilding capabilities and the US’ need to collaborate with Korean shipbuilders.

Seoul’s presidential office quoted Trump as saying that the US president-elect is well aware of Korea's world-class shipbuilding capabilities and warships, and thinks it is necessary to closely work with Korea in not only ship exports, but also the field of maintenance, repair and overhaul, or MRO.

Trump’s comments were in line with his consistent approach on curbing China’s influence in the global trade order.

According to the world’s leading provider of integrated shipping services, Clarksons, China secured 59 percent of new shipbuilding orders worldwide last year, while Korea accounted for a 24 percent share.

“There is no quick and simple solution to competing with China’s booming shipbuilding industry,” said Matthew Funaiole, a senior fellow of the China Power Project at the Center for Strategic and International Studies in Washington.

“Reinvigorating the United States’ battered industry will be a multidecade endeavor that has only just begun. Deepening integration with key allies, including industry leaders like Japan and South Korea, will be crucial.”

From left: HD Hyundai Vice Chairman Chung Ki-sun, US Secretary of the Navy Carlos Del Toro, US Pacific Fleet Commander Stephen Koehler and Hanwha Group Vice Chairman Kim Dong-kwan take a look around the respective shipbuilders' shipyard in Ulsan and Geoje, South Gyeongsang Province. (HD Hyundai, Hanwha)

Korea’s leading shipbuilders -- Hanwha Ocean and HD Hyundai Heavy Industries -- have upped their efforts to forge deeper relations with the US Navy, as they look to score orders in the American warship market estimated at about 20 trillion won ($14.3 billion) per year.

In August this year, Hanwha Ocean bagged Korea’s first warship maintenance project from the US Navy to open up the market for the US maritime defense industry. USNS Wally Schirra, a US Navy dry cargo and ammunition ship, arrived at Hanwha Ocean’s Geoje shipyard for a three-month overhaul in September.

Hanwha announced a $100 million takeover of the Philly Shipyard in Philadelphia in June, becoming the first Korean shipbuilder to acquire a US local shipyard. Moreover, Hanwha has hinted at reviewing more options for an additional shipyard purchase in the US, as the conglomerate deems maritime an attractive market where its expertise in ship design, shipbuilding and MRO would be advantageous.

HD Hyundai Heavy Industries was the first to sign a master ship repair agreement with the US Naval Supply Systems Command in July. Hanwha followed suit and ended up getting an actual contract before HD HHI.

HD Hyundai is reportedly reviewing options to either acquire a US shipyard or collaborate with a local entity to enter the US shipbuilding market. US Ambassador to South Korea Philip S. Goldberg visited HD HHI’s shipyard in Ulsan in July to evaluate potential opportunities for the US Navy to outsource MRO services, and the two sides discussed utilizing HD Hyundai’s shipbuilding capabilities to support maritime collaboration between Korea and the US.

The shares of Hanwha Ocean and HD HHI surged on the back of Trump’s shipbuilding cooperation remarks, closing at 36,200 won and 209,500 won on Friday, respectively, up about 30.2 percent and 15.7 percent from Wednesday’s close.

By Kan Hyeong-woo (hwkan@heraldcorp.com)