U.S. Warships To Be Repaired In India, S.Korea & Japan; Hanwha Becomes First Firm To Bag U.S. Naval Contract

As the US steps up efforts to work with its Asian allies to steer its collapsing shipbuilding industry, a significant player in South Korea, Hanwha Ocean, has secured a contract that makes it the first in the nation to be tasked with a maintenance, repair, and overhaul (MRO) role for a US vessel.

As the first shipyard in South Korea to obtain a ship maintenance, repair, and overhaul (MRO) contract from the US Navy, Hanwha Ocean announced that it had been awarded a contract to overhaul a 40,000-ton dry cargo and ammunition ship.

The deal calls for the US Navy ship to dock at the Geoje shipyard owned by Hanwha Ocean, where it will receive extensive maintenance and inspection. Additionally, onshore overhaul work will be carried out using the shipyard’s floating shipbuilding facilities.

This contract was a result of the company’s signing a Master Ship Repair Agreement (MSRA) with the U.S. Naval Supply Systems Command on July 22. US Navy ships are overhauled regularly by companies holding a Master Ship Repair Agreement (MSRA).

With the award of the contract, Hanwha Ocean makes a debut in the international maritime defense industry by joining the US Navy ship maintenance and repair market. A Hanwha Ocean representative quoted by Business Korea said, “Entering the US Navy maintenance market, which is expected to exceed $20 trillion annually, will be a significant stepping stone for a new leap forward.”

Hanhwa Ocean also recently acquired the Philadelphia Shipyard. Carlos Del Toro, Secretary of the U.S. Navy, praised Hanwha Group’s acquisition, stating, “Hanwha’s acquisition of Philly Shipyard is a game-changing milestone in our new Maritime Statecraft.”

The acquisition, along with the MSRA accreditation, positions Hanwha Ocean as a major force in the international defense export market. It comes at a time when several South Korean shipbuilders are vying to enter the US MRO market, given its huge potential amid a burgeoning China threat.

In response to China’s accelerated naval expansion, the United States is seeking to revitalize dormant shipyards and enhance maritime competitiveness.

To capitalize on this opportunity, South Korean companies such as Hyundai Heavy Industries Co. (HHI) and Hanwha Ocean Co. have been actively pursuing partnerships and acquisition deals with authorized shipyards in the United States that can build and repair American warships.

The contract awarded to Hanwha Ocean is the outcome of close defense cooperation between South Korea and the United States. The contract was secured with the active backing of the Ministry of National Defense and the Defense Acquisition Program Administration of the Republic of Korea.

However, it also highlights the key deficiencies in the United States shipbuilding industry, which has forced the US to co-opt the facilities of its allies in Asia.

US Looking For MRO Assistance To Match China 

In an attempt to match China’s rapidly expanding shipbuilding capacity, the US is using South Korea and Japan, two Asian allies, to assist in reviving idle shipyards. Earlier this year, US Secretary of the Navy, Carlos Del Toro, made pitches to join initiatives to resurrect shuttered shipyards in the United States during his visits to two shipyards in South Korea.

Over the past 40 years, China has developed a remarkable commercial shipbuilding industry, cautioned Del Toro at an event. “We’ve lost that capability from about the 1980s when we left it open to market forces.”

The US strategy concentrates on using Asian finance, engineering expertise, and shipbuilding experience to increase its shipbuilding capacity. Earlier, the US Secretary of Navy visited the Mitsubishi Heavy Industries shipyard in Yokohama, Japan, and the South Korean shipyards of Hanwha Ocean on Geoje Island and Hyundai Heavy Industries.

The move to delegate MRO work to allies comes at a time when there is widespread concern in the US about reduced capacity caused by delays and cost overruns for several major military programs, including the construction of submarines and aircraft carriers.

Moreover, the US has seen a very steep decline in its shipbuilding capacity. The United States originally had 13 public naval shipyards, and of these, at least nine have been shuttered.

China’s massive shipbuilding sector poses a threat to the US and its allies in the Indo-Pacific. Chinese ships may be used to project power in far-off seas and be deployed against the US in the event of a conflict, the threat of which looms large.

On the prospect of using MRO facilities in South Korea and Japan, Del Toro said, “It keeps ships in the theater so that we don’t lose time on the travel back and forth from the United States when it comes to repairing work. The repair work being done here would relieve pressure on American shipyards, so they are building new ships.”

If an American warship sustains damages during combat over Taiwan or the Philippines, the US would have to return the damaged craft to Guam, Hawaii, or the US West Coast for repairs. However, by leveraging foreign shipyards closer to potential conflict zones, the US would be able to expedite repairs and send vessels back to the combat zone quickly.

Besides Japan and South Korea, the US has also been considering India for the MRO of its vessels. India’s assistance in maintaining US Navy equipment was emphasized in a joint statement released during a September 2023 meeting between Indian Prime Minister Narendra Modi and US President Joe Biden.

Several Indian shipbuilders, such as Mazagon Dock Shipbuilders, Larsen and Toubro, and Cochin Shipyard, have signed Master Ship Repair Agreements with the US Navy. Gen. Pat Ryder, the Pentagon’s spokesman, stated last year that the US sought to make India a logistical center for the US military and other Indo-Pacific partners, suggesting that Indian ports could serve a strategic purpose in potential conflicts.

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