Hanwha Ocean Targets 400% Revenue Boost in U.S. Navy Shipbuilding by 2030
2min read In a significant development, Donald Trump has been actively pursuing stronger cooperation in the shipbuilding industry, with a particular focus on international partnerships. One key player in this endeavor is South Korea's Hanwha Ocean, which has set its sights on securing contracts from the U.S. Navy. A high-ranking executive from Hanwha Ocean disclosed that the company aims to boost its overseas military ship business revenue to approximately 4 trillion Korean won by 2030. This ambitious target reflects Hanwha Ocean's strategic intent to expand its presence in the global defense market, with a keen interest in the lucrative U.S. Navy contracts.
South Korea is a major player in the global shipbuilding industry. Following Trump's executive order to revitalize the U.S. shipbuilding sector, discussions between the U.S. and South Korea on tariffs and trade have opened up possibilities for collaboration in this field. Hanwha Ocean, formerly known as Daewoo Shipbuilding, is one of the world's largest shipbuilding companies, with a total order backlog of 314.3 billion USD as of March. The company acquired a shipyard in Philadelphia last year to expand its presence in the U.S. market.
Hanwha Ocean's naval vessel business unit has constructed numerous submarines and surface vessels for the South Korean Navy. In the past year, the unit secured its first two contracts for U.S. Navy vessel maintenance and repair. Steve SK Jeong, the global business head for naval vessels at Hanwha Ocean, expressed confidence in the company's capabilities, stating that Hanwha Ocean is likely the largest shipbuilder globally to handle U.S. Navy maintenance, repair, and overhaul orders. Jeong highlighted that while the profit margins for this business are not high, understanding the process of working with the U.S. Navy is invaluable for securing future new ship construction contracts.
Jeong revealed that Hanwha Ocean aims to secure double-digit maintenance contracts from the U.S. Navy by 2030. Trump had previously pledged significant investment in the shipbuilding industry to restore U.S. capabilities and address concerns about falling behind in this sector, which is dominated by China. However, U.S. laws may pose challenges for foreign shipbuilders, even those operating in the U.S. The Jones Act, for instance, prohibits foreign shipbuilders from constructing U.S. Navy vessels.
Hanwha Ocean's Philadelphia shipyard is seeking permits to build U.S. Navy vessels. Jeong acknowledged that transferring advanced manufacturing processes developed through competition with other Korean and Chinese shipbuilders to the U.S. is not as simple as introducing automated welding machines. He noted that the U.S. shipbuilding industry has historically lacked competition, with outdated equipment and a shortage of skilled labor. Hanwha Ocean plans to modernize its facilities, train and equip workers, and implement its manufacturing processes, aiming to reduce construction time for the same vessel to about two-thirds or less compared to U.S. shipyards.
Hanwha Ocean is investing in South Korea to expand its naval vessel production capacity, targeting the ability to build five submarines and three surface vessels simultaneously by 2029, up from the current capacity of two submarines and two surface vessels. Despite having built 17 submarines for the South Korean Navy since 1987, the company has recently become more proactive in pursuing overseas orders due to declining domestic demand resulting from a low birth rate and a shrinking eligible military population.
Jeong mentioned that the company is competing for submarine export contracts to Poland and Canada, pursuing a frigate export order to Thailand, and exploring markets in the Middle East, South America, North Africa, and Southeast Asia. The goal is to establish a stable order flow and increase overseas sales to 4 trillion Korean won by 2030. This figure is approximately four times the company's projected revenue of 1.05 trillion Korean won for 2024.
