Overseas venture: A container ship under construction at the Hanwha Ocean shipyard in Okpo, south of Busan. The South Korean firm is pursuing further global expansion after acquiring the Philly Shipyard in Pennsylvania last year. — AFP
SEOUL: South Korea’s top shipbuilders are moving to build vessels in the United States and India to capture rising demand for naval and strategic shipbuilding, but their plans hinge on government support to avoid the same pitfalls that plagued earlier overseas ventures, experts say.
HD Hyundai, South Korea’s largest shipbuilder, recently partnered with India’s Cochin Shipyard, following tie-ups earlier this year with US builders Huntington Ingalls and Edison Chouest Offshore.
Hanwha Ocean, backed by an 800 billion won rights offering from parent company Hanwha Aerospace, is also pursuing further global expansion after acquiring the Philly Shipyard in Pennsylvania last year.
Both firms aim to secure early access to growing demand for naval and commercial vessels, as countries seek to collaborate with South Korean shipbuilders to counter China’s expanding dominance in global shipbuilding.
The United States aims to build a 250-ship commercial fleet under an April legislative proposal, with top Navy and trade officials meeting South Korean executives this year.
India has also set a goal to become the world’s fifth-largest shipbuilder by 2047, with high-profile delegates visiting South Korean yards in December.
Despite intentions to support South Korean firms, the countries face major challenges in local shipbuilding, lacking the infrastructure and workforce for large-scale commercial or naval vessels.
The United States builds only about five commercial vessels a year, compared with a global capacity of roughly 1,300. India accounts for less than 1% of the world’s shipbuilding output.
Such limited domestic industries mean the countries lack not only experienced shipbuilders, but also local suppliers of essential components, which can constitute around 60% of a vessel’s value.
“Even if they operate a yard overseas, the first challenge they will face is a lack of process know-how and skilled workers,” said Kim Myung-hyun, an ocean engineering professor at Pusan National University.
Industry sources warn that building up such capabilities can take decades, as seen in South Korea and China.
“Ship manufacturing, where adapting to diverse orders is key, still relies heavily on skilled labour trained on-site,” said an industry veteran.
“Even with a shared language and culture, training new workers takes time, so imagine how much harder it is overseas.”
The United States and India are stepping up shipbuilding support, with US President Donald Trump in March proposing tax breaks and a dedicated White House office, while India has pledged US$2.2bil to boost capacity. Yet, experts said policy details remain vague.
“It’s unclear how much US naval demand will benefit South Korean shipbuilders or what roles they would play even if they invest,” said Yang Jong-seo of the Korea Eximbank’s Overseas Economy Institute.
Other challenges, such as regulations, the role of South Korean workers and local participation, still need to be worked out, potentially requiring formal government talks to avoid South Korean firms being sidelined. — The Korea Herald/ANN
