In a recent telephone conversation between President-elect Trump and South Korean President Yoon Suk-yeol, Trump made a rare statement expressing a desire for cooperation in the shipbuilding industry with South Korea. Yoon Suk-yeol also expressed willingness to actively participate for the sake of the American economy and security.
Trump stated, “The American shipbuilding industry has significantly declined, and Korean assistance and cooperation are crucial. I am very aware of Korea’s world-class abilities in building warships and vessels. It is not only about ship exports, but also necessary for close cooperation in maintenance, repair, and overhaul (MRO) sectors with Korea.”
Yoon Suk-yeol replied, “Because this is related to America’s economy and security, we are willing to actively participate.”
Kim Taewoo, former director of the Korea Institute for National Unification and professor at Kyoungyang University’s military department, analyzed to Epoch Times on November 10 that Trump’s statement indicates a future under his leadership to strengthen the South Korea-U.S. alliance and trilateral security cooperation among the U.S., South Korea, and Japan. On a micro level, due to the shortfall in the U.S. Navy’s shipbuilding and repair capabilities and the limitations imposed by the Jones Act, which requires that vessels and warships be built in the U.S., the need for assistance from shipbuilding powerhouses like South Korea and Japan has become necessary.
Senator Rubio, nominated by Trump as Secretary of State, highlighted in a report released in September, “The World China Made: ‘Made in China 2025’ Nine Years Later,” that the Chinese Communist Party controls the world’s largest industrial base. Through theft, market distortions through subsidies, and strategic planning, Beijing now leads in many industries that will determine the geopolitical dominance of the 21st century.
In particular, Rubio emphasized electric vehicles, energy and power generation, high-speed rail, and shipbuilding. China’s shipbuilding capacity is currently 200 times that of the U.S.
Rubio stated, “This report should sound the alarm for legislators, executives, and investors. We need the collective effort of society to rebuild our nation, overcome the challenge posed by China (the CCP), and continue to pass on the torch of freedom to future generations.”
For years, the U.S. shipbuilding industry’s naval programs have been operating at full capacity, a situation expected to continue until the 2050s. The U.S. Navy is constrained by the country’s shipbuilding capabilities, forcing adjustments to fleet structure to meet future strategic needs. Sudden ship losses, such as the collision incident involving the USS Connecticut, a Seawolf-class nuclear-powered attack submarine, in the South China Sea in October 2021, have impacted the U.S. Navy’s deployments in the Pacific as shipyard schedules have been fully occupied.
The significant gap in U.S. shipbuilding capacity has led to severe delays in the delivery of naval vessels, increased shipbuilding costs, and other detrimental factors. The retirement of older vessels has added to the pressure on the U.S. Navy’s shipbuilding efforts. The U.S. Navy aims to achieve a fleet of 300 vessels by the 2032 fiscal year and exceed 381 vessels by the 2042 fiscal year. As a result, the U.S. Navy’s shipbuilding plan is scheduled until 2054.
Kim Taewoo believes that if South Korea can leverage its shipbuilding industry advantages to complement the U.S. Navy’s needs, it would not only address the urgent requirements of the U.S. Navy’s development but also facilitate rapid growth in South Korea’s defense industry and deepen military cooperation with the U.S.
Military commentator Xia Luoshan expressed to Epoch Times on November 2 that the scale, composition, and shipbuilding plans of the U.S. Navy, both present and future, have long been critical concerns overseen by the U.S. Congress. With the increasing size and capabilities of the Chinese navy, the comparison of shipbuilding capacities between China and the U.S. has garnered much attention. Although the U.S. Navy’s strength is well-known globally, the lag in the U.S. shipbuilding industry impedes the navy from realizing its loftier aspirations.
A report by the U.S. Naval Institute in February of this year highlighted that the biggest challenge facing the U.S. Navy is rebuilding its capacities for ship construction, maintenance, and repair. Data shows that the U.S. accounts for only 0.13% of global ship construction (in 2023).
The report indicates that considering the current production capacity of U.S. shipyards, the Navy’s maintenance work is predicted to be 20 years behind. The inability to maintain and repair ships to extend their service life leads to the gradual retirement of usable vessels.
In April, the American Enterprise Institute’s report revealed that over one-third of U.S. nuclear submarines had to wait for maintenance before returning to sea. Furthermore, the inadequate number of merchant ships available for wartime operations leaves the U.S. overly dependent on foreign shipping to meet military requirements and support wartime economies.
On October 28, U.S. Congressman Mike Waltz, a retired Army National Guard officer who has served in combat, emphasized during a discussion at the Atlantic Council that to strengthen shipbuilding capabilities, the U.S. should collaborate in the short term with South Korea and Japan. Waltz was nominated by Trump on November 11 as the new National Security Advisor for the administration.
Since 2003, South Korea has replaced Japan as the leading force in the global shipbuilding industry in terms of order volume, construction volume, and remaining order balances. Starting from 2020, however, China surpassed South Korea in global shipbuilding order volumes.
Although South Korea lags behind China in the number of shipbuilding orders, it still dominates high value-added vessels such as super-sized container ships and liquified natural gas (LNG) carriers. In the first three quarters of this year, South Korea held a 60% global market share in LNG carrier orders.
On November 12, Hanhwa Marine, a subsidiary of the Hanhwa Group, announced that it secured maintenance, repair, and overhaul (MRO) orders for the U.S. Navy’s USS YUKON from the Seventh Fleet. This year, the company has obtained two MRO orders from the U.S. Navy’s Seventh Fleet Supply Support Center in Singapore. In August, the company also undertook the MRO project for the U.S. Navy’s supply support ship, the Wally Schirra.
Trump’s proposal for shipbuilding cooperation with South Korea has garnered significant public attention.
Reports indicate that the U.S. is exploring South Korea’s excellent maritime defense industry to maintain naval combat readiness. Under the Regional Sustainment Framework (RSF) policy, the U.S. Department of Defense has identified South Korea as a vital hub for defense industry cooperation and is planning to establish maintenance hubs in five countries in the Indian and Pacific regions.
This exceptional injection of support by Trump for South Korea’s maritime defense industry is seen as promising. With the annual 20 trillion Korean won (about $142 billion) U.S. Navy MRO business and the foundation set for expanding cooperation in shipbuilding, the industry is poised for growth.
Throughout this year, the U.S. has actively sought collaboration with South Korea. To explore the potential for U.S.-South Korean cooperation in naval maintenance, repair, and overhaul (MRO) fields, U.S. Navy Secretary Carlos Del Toro visited the world’s largest shipbuilding company, HHI, and Hanhwa Marine’s Ulsan headquarters during his visit to South Korea in February.
Hanhwa Group acquired 100% of the shares of the Philadelphia shipyard in the U.S. for $100 million in June, becoming the first South Korean company to enter the U.S. shipbuilding industry. This acquisition marks Hanhwa Group’s establishment in the U.S. commercial and military shipbuilding market.
Trump’s remarks on the importance of U.S.-South Korea shipbuilding cooperation have suddenly brought attention to the shipbuilding industry in South Korea, which has been struggling under pressure from China. Shipbuilding stocks surged by 11% in a single day in the stock market, with individual companies seeing their share prices rise by over 20%.