US and South Korean warship makers sign deal that could help narrow naval race with China

By Brad Lendon, CNN

Seoul, South Korea (CNN) — America’s largest military shipbuilder has signed a deal with a South Korean company that experts say could be a big step in helping the US Navy build new warships to keep pace with rival China in fleet size.

Virginia-based HII (Huntington Ingalls Industries) and South Korea’s Hyundai Heavy Industries inked the memorandum of understanding (MOU) on Monday at a defense exhibition in Maryland.

“Today’s agreement reflects our commitment to explore all opportunities to expand US shipbuilding capacity in support of national security,” HII Executive Vice President Brian Blanchette said at a ceremony at the Sea Air Space 2025 exposition.

“By working with our shipbuilding allies and sharing best practices, we believe this MOU offers real potential to help accelerate delivery of quality ships.”

A Hyundai Heavy Industries statement noted that both HII and the South Korean shipyard build Aegis destroyers, the backbones of the US and South Korean surface fleets. Aegis ships provide protection against missile threats, including powerful ballistic missiles in the arsenals of rivals China and North Korea.

“This MOU is particularly significant as it marks the first collaboration between two leading shipbuilding companies from Korea and the US, both of which have the capability to construct the world’s most advanced Aegis ships,” the statement said.

Hyundai Heavy Industries operates the world’s largest shipyard in Ulsan, South Korea, and it builds 10% of the world’s ships, according to the company’s website.

Analysts have long called for the US to take steps with allies like South Korea and Japan to cooperate on naval shipbuilding as Chinese shipyards have been churning out warships at breakneck speed, giving the People’s Liberation Army Navy the world’s largest fleet.

Meanwhile, Washington has failed to keep pace, due in large part to limited capacity in shipyard space and insufficient workers in the US.

“This agreement is a strong start towards alleviating the impact of America’s shortfall in shipbuilding capacity,” said Hawaii-based analyst Carl Schuster, a former US Navy captain.

Schuster said while changes would be needed to US law to enable the South Korean shipyard to begin fully constructing destroyers for the US Navy, the pact signed Monday could yield immediate benefits.

“(US) law does not prohibit using foreign yards to repair and do maintenance on US Navy ships, and we have a 36-month backlog on shipyard maintenance and hull refurbishment,” he said.

Another South Korean shipyard, Hanwha Ocean, last month completed a seven-month overhaul of a US Military Sealift Command supply ship, the USNS Wally Schirra, a feat a US Navy admiral called a “landmark achievement.”

“Maintenance in Theater reduces downtime and costs, while enhancing operational readiness,” Rear Adm. Neil Koprowski, commander of US Naval Forces Korea, said in a statement.

But cooperation between the builders of Aegis destroyers takes the alliance to a higher level.

“We aim to enhance the shipbuilding capacities and capabilities of both nations and, furthermore, to contribute to the strengthening of bilateral security cooperation,” said Joo Wonho, chief executive of naval and special shipbuilding at Hyundai Heavy, in a statement.

South Korean lawmaker Yu Yong-weon called the deal “a new win-win model of shipbuilding and defense industry cooperation between South Korea and the United States.”

“With Korean shipyards directly participating in the enhancement of US naval power, it is also expected to contribute to ROK-US security cooperation, including efforts to keep China in check,” Yu said. ROK stands for Republic of Korea.

Schuster sees another big benefit from the deal.

“Hyundai and Huntington can use the agreement to train new American workers for HII’s shipyards. A labor shortage is the primary limiting factor in America’s shipyard capacity,” he said.

If it can eventually be worked out that warships for the US Navy could be built in South Korea, the impact could be even more substantial.

Woo-man Jeong, Hyundai Heavy’s specialized ship business division managing director, told South Korea’s Chosun Ilbo newspaper last month that his company could build five or more Aegis destroyers a year. US shipyards average two or fewer destroyers built per year.

The HII-Hyundai deal follows a big investment in US-based shipbuilding last year by Hanwha Ocean, when it purchased Philly Shipyard, which builds mainly commercial vessels but also does maintenance and repair work on government vessels.

Bence Nemeth, a senior lecturer at King’s College London, said after the Philly Shipyard deal that US-South Korea shipbuilding cooperation benefits the security of both countries.

“In the short term, the US Navy will benefit from increased availability of ships, and in the medium term, it could accelerate the growth of its fleet. This can help Washington maintain its global maritime dominance,” Nemeth wrote on the Korea Institute for Maritime Strategy’s website.

“A strong U.S. Navy is also crucial for South Korean national security, as it helps deter North Korean aggression,” Nemeth said.

CNN’s Gawon Bae contributed to this report.

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