New Shipbuilding Deal a Move in the Right Direction

Last week, America’s largest military shipbuilder signed a memorandum of understanding with South Korea’s Hyundai Heavy Industries, the global leader in shipbuilding with a roughly 10% market share.

This new agreement comes as President Donald Trump has just issued an executive order on Restoring America’s Maritime Dominance to “revitalize and rebuild domestic maritime industries and workforce to promote national security and economic prosperity.”   

Virginia-based Huntington Ingalls Industries builds Arleigh-Burke destroyers, amphibious warships, aircraft carriers, and nuclear submarines for the U.S. Navy. Huntington Ingalls employs 44,000 Americans and builds ships primarily in Newport News, Virginia. and Pascagoula, Mississippi. Korean Hyundai Heavy Industries builds Arleigh Burke-class destroyers for the Korean Navy, submarines, and corvette warships, along with a wide range of commercial ships.  

U.S. Navy shipbuilders consistently late and over budget 

American shipbuilders like Huntington Ingalls and others have come in for quite a lot of criticism in recent years, with U.S. Navy ships consistently being delivered late and over budget. Rep. Ken Calvert, chairman of the Defense House Appropriations Subcommittee, warned last year that several shipbuilding programs were “in crisis” and moved to cut appropriations for shipbuilding as a result.  

Hyundai Heavy Industries has, conversely, been widely praised for its efficient business practices, which enable it to deliver ships consistently on time and under budget.  

Indeed, the Republic of Korea has been America’s capable business partner and faithful ally. More than ever, it is in the clear interest of the United States to build on that steadfast relationship and notch up the pivotal partnership to the next pragmatic level. 

A partnership to deliver the ships the Navy needs 

American policymakers have already expressed hopes that the U.S. Navy and shipbuilders both can learn best practices from South Korea and implement them here in the United States to fix the problems in American shipbuilding and deliver the ships the Navy needs.  

The new agreement between Huntington Ingalls and Hyundai Heavy will focus first on the exchange of technology and best practices but could expand even further. As Huntington Ingalls president Brian Blanchett told the U.S. Naval Institute:  

We’re building off of the relationship that we have as builders of destroyers, both companies [are] working Aegis destroyers right now. We’re certainly open to exploring everything at a corporate level, beyond just Ingalls. We’ll talk component outsourcing or exploring the opportunities to provide components to destroyers. [Hyundai] has an excellent supply chain. [They have] a lot of lessons learned that they’ve experienced in their production of their destroyer program. 

Countering the threat from China, ensuring our national security 

The desire for the United States to engage more with Korean and other allied shipbuilders is closely linked with the dramatic expansion of Chinese shipbuilding capacity and naval buildup, both of which threaten the ability of the United States to successfully deter aggression by China.  

In January, the U.S. Trade Representative’s office announced that it had found China’s dominance (achieved by design, through state intervention) in the global shipbuilding, maritime, and logistics sectors to be “unreasonable” and that it is ”actionable” under U.S. law.  

As the U.S. shifts its strategic focus to the Indo-Pacific, the national security enterprise is likely to continue to focus more and more on shipbuilding and naval dominance.  

Defense cooperation prioritization can strengthen America’s alliances and partnerships with like-minded and willing partners like the Republic of Korea that have very capable military and industrial sectors.  

Now is the time for Washington and Seoul to build on that strategic cooperation and further advance the time-tested alliance to new heights. 

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