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HD Hyundai Executive Vice Chairman Chung Ki-sun (center) shows warships currently under construction during a visit to the company’s special vessel yard with US Navy Secretary John Phelan (second from left). (HD Hyundai)

 
A South Korean visit by US Navy Secretary John Phelan, which included visits to the shipyards of HD Hyundai and Hanwha Ocean, appears poised to set the gears in motion for cooperation in shipbuilding between South Korea and the US.

The two countries’ talks toward an agreement on the joint maintenance, repair, and operations (MRO) of warships are expected to gather momentum, along with discussions on cooperation on the building of new vessels. Phelan also reportedly requested South Korean investment in US shipyards that are currently outdated and in disrepair.

The US Navy, HD Hyundai, and Hanwha Ocean all announced on Thursday that Phelan had visited the HD Hyundai shipyard in Ulsan and the Hanwha Ocean shipyard in Geoje on April 30. Phelan was joined in Ulsan by HD Hyundai Executive Vice Chairman Chung Ki-sun and in Geoje by Hanwha Group Vice Chairman Kim Dong-kwan.

During his visit, Phelan confirmed the potential for MRO cooperation. Despite investing around 10 trillion won (US$7 billion) in MRO for its military vessels, the US Navy has struggled to repair and maintain its warships as US shipbuilding capacity has waned over the years.

The US has made use of legal exemptions to allow warships docked overseas to be maintained and repaired by certain overseas shipyards. Hanwha Ocean received two MRO contracts from the US Seventh Fleet last year for an auxiliary ship and a replenishment vessel. In the latter case, work was completed on the replenishment vessel, which was delivered to the US Navy in March of this year.

US Navy Secretary John Phelan (first on right) and Hanwha Group Vice Chairman Kim Dong-kwan (second on right) visit the servicing site for the USNS Yukon at Hanwha Ocean’s shipyard in Geoje. (Hanwha Ocean)

The Seventh Fleet also extended an MRO contract to HD Hyundai for a replenishment vessel in February of this year. The Seventh Fleet is headquartered not in the US but at Yokosuka in Japan.

Phelan also explored the prospect of contracting South Korean firms to build new vessels. Current US law restricts military shipbuilding to domestic shipyards, but exceptions can be granted through presidential approval. Phelan inspected HD Hyundai's special vessel yard in Ulsan, where vessels such as advanced Aegis-class destroyers are built.

Hanwha Ocean already has a domestic yard in the US, having acquired the Philly Shipyard last year. Hanwha reportedly stressed to Phelan the significance of its US facilities, which enable it to build and repair ships on American soil.

Phelan also requested investment in US shipyards during his visit, as mentioned by the US Navy in a press release on Wednesday.

“Secretary Phelan further discussed shipbuilding as a top priority with a recognition of Korean shipyards, HD Hyundai and Hanwha, as industry experts, and encouraged additional investment in US domestic shipyard[s],” the press release stated.

Korean shipbuilding firms are currently exercising caution in weighing the costs and risks of investing in and acquiring US shipyards.

By Jun Seul-gi, staff reporter