South Korea’s HD Hyundai Qualifies to Compete for U.S. Navy Repair Work

HD Hyundai signed an agreement that permits it to compete for U.S. government vessel repair work (file photo)

PUBLISHED JUL 11, 2024 4:33 PM BY THE MARITIME EXECUTIVE

 

 

In a first of the Korean shipbuilding industry, HD Hyundai Heavy Industries, the intermediary company for three of South Korea’s largest shipyards, has secured the right to compete over the next five years for U.S. Nay maintenance, repair, and overhaul work. The agreement comes at a time when the U.S. Navy is facing a critical shortfall in shipbuilding and repair capabilities and follows a visit by U.S. Secretary of Navy Carols del Toro to South Korea earlier this year.

The company estimates the market is valued at $14.5 billion annually for both MSTS support ships and the Navy’s warships. The Koreans highlight it builds on their experience as the first domestic shipbuilding company to enter into the overseas maintenance business having established operations in the Philippines in 2022. The company also highlights that it has built warships for Korea and exported 18 vessels to the Philippines and elsewhere.

HD Hyundai Heavy Industries applied for the U.S. certification in May last year. The company underwent quality inspections in January as well as security inspections and a financial review before being certified. Today, they reported signing a Ship Maintenance Relations Agreement (MSRA) with the U.S. military authorities.

The MSRA program operated by the U.S. Naval Supply Systems Command involves private shipyards to provide maintenance and repair work mostly for the support ships deployed by the Military Sea Command (MSC) and U.S. Navy. Most of the work goes to U.S. private shipyards but the U.S. government has been strategically assigning work outside the country. India’s L&T (Larsen & Toubro) Kattupalli shipyard in Chennai, India performed its first project on a supply ship in 2022 with additional work in 2023. Three Indian shipyards were certified in April 2024.

Joo Won-ho, head of the Special Vessel Building Division of HD Hyundai called the agreement the company’s “full-scale entry” into the U.S. ship maintenance, repair, and overhaul market. Describing the scope of the work, HD Hyundai said it plans to use these projects to “build the trust of the U.S. military authorities.” It looks to expand its scope to newbuilding projects such as special purpose vessels and other government orders.

SECNAV del Toro visited Hyundai in Ulsan, South Korea in February and commended the level of work and technology available at the yard. He was quoted at the time as encouraging the South Koreans to enter the U.S. and possibly rehabilitate shipyards to expand the domestic capabilities and apply their technologies to the U.S. industry. Hyundai says they discussed ways of strengthening cooperation with the U.S. authorities. 

HD Hyundai made a first play into the U.S. market in April 2024 signing a MOU to work with the Philly Shipyard on government projects. This however was upended when Hanwha Ocean announced last month that it agreed to acquire Philly Shipyard.