Korean shipbuilders are accelerating efforts to secure overseas production bases. Moving away from the traditional model of exporting ships built domestically, they are establishing production facilities in key markets or engaging in joint construction with local companies.
According to industry sources, HD Hyundai is pushing to build a large new shipyard in India while also considering the acquisition of local shipyards and equity investments in the United States.
HD Hyundai's intermediate holding company, HD Korea Shipbuilding & Marine Engineering, has recently decided to halt plans for a joint venture to establish a block manufacturing plant with the state-owned Cochin Shipyard in India. Instead, it will focus on constructing a large new shipyard in Tuticorin, Tamil Nadu. The decision is based on the belief that securing a large-scale production base capable of performing pre-shipbuilding processes will be more advantageous for penetrating the Indian market. In December 2022, HD Hyundai Heavy Industries signed an exclusive memorandum of understanding (MOU) with the Tamil Nadu government to establish the new shipyard, followed by an additional MOU in April 2023 to pursue the establishment of a joint venture with local port-related special purpose companies.
The Indian government has proposed a shipyard production capacity of 2.5 million gross tons per year, with an estimated 15,000 direct jobs expected once fully operational. While specific investment amounts and equity structures have yet to be finalized, industry speculation suggests potential investments could reach up to $4 billion.
In the United States, HD Hyundai is also exploring options to secure local production bases directly. Key choices include acquiring local shipyards and equity investments linked to the Korea-U.S. shipbuilding cooperation project, known as MASGA.
HD Korea Shipbuilding & Marine Engineering established a local investment firm, HD Hyundai USA, in May. With the U.S. government accelerating efforts to rebuild its shipbuilding industry, the importance of local production bases has increased, indicating a strategic move to expand direct investments through acquisitions and equity stakes.
Hanwha is also taking proactive steps in the U.S. and Australian markets. After acquiring the Philadelphia Shipyard in 2024, it is now pursuing the acquisition of Austal USA to further expand its local production capabilities.
Austal USA, a subsidiary of Australia's Austal established in 1999, is headquartered in Mobile, Alabama, and has key production facilities there. The company employs approximately 3,500 people and currently has a backlog of around $10 billion, much of which is reported to be for the U.S. Navy.
If the acquisition is successful, Hanwha will secure a foothold in the supply chain for U.S. Navy submarine construction while significantly enhancing its shipbuilding capacity in the U.S. The combination of Austal USA's experience in building naval vessels and Hanwha's design, production technology, and shipyard management expertise could facilitate further expansion in local naval projects.
Hanwha's earlier move to become the largest shareholder in Austal was also aimed at leveraging synergies in its U.S. operations.
Korean shipbuilders' focus on securing overseas production bases is a proactive response to anticipated increases in global orders.
Although India currently holds less than 1% of the global shipbuilding market share, the government is intensively promoting the industry with a support plan worth approximately 697.25 billion rupees, aiming to rank among the top 10 shipbuilding nations by 2030 and the top 5 by 2047. The current shipbuilding production capacity of 50,000 gross tons is planned to expand to 600,000 gross tons by 2030 and 4.5 million gross tons by 2047.
The U.S. is also investing heavily in rebuilding its shipbuilding industry. Despite operating the world's largest navy, the country has faced long-standing challenges with shipyard production capacity and skilled labor shortages, making the expansion of its shipbuilding base a critical issue.
An industry insider noted, "In the past, the focus was on delivering ships built in domestic shipyards to overseas owners. Now, the production scope is expanding through direct utilization of overseas shipyards or joint construction with local companies. However, since shipbuilding relies on skilled labor, supply chains, and productivity, the key will be how effectively domestic shipyards can maintain their competitiveness in local markets."
* This article has been translated by AI.
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