Hanwha is accelerating its entry into the U.S. defense market after securing its first shipbuilding contract for the U.S. Navy, nearly two years after acquiring the Philadelphia Shipyard. This achievement is seen as a significant step in establishing a foothold in the U.S. Navy procurement market, following the establishment of a local production base.
According to industry sources, Hanwha Defense USA signed a contract on September 29 with TOTE Services, a U.S. Navy vessel construction management firm, to build one medium landing ship (LSM) valued at approximately 357.5 billion won. The actual construction will be carried out by the Philadelphia Shipyard, which Hanwha acquired in December 2024.
This contract is particularly noteworthy as it marks Hanwha's entry into the U.S. Navy's new shipbuilding market, leveraging its acquisition of a local shipyard. The U.S. typically mandates domestic shipbuilding, which has posed challenges for foreign shipbuilders. By acquiring the Philadelphia Shipyard for about $100 million in 2024, Hanwha laid the groundwork for participating in local shipbuilding projects.
Moreover, this contract is expected to enable the Philadelphia Shipyard to expand its operations beyond commercial vessels to include U.S. Navy shipbuilding. Previously, the shipyard focused on constructing commercial and government vessels, such as the National Security Multi-Mission Vessel (NSMV) for the U.S. Maritime Administration. Securing this contract provides a foundation for future projects with the U.S. Navy.
Hanwha has also been exploring opportunities in U.S. Navy ship design. In March, Hanwha Defense USA and the Philadelphia Shipyard participated in the concept design project for the next-generation logistics support ship (NGLS). In July, they were selected as the contractor for the maritime missile test measurement vessel (MRIV) associated with the U.S. 'Golden Dome' missile defense system. With this LSM contract, Hanwha is expanding its business from design participation to actual construction.
There is growing interest in the potential for follow-up contracts. The U.S. Navy plans to procure a total of 35 LSMs to rapidly transport Marine Corps personnel and equipment in conflict-prone areas of the Indo-Pacific. Notably, the Navy is pursuing a strategy that utilizes existing commercial vessel designs and allows for simultaneous construction at multiple shipyards, which could open up opportunities for Hanwha Philadelphia Shipyard in future orders.
This initiative aligns with the U.S.-Korea shipbuilding cooperation project known as MASGA. The U.S. is facing delays and cost increases in shipbuilding schedules due to declining production capacity and a shortage of skilled labor, highlighting the need for collaboration with the Korean shipbuilding industry.
However, to expand follow-up orders, enhancing the production capacity and delivery competitiveness of the Philadelphia Shipyard is crucial. Hanwha plans to invest approximately $5 billion to expand production facilities, including docks and wharves, and aims to increase its current construction capacity from 1-1.5 vessels per year to 10 vessels in the short term and 20 vessels in the long term. Meeting the U.S. Navy's stringent quality standards and delivering the first vessel on schedule will be key to future competitiveness in securing contracts.
Michael Cooler, CEO of Hanwha Defense USA, stated, "Since acquiring the Philadelphia Shipyard, we have made significant investments in personnel and technology to establish a shipbuilding base for U.S. Navy and federal government clients. We will collaborate with TOTE Services to ensure timely delivery of vessels within budget."
* This article has been translated by AI.
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