Acquisition of Philly Shipyard
Hanwha Systems and Hanwha Ocean have acquired Philly Shipyard and strategic plans are in place to invest $100 million to globally expand defense and shipbuilding operations . Philly Shipyard is a leading U.S. shipbuilder that has delivered around half of the merchant navy vessels in the United States since the year 2000.
The Philly Shipyard operates the largest construction facility in the U.S. and its two drydocks are large enough to accommodate major U.S. ships such as landing ships and destroyers except aircraft carriers. Shipbuilding entails additional investment as security certification from the U.S. authorities has to be obtained.
The Philadelphia shipyard was built following the 1996 closure of the former U.S. Navy Philadelphia Naval Shipyard and currently employs about 1,500 shipyard workers. At present the shipyard has 5 ships under construction with 3 under contract
Ownership Status of Philly Shipyards
Philly Shipyard is a public company controlled by Aker ASA, a Norwegian industrial investment company with ownership interests in energy, green technologies and marine biotechnology.Is the US foregoing its maritime strategic interests to outsiders is a moot question.
US Legal Maritime Framework
Philly Shipyard produces vessels that are compliant with the Jones Act, a federal law that requires vessels used in domestic trade to be built in U.S. shipyards. Philly Shipyard supplies around 50% of the largest U.S. commercial vessels including tankers and container ships besides constructing training vessels for the U.S. Maritime Administration .
Hanwha to Introduce Advanced Technology in US Market
The CEO of Hanwha Systems Sung-Chul Eoh shared that Hanwha Systems will deploy its state-of-the-art naval systems and associated technologies to cater to the requirements of the U.S. markets .Regulatory approvals are awaited . Hanwha Systems and Hanwha Ocean view the acquisition as part of a long-term investment strategy that will bring best practices and leading technologies to complement existing Philly Shipyard capabilities. Hanwha Systems strength lies is its capability to provide differentiated smart technologies by leveraging synergies with advanced defense electronics and future oriented ICT technologies including IT services such as AI, big data, blockchain, cloud services and digital innovation across a range of industries.
Credit; HANWHA
Hanwha Posesses Advanced Defense Technology
Hanwha Systems is one of the leading defense companies in Korea rapidly developing technologies for unmanned maritime systems, naval radars and sensors for Manned and Unmanned Teaming operations. Hanwha Systems is deploying its advanced technology to manufacture vessels in the commercial market and take advantage of opportunities in the unmanned underwater vehicles ,Smart Ship and unmanned surface vehicles markets. Hanwha Ocean, a world-class shipbuilder , is pioneering the global marine defense market and boasts a full range of low-carbon, high-tech vessels ranging from ammonia and LNG carriers to destroyers, submarines and frigates.
Credit : USNI
Hanwha Entry into US Ship Markets
After successfully acquiring Daewoo Shipbuilding & Marine Engineering Hanwha Ocean sent its due diligence team to acquire the Phylly Shipyard and adroitly secured a bridgehead to access the MRO (maintenance and repair) of all U.S Navy ships including ships operating in the U.S. mainland.The U.S law stipulates that U.S. coastal operations are allowed only for ships built or renovated in the US with registered maritime transportation rights in the U.S. and having U.S. sailors as crew. Hanwha Ocean is in a position to comply with the requirements of the Coastal Trade Act of ‘building and remodeling within the country’ through the Philly shipyard.
US Ship Building Industry Lagging
Currently the United States has not been able to properly digest the construction and MRO volume of naval ships in the country. US shipbuilders monopolized their country’s construction and renovation volume under the Coastal Trade Act and the US industry is lagging behind due to high levels of labor costs and low profitability. Hanwha Ocean with its extensive global construction capacity, is expected to achieve high levels of profitability as it enters the U.S market.
Hanwha Revenues & Corporate Restructuring
Credit : HANWHA
Hanwha Ocean will establish a base for not only the U.S ship MRO market, worth 20 trillion won a year, but also the warship and merchant ship construction market operating along the U.S. coast. Hanwha Group replaced the heads of its 7 subsidiaries almost 4 years back with younger CEO’s signalling a generational shift in the energy-to-chemical empire with 65 trillion won ($54.4 billion) in assets. Whether this acquisition of a shipyard spells the doom for US ownership of strategic maritime interests and assets only time will tell .
Authored by Nadir Mumtaz
Credit /Sources
https://www.koreaherald.com/view.php?ud=20190923000790
https://www.navalnews.com/naval-news/2024/06/south-koreas-hanwha-to-acquire-philly-shipyard/
https://www.mk.co.kr/en/business/11048177
https://www.koreatimes.co.kr/www/tech/2024/06/129_377129.html
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