US to spend $30B annually on warships for 30 years

South Korea's shipbuilding industry is embracing new growth opportunities due to the U.S. naval buildup and merchant fleet expansion plans under President Donald Trump’s second term, according to an analysis.

According to a recent report by the Korea Trade-Investment Promotion Agency (KOTRA), entitled ‘Opportunities for Korean companies in the U.S. marine shipbuilding market and policy trends,’ the U.S. Navy plans to expand its fleet to 381 ships by 2054. To do so, it is expected to invest an average of about 30 billion U.S. dollars per year over the next 30 years in the procurement of new ships.

The number of U.S. shipyards, which will serve as the basis for building military ships and other vessels, once reached 414, but has been in decline for a long time and is now down to 21. This will likely lead to shipbuilding cooperation with allies such as South Korea, the report said.

In fact, the U.S. Congress introduced the Naval Readiness Assurance Act last month, which would allow South Korea and other allies to build U.S. Navy ships in their own shipyards. If passed, the legislation would allow South Korean shipyards to build U.S. Navy vessels, giving them access to the U.S. military and Coast Guard ship market.

The maintenance, repair, and overhaul (MRO) market for U.S. warships could also be a new market for Korean shipbuilders, according to the report. As of November last year, the U.S. Navy had 149 warships in operation, excluding submarines and aircraft carriers, and about 6 billion dollars to 7.4 billion dollars (about 8.778 trillion won to 10.826 trillion won) is spent annually on MRO for these ships. However, it is difficult for the U.S. to meet this demand for MRO due to a shortage of shipyards and aging facilities in the country.

In response, South Korean shipbuilders such as HD Hyundai Heavy Industries signed a ship maintenance service agreement (MSRA) with the U.S. Navy last year to secure MRO orders. “Korean shipbuilders are highly regarded for their design, manpower, and equipment management capabilities,” the report said.


Jae-Hyeng Kim monami@donga.com