Trump hints at outsourcing vessels from Korean shipbuilders

US President Donald Trump has once again indicated the intention to work with allies to build ships while rebuilding America’s shipbuilding sector, but this time, he hinted at the possibility of buying ships from other countries, raising the potential for collaboration with Korean shipbuilders.

“We are going to be rebuilding our shipbuilding business,” said Trump during a White House Cabinet meeting in Washington on Thursday.

“We may order ... (we) would have to go to Congress for this, but we may buy some ships from other countries that we're close to and that do great jobs with ships.”

His remarks came after National Security Advisor Mike Waltz reported that Chinese shipyards received 1,700 orders last year while US shipyards had only five.

“We're going to start the process of rebuilding,” said Trump.

“We don't really essentially build ships anymore, which is ridiculous. It's going to be a very big business for us in the not-too-distant future, but in the meantime, we have countries that do very well at building ships, and we'll be dealing with those countries, and we may be ordering top-of-the-line ships from those countries.”

Korea’s acting president, Prime Minister Han Duck-soo discussed the country’s willingness to cooperate in shipbuilding, liquefied natural gas, or LNG, and trade balance with the US during his first phone call with Trump on Tuesday.

“We talked about their tremendous and unsustainable surplus, tariffs, shipbuilding, large scale purchase of US LNG, their joint venture in an Alaska Pipeline and payment for the big time military protection we provide to South Korea,” Trump said in a post on his Truth Social account.

Trump also talked about cooperation in the shipbuilding sector in a phone call with Korea’s former President Yoon Suk Yeol in November last year shortly after Trump won the presidential election as the US leader was quoted as saying that he is well aware of Korea's world-class shipbuilding capabilities and warships, and thinks it is necessary to closely work with Korea in not only ship exports, but also the field of maintenance, repair and overhaul, or MRO.

Korea’s top shipbuilders — HD Hyundai and Hanwha Ocean — have been rolling up their sleeves to collaborate with the US.

Earlier this week, HD Hyundai teamed up with US defense shipbuilder Huntington Ingalls Industries to become the first foreign shipyard to sign a memorandum of understanding with the latter. HD Hyundai signed an agreement with the University of Michigan and Seoul National University to foster shipbuilding professionals last year.

Hanwha Ocean completed the acquisition of the Philly Shipyard at the cost of $100 million in December last year, becoming the first Korean shipbuilder to take over a US shipyard. According to Mike Smith, CEO of Hanwha Defense USA, the greatest need from a strategic point of view is on the West Coast, which is on the opposite side of the country to the Philly Shipyard.

“We need to see what is actionable and strategically suitable. We would need to assure all stakeholders that we are a better owner who would create value for all involved,” said Smith.

HD Hyundai Heavy Industries and Hanwha Ocean both signed a master ship repair agreement, or MSRA, with the US Naval Supply Systems Command in July last year to secure the right to bid for MRO projects. Hanwha has actually bagged two MRO projects from the US Navy since then.

“What can Korea bring? I don’t think it’s about Korea as a specific country. It is the production capability, the workforce expertise, both the shipbuilding and shipyard technologies that money has been put in and investments have been made in Korea both by the government and the industry, into making world-class shipyards,” said Michael Viggiano, director of government affairs for defense at Hanwha USA, during a discussion hosted by the Korea Economic Institute of America in Washington last month.

“The Korean shipbuilding industry at large is ready as a partner and an allied country to meet the needs of whatever the US government decides.”

The stock prices of HD Hyundai Heavy Industries and Hanwha Ocean gained on Trump’s repeated intention for collaboration and ended at 342,500 won ($236) and 77,600 won, respectively, on Friday’s, up 5.71 percent and 6.16 percent from the previous day’s closing.