[인터뷰] “The ship MRO market opened by the U.S. is a big opportunity for the Korean shipbuilding industry.”

Hanwha Ocean wins maintenance project for two U.S. ships… New growth engine ‘expected’

Managing Director Kim Dae-sik, “US ship MRO business size is 20 trillion won per year, expanding into global market.”

Korea, small and medium-sized shipyards, maintenance companies, and manpower… Trump mentions ‘close cooperation’

‘Blueprint’ for parts development and supply solutions with local companies… “Combat ship MRO/ship construction challenge”

US Navy ship scheduled for depot maintenance enters Korea’s first Hanwha Ocean business site

(Geoje = Yonhap News) The U.S. Navy logistics support ship ‘Wally Shira’, which Hanwha Ocean won by participating in a bid for the U.S. Navy MRO project, entered port at Hanwha Ocean’s Geoje business site in Geoje-si, Gyeongsangnam-do on September 2 and docked at the quay wall. [한화오션 제공. 재판매 및 DB 금지]

(Geoje = Yonhap News) Reporter Jeong-Hoon Lee = As the United States opens the door to the ship maintenance, repair, and overhaul (MRO) field to Korean companies, the ship MRO business is emerging as a new growth engine for the Korean shipbuilding industry, which has the world’s No. 1 competitiveness. .

Hanwha Ocean is leading the way in pioneering blue oceans. Hanwha Ocean was the first in the domestic shipbuilding industry to win an MRO project for two US Navy ships.

Last August, the company became the first domestic shipyard to win an order for the MRO project for the U.S. Navy’s logistics support ship ‘Wally Shira’, and on the 12th, it became the first Korean shipyard to take charge of the regular repair project for the ‘Yukon’, a tanker assigned to the US Navy’s 7th Fleet.

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The Yukon MRO order received particular attention as it was announced while U.S. President-elect Donald Trump mentioned ‘close cooperation’ with the Korean shipbuilding industry. In a phone call with President Yoon Seok-yeol on the 7th, President-elect Trump praised Korea’s ability to build warships and ships and said, “There is a need to closely cooperate with Korea in the MRO field as well.”

On the 20th, we met with Kim Dae-sik, managing director of Hanwha Ocean’s special ship and MRO business, at Hanwha Ocean’s Geoje business site and heard the significance of winning the MRO order for U.S. ships and the future prospects for related businesses. Managing Director Kim emphasized, “The overseas ship MRO market, which continues to grow, can be a great opportunity for our country’s shipbuilding industry.”

Next is a Q&A with Managing Director Kim Dae-sik.

Daesik Kim, Managing Director of Hanwha Ocean’s Special Vessel and MRO Business

(Geoje = Yonhap News) Reporter Jeong-hoon Lee = Kim Dae-sik, managing director of Hanwha Ocean’s special vessel and MRO business, is being interviewed by Yonhap News at Hanwha Ocean’s Geoje business site on the 20th.

— What is the ship MRO business specifically?

▲ It provides necessary maintenance, such as repair and overhaul, to ensure that naval vessels maintain their proper performance.

Unit maintenance performed by naval crews, field maintenance performed by military maintenance units, depot maintenance performed by the military or shipyards, and performance improvement projects aimed at strengthening combat power are included in ship MRO.

— Are there any entry barriers to the U.S. Navy ship MRO business?

▲ So far, Korean shipyards have focused on building new ships, whether merchant ships or special ships. Pitfalls MRO was not viewed as a business or a market. Through the coronavirus pandemic, MRO issues have increased rapidly around the world as navies of many countries, including the U.S. Navy, have had difficulty maintaining ships. Trap MRO is starting to open up to a new market.

Hanwha Ocean signed a Ship Maintenance Agreement (MSRA) with the U.S. Naval Supply Systems Command last July and acquired the qualification to perform MRO on U.S. Navy ships for five years.

— The U.S. Navy recently entrusted Hanwha Ocean with the MRO, a tanker and logistics support ship belonging to the 7th Fleet, which operates in the Indo-Pacific region. Was there no competition?

▲ I understand that it was conducted through competitive bidding. It was not announced which companies participated in the bidding.

U.S. Navy ship undergoes depot maintenance at Hanwha Ocean for the first time in Korea

(Geoje = Yonhap News) The U.S. Navy logistics support ship ‘Wally Shira’, which Hanwha Ocean won by participating in a bid for the U.S. Navy MRO project, entered port at Hanwha Ocean’s Geoje business site on September 2. Officials from both countries who attended the port entry ceremony are taking a commemorative photo. [한화오션 제공. 재판매 및 DB 금지]

— The country that is building super-large aircraft carriers is the United States. The reason for entrusting naval vessel MRO to a foreign company.

▲ The U.S. Navy, which operates around the world, operates more than 370 ships. Every year, 130 to 150 ships need to be maintained at shipyards, but due to the lack of shipyards in the U.S., aging facilities, and low productivity, maintenance is not carried out in a timely manner. The maintenance delay rate for U.S. Navy ships is approximately 75% and continues to increase. In 2019, the U.S. Government Accountability Office under the U.S. Congress issued a report stating that one-third of the maintenance required for aircraft carriers and submarines could not be supported due to a lack of facilities. The U.S. Navy’s 7th Fleet, which is in charge of the Indo-Pacific region, including Korea, must undergo maintenance in the U.S. mainland after moving long distances, making concerns about a power vacuum even more serious.

— Potential for growth in the global ship MRO market, including in the United States.

▲ The size of the U.S. Navy ship MRO business alone amounts to 20 trillion won per year. In addition, the global naval ship MRO market continues to grow. The experience of performing MRO on U.S. Navy ships will be of great help to the Korean shipbuilding industry in entering the global naval ship MRO market.

— Hanwha Ocean’s blueprint for the ship MRO business.

▲ Making the most of our strengths. There are many small and medium-sized shipyards and maintenance companies in the Busan-Gyeongnam area, and the maintenance manpower is abundant. If you combine these things well, you can secure sufficient production capacity without the need to increase equipment and manpower. An efficient MRO business is possible if Hanwha Ocean plays a central role in certification and design and collaborates with local companies. Hanwha Ocean can share the MRO orders it has received with local companies.

— Is there anything in particular that the U.S. Navy emphasizes when entrusting the MRO business to Hanwha Ocean?

▲ They say that it would be nice to create a parts procurement system as well as ship maintenance. Ships must operate for 30 to 40 years, and there are great difficulties in supplying parts as the production line cannot be maintained during this period. There are many parts and equipment companies in the Busan-Gyeongnam region. I think this is an opportunity to build a solution where large corporations such as Hanwha Ocean, which have research facilities and design personnel, provide certification and companies develop and supply parts.

Vice Chairman Kim Dong-gwan met with the Commander of the U.S. Navy Pacific Fleet

(Geoje = Yonhap News) Hanwha Group Vice Chairman Kim Dong-kwan (front row, first from right) and U.S. Navy Pacific Fleet Commander Stephen Koehler (front row, second from right) attend the ‘Wally Shira’ maintenance site at Hanwha Ocean’s Geoje business site in Geoje-si, Gyeongsangnam-do on October 24. Looking around. [한화그룹 제공. 재판매 및 DB 금지]

— Is the Japanese shipbuilding industry a competitor in the U.S. Navy ship MRO business? What are the strengths of the Korean shipbuilding industry?

▲ The home port of the US Navy’s 7th Fleet and a regional maintenance center directly operated by the US Navy are located in Japan. The local maintenance center basically maintains ships belonging to the 7th Fleet. Some MRO subcontractors are outsourced, and MRO is performed by Mitsubishi Heavy Industries, which has signed a Ship Maintenance Agreement (MSRA) with the U.S. Navy. The Japanese shipbuilding industry has an advantage in that it has the U.S. 7th Fleet home port and a local maintenance center, and that it participated in the U.S. Navy MRO project faster than ours. However, Korea is ahead in shipbuilding competitiveness. Even though labor costs are similar, Korea has superior management capabilities in design, manpower, and equipment.

— Hanwha Ocean is a shipyard specializing in new construction. Can new construction and MRO be carried out simultaneously at the Geoje plant?

▲ From a shipyard’s perspective, it is important to increase facility availability. The average ship MRO period is about 3 to 5 months, which is shorter than that of a new ship. There are times when the construction schedule is empty, and ship MRO can be seen as playing a role in filling the empty space.

— Profitability of ship MRO business compared to new ship.

▲ Ships generally have a lifespan of over 30 years and periodic maintenance is essential. The MRO business is a single contract, so the ship price is lower than that of a new building, but the margin rate is high and it makes it possible to secure a stable supply in the mid to long term. This is why MRO is evaluated as a field that can generate continuous profits. With thorough cost analysis and preparation, it is possible to secure high profitability.

Panoramic view of Hanwha Ocean’s Geoje business site.

[한화오션 제공. 재판매 및 DB 금지]

— Won the MRO project for US Navy non-combat ships such as refueling ships and logistics support ships. What is the possibility of receiving MRO orders for combat ships?

▲ Current U.S. laws do not allow overseas companies to maintain U.S. Navy combat ships. Combat ships can only be maintained within their own country or at regional maintenance centers operated by them. Since there is a movement to outsource maintenance to foreign shipbuilding companies on a pilot basis, it is believed that the combat ship MRO market will also open when related laws are revised.

— If you gain experience in the MRO business, will you be able to jump into the new construction business for U.S. Navy ships?

▲ Through the MRO project, we plan to demonstrate to the U.S. Navy our timely delivery capability, unrivaled technological prowess, and systematic maintenance infrastructure. Hanwha Ocean acquired the Philadelphia Shipyard in Philadelphia, USA last June. We expect that winning the MRO project and acquiring the Philly Shipyard will serve as a solid foundation for entering the U.S. Navy ship business.

— Can the U.S. Navy ship MRO project become a blue ocean for Korea’s shipbuilding industry?

▲ The United States is also seeking to strengthen its naval power in response to the rapidly rising Chinese Navy. However, with the decline of the shipbuilding industry, the United States faced a situation where it was unable to properly carry out not only new construction but also operational ship maintenance. Solving that problem can be a great opportunity for us. The problem of lack of shipyards to build or maintain U.S. Navy ships cannot be solved in the short term. In the future, overseas maintenance volume will continue to increase.

Hanwha Ocean wins second MRO order for U.S. Navy vessel

(Geoje = Yonhap News) The Yukon was ordered by Hanwha Ocean as the second MRO project for a U.S. Navy ship. [한화오션 제공. 재판매 및 DB 금지]

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2024/11/24 06:11 Sent

**How might Hanwha Ocean’s focus on leveraging existing shipbuilding expertise⁣ and local workforce for MRO​ impact the employment landscape⁣ and economic development in the regions where they operate,⁣ both in Korea and in the US?**

## Open-ended Questions for ‍Discussion based on Hanwha Ocean’s Ship MRO Business with US Navy

This interview offers fascinating⁤ insights into ⁣Hanwha Ocean’s foray⁣ into ‌ship​ maintenance (MRO) for the US Navy, particularly against the backdrop of⁣ a growing global demand and escalating geopolitical tensions in the Indo-Pacific region. Here are some open-ended questions designed‍ for stimulating discussion and exploring diverse perspectives:

**I.⁣ US Navy Needs and Global‌ Market Dynamics:**

1. **How significant is ⁣the US Navy’s ‌struggle with insufficient maintenance capacity ⁢for achieving its strategic⁤ goals in the⁣ Indo-Pacific region?**

2. **Beyond lack of facilities,⁣ what other factors contribute to ‍the US Navy’s reliance on overseas shipyards for maintenance?**

3. **Considering the global market growth for naval ship MRO, is specializing in ‍this area a smart long-term strategy for​ Korean shipbuilders like Hanwha Ocean?**

4. **What are the potential risks and ‌challenges Korean shipyards might⁤ face‌ while catering to the US Navy’s MRO requirements and competing with established players like Japan?**

**II. Hanwha ⁤Ocean’s Strategy and ‌Competitive Advantage:**

1. **Hanwha Ocean emphasizes ‍leveraging existing ⁣shipbuilding expertise⁣ and local workforce for MRO.⁤ What are⁢ the potential advantages and disadvantages of this‍ approach compared to ​setting up ​dedicated MRO facilities?**

2. **The interview mentions creating‍ a “parts procurement system” as a key differentiator. How effective can this ⁢be, and ‍what complexities might Hanwha Ocean encounter in establishing‍ such ⁢a system?**

3. **Hanwha Ocean aims to expand from non-combat ships to combat ships maintenance in the future. What legislative hurdles need to be ⁣overcome to make this happen, and what timeline realistically are we looking at?**

4. **How does Hanwha Ocean’s acquisition of the Philadelphia Shipyard strategically complement ‌its MRO ambitions for the US Navy?**

**III. Geopolitical Implications and Broader Impact:**

1. **Could Hanwha Ocean’s success in securing US⁤ Navy MRO contracts signal ‍a ‍broader shift in the global shipbuilding landscape, with Asian ​shipyards ⁣playing a more prominent ⁣role?**

2. **How might this increased‍ reliance on foreign shipyards for maintenance affect⁤ the US Navy’s operational readiness and strategic independence?**

3. ​ **What are ‍the implications⁣ of this ⁤growing demand for naval ⁢ship MRO on‌ the global supply chain for maritime equipment and technology?**

4. **Ultimately, what does Hanwha Ocean’s success or failure in this market signify for ‍the future⁣ of Korea’s shipbuilding industry on the global‍ stage?**

These open-ended questions encourage a deeper analysis of the interview’s content, promoting discussion and critical thinking on⁢ the multifaceted implications of Hanwha Ocean’s ‍US Navy MRO venture.