[트럼프 2기와 한국 산업]Trump declared “rebuilding military power”… ‘American Pie’ in front of Korea’s defense industry

“Significantly increase the defense budget” in the presidential election pledge

“Cooperation in shipbuilding industry” in phone call with President Yoon

Hanwha Ocean wins successive orders for U.S. Navy projects, etc.

Opportunity for domestic companies to enter the U.S. market

Industry forecasts “surging demand for U.S. military supplies”

A trickle-down effect is expected from NATO’s purchase of new weapons.

US President-elect Donald Trump. AP Yonhap News

“The U.S. military has become helpless” “We will significantly increase the defense budget to rebuild military power” “We can end (the war between Russia and Ukraine) within 24 hours of taking office”… .

These are the words that U.S. President-elect Donald Trump made as a campaign promise. Countries watching the U.S. presidential election became busy considering their own security and weapons systems and defense cost sharing as Trump’s return to the White House was confirmed. Meanwhile, there are predictions that Trump’s plan to increase the defense budget and North Atlantic Treaty Organization (NATO) demand for increased defense spending could act as a positive factor for the Korean defense industry.

In a phone call with President Yoon Seok-yeol on the 7th, President-elect Trump said, “I am well aware of Korea’s world-class warship and shipbuilding capabilities,” and added, “We need to closely cooperate with Korea not only in exporting our ships, but also in the field of maintenance, repairs, and repairs.” “He said. In the call, President-elect Trump only mentioned ship maintenance and repair (MRO), but the industry hopes that it will lead to broader defense industry cooperation. So far, the United States has continued to pursue collaboration with Korea in the MRO field.

Coincidentally, Hanwha Ocean announced on the 12th that it had won an order for the MRO project for ‘Yukon’, a fuel tanker assigned to the US Navy’s 7th Fleet. Previously, Hanwha Ocean won the MRO project for the US Navy logistics support ship ‘Wally Shira’ last August. HD Hyundai Heavy Industries is also preparing to enter the U.S. market by signing the Ship Maintenance Agreement (MSRA), which qualifies it to participate in the U.S. Navy’s MRO project bidding for the next five years.

In June, the Korea Institute for Industrial Economics & Trade predicted in a report titled ‘Defense industry impact and response tasks according to the direction of the U.S. presidential election’, “If candidate Trump takes office again, a large-scale increase in defense spending is expected, which will be an opportunity for domestic defense companies to enter the U.S. market.” did it

In fact, the domestic defense industry believes that the U.S. military’s demand for military supplies will increase rapidly as the U.S. defense budget expands. Hanwha Aerospace’s K9 has been selected as one of the candidates for the self-propelled artillery modernization project promoted by the U.S. Army and is scheduled to be tested and evaluated within this month. There is also the possibility of exporting the anti-ship guided rocket Bigung developed by LIG Nex1 to the United States. In addition, Korea Aerospace Industries (KAI) plans to participate in winning orders for the U.S. government’s advanced training aircraft (UJTS) project.

Some analysts say that pressure on NATO to expand defense spending could also have a trickle-down effect. President-elect Trump has announced that he will ask NATO member countries to increase the ratio of defense spending to 3% of gross domestic product (GDP) from the current 2%.

In fact, the basis of Trump’s pressure on NATO member countries for defense spending contains signals such as ‘The United States is no longer protecting Europe’ and ‘Do not free ride on security.’ This means directly protecting security by increasing the defense budget and investing in securing weapons.

Due to the impact of the war between Russia and Ukraine and pressure from President-elect Trump, if NATO member countries increase their defense spending for their own security, it is highly likely that this will lead to the purchase of new weapons. Currently, Europe’s conventional weapons production infrastructure is reduced. In particular, if you need to replace old heavy weapons such as tanks and artillery, you can knock on the door of domestic defense companies that can procure them faster than American companies.

Currently, domestic defense companies are expanding their share in the global defense market with competitiveness such as quick delivery and ‘cost-effectiveness’. According to the Defense Acquisition Program Administration, defense industry exports, which were 3.5 trillion won in 2019, increased to 18.91 trillion won last year. The government set this year’s defense export target at 28 trillion won. The plan is to become one of the world’s top four defense industry powers by 2027.

As President-elect Trump advocates ‘country first,’ the defense budget may be focused on investing in the domestic defense industry and creating jobs. Accordingly, there are voices calling for increased technological competitiveness.

Jang Won-jun, a researcher at the Korea Institute for Industrial Economics and Trade, said, “Korea is ship MRO, Missiles, ammunition, self-propelled artillery “We can strengthen our entry into the U.S. market as we are more competitive than the U.S. in such areas,” he said. “We need to develop strategies appropriate for areas of cooperation with the U.S. in line with Trump’s ‘America First.’”