HD Hyundai Heavy Industries has announced its intention to pursue the acquisition of a U.S. shipyard while stating that it is not considering additional investments in other domestic shipyards.
Lee Sang-kyun, CEO of HD Hyundai Heavy Industries and chairman of the Korea Offshore & Shipbuilding Association, denied the possibility of utilizing the Gunsan Shipyard in relation to the Korea-U.S. shipbuilding cooperation project “MASGA (Make American Shipbuilding Great Again)” at the 22nd Shipbuilding and Ocean Day commemoration ceremony held in Seocho-gu, Seoul on Sept. 18. However, he stated that the company will continue to pursue the acquisition of a U.S. shipyard in accordance with the agreement signed after the Korea-U.S. summit.
Lee said, “We are not considering investments in new domestic shipyards,” adding, “We will make good use of the HD Hyundai Mipo shipyard (after the merger).”
On Sept. 18, the Fair Trade Commission approved the merger of HD Hyundai Heavy Industries and HD Hyundai Mipo. The FTC explained the reason for approving the merger, stating, “Both companies are affiliates of HD Hyundai Group, and the merger meets the criteria for business combinations that are presumed to have no impact on competition as it corresponds to an internal combination.” HD Hyundai Heavy Industries announced plans to expand its warship business and lead the Korea-U.S. shipbuilding project by utilizing HD Hyundai Mipo Shipyard’s facilities through the merger.
Regarding workforce recruitment, Lee said, “As we have been steadily receiving applicants recently, there will be no large-scale introduction of foreign workers,” adding, “We plan to maximize the use of domestic workforce and supplement from overseas only when necessary.”
On the other hand, the company continues to pursue the acquisition of a U.S. shipyard. Reuters reported on Sept. 18 (local time) that HD Hyundai Heavy Industries is in talks with several companies regarding the acquisition of a U.S. shipyard. Reuters based this report on an interview with a senior executive of HD Hyundai Heavy Industries.
According to Reuters, the official stated, “It seems clear that we will need to establish a production base in the United States at some point in the future.” The official did not disclose the names of the companies involved in the negotiations or the potential investment scale but said, “The United States appears to be in a situation where it inevitably has to open its shipbuilding market as the gap in naval capabilities between the U.S. and China widens, and there is a shortage of warship construction capacity.”
Currently operating shipyards in the United States include Phily Shipyard in Philadelphia acquired by Hanwha Ocean last year, General Dynamics’ shipyard providing full-service operations on the U.S. West Coast, and Huntington Ingalls Industries building ships as a supplier to the U.S. Navy.
Meanwhile, in July, Korea promised to invest $150 billion in the U.S. shipbuilding industry during tariff reduction negotiations with the United States.
Regarding this, HD Hyundai stated on Sept. 19, “The Reuters report is a general statement,” and clarified that “there has been no further progress regarding the acquisition of a U.S. shipyard beyond the ‘Memorandum of Understanding (MOU) for the Establishment of a Joint Investment Program in the Korea-U.S. Shipbuilding Industry’ signed after the Korea-U.S. summit last month.” HD Hyundai said it requested a correction of the article to prevent misunderstanding that negotiations are currently underway in relation to the Reuters report, but the request was not accepted.
On Aug. 25, HD Hyundai signed a memorandum of understanding with Cerberus Capital and Korea Development Bank in Washington, D.C., agreeing to pursue 1) acquisition and modernization of U.S. shipyards, 2) investment in equipment companies to strengthen the supply chain, and 3) development of advanced shipbuilding technologies such as autonomous navigation and AI.
HD Hyundai plans to participate as a key investor and technical advisor to support the successful operation of the investment program. In particular, it will play a role in supporting investment decision-making by reviewing the technical feasibility, competitiveness, and growth potential of investment targets based on its accumulated industry expertise in shipbuilding and offshore fields.
Cerberus Capital will be responsible for the overall management and strategy formulation of the investment program as the operating company. Korea Development Bank will design the participation structure for Korean investors and support recruitment, aiding the successful operation of the investment program.
HD Hyundai is taking a cautious approach to acquiring a U.S. shipyard. It is known that even if Cerberus Capital, which operates the U.S. investment program, acquires a U.S. shipyard, HD Hyundai is considering equity participation and technical support rather than direct operation.
The issue of dispatching personnel is also sensitive and fluid due to recent immigration enforcement issues in Georgia.
Source: Business Korea