American Firm Negotiating for Former Hanjin Subic Bay Shipyard
More than two years after the large shipyard facility in Subic Bay in the Philippines closed due to financial difficulties, Philippine officials are reporting that they are close to a deal with a new operator. The former shipyard operated by a division of South Korea’s Hanjin Heavy Industries could reopen before the end of the year according to the Subic Bay Metropolitan Authority and confirmed by a presidential spokesperson.
Built at the location of the former largest American overseas naval base, the sprawling U.S. Naval Base Subic Bay, was turned over to the Philippine government in 1992 and at its peak the yard employed as many as 30,000 workers. Hanjin Heavy Industries and Construction-Philippines was hit hard by the downturn in international shipping more than five years ago struggling to find new contracts. As many as 7,000 workers were laid off in December 2018 due to a lack of work, while the shipyard manager was rumored to be seeking a buyer for the operations.
In January 2019, HHIC-Phil sought court receivership. The Korea Development Bank along with Filipino investors were reported to be the largest debtors in the collapse. As of 2021, HHIC-Phil has a total of $1.3 billion in outstanding loans, including $400 million due to Philippine banks and $900 million in loans from South Korean lenders. Chinese interests were rumored to be interested in the facility while later reports tied the yard to Austal from Australia, possibly supported with American investments.
Subic Bay Metropolitan Authority CEO and Administrator Wilma Eisma announced yesterday, July 26, that a deal was 99.99 percent complete for a new operator to take over portions of the yard. “Hopefully, before the end of the year, we will be able to announce the reopening of the Hanjin Shipyard,” Eisma said.
While speculation has centered around the renewal of the bid from Austal, Eisma said, “I want to make it clear that the white knight is not from Asia. It comes from North America,” but she declined to identify the firm until the transaction is completed.
Philippine officials said they were hopeful the deal will be finalized shortly and the commercial portion of the shipyard could resume work. They speculated that as many as 3,400 people would be employed at the yard in the first phase of resuming work.
At the end of May 2021, the Philippine Navy reported that it had signed a terms sheet with the former yard operator to convert and use approximately 250 acres of HHIC-Phil's North Yard as an installation that will house the Philippine Fleet, Naval Sea Systems Command, Naval Installation Command, and the Amphibious Assault Battalion. The navy reportedly has always been interested to occupy a part of the HHIC-Phil in Subic Bay due to the deep harbor that can be used to accommodate its strategic sealift vessels and larger patrol ships. The harbor reportedly has a 33-foot depth along with strategic access to the South China Sea.
American forces captured the Spanish base at Subic Bay in 1899 during the Spanish–American War. Over the nearly next century, the US expanded the base until it covered 59,000 acres adding modern facilities such as a naval air station. After the Americans returned the base to the Philippines, portions were converted into a free trade zone while the navy’s facilities were used for the commercial shipyard.