Philly Shipyard and HD Hyundai Sign MOU for Cooperation on US Shipbuilding

Philly Shipyard
Philly Shipyard is one of the leading U.S. Jones Act shipbuilders (file photo)

Published Apr 24, 2024 12:38 PM by The Maritime Executive


South Korea’s HD Heavy Industries is continuing its push to expand its international military work with an announcement that it plans to explore a potential business relationship with Philly Shipyard, a U.S. shipbuilding that is a leader in building U.S. coastal trade vessels under the Jones Act. The companies confirmed that they entered into a memorandum of understanding for future cooperation on opportunities for U.S. government shipbuilding projects.

News of the agreement comes just weeks after U.S. Secretary of the Navy Carlos Del Toro toured Korean shipyards and called for efforts to restore and expand U.S. shipbuilding capabilities. Del Toro this week speculated about the possibilities of international shipyards building modules sent to the U.S. for incorporation into construction projects. 

Philly Shipyard has a history of working with the Koreans. Between 2005 and 2017 they noted a cooperation with Hyundai on 22 commercial product tankers with HHI supporting design and procurement. Philly Shipyard later worked with the engineering and naval architecture division of Daewoo Shipbuilding & Marine Engineering, DSEC, which is now part of Hanwha Ocean after the conglomerate acquired control of DSME in 2023.

The MOU with HHI was signed during a visit by the company’s executives to the Philly Shipyard on April 12. Speaking to the Korean media, the Hyundai executives said they had toured the yard and explored the opportunities for sharing their technology for construction and maintenance projects at the U.S. shipyard.

Philly Shipyard was founded in 1997 by a public-private partnership between U.S. Government agencies and the then Kvaerner Shipbuilding Division, which later became Norway’s Aker group which continues to own approximately 60 percent of Philly Shipyards. The company is also publicly traded on the Euronext Expand Oslo.

In announcing the agreement, Hyundai said it looked forward to the opportunities for cooperation for U.S. Navy, Coast Guard, and government vessels. They noted since 2003, Philly Shipyards has built more than 50 percent of the large U.S. merchant vessels under the Jones Act, Currently, the yard is undertaking the project for the five new MARAD U.S. training ships, last year started construction on a rock installation vessel for Great Lakes Dredge & Dock Company, and has an order for three LNG-fueled containerships for Matson. The orderbook runs to 2027, and while most of the yard’s work is commercial ships, it has also undertaken maintenance projects for the U.S. government. 

“We will expand our presence in the global defense industry through our cooperation with the U.S. firm in the construction, maintenance, repair, and overhaul of naval and public vessels,” said Joo Won-ho, head of HD HHI’s naval and special ship business unit.

Last year it was reported that Philly Shipyard was in discussions with Hanwha Ocean over a possible acquisition. Hanwha confirmed to Korean analysts that it had explored the deal. This year, the company reported the launch of a U.S. subsidiary as it said it was exploring opportunities in the shipbuilding market.

Both Hyundai and Hanwha are moving aggressively to expand their international business. Hanwha recently approached Australian-based Austal about the possible acquisition. HD Hyundai recently announced strategic partnerships with U.S. defense contractor GE Aerospace to support efforts with developing propulsion systems as well as to cooperate in maintenance, repair, and overhaul projects, and in an effort to participate in the Royal Australian Navy frigate project. They also formed a partnership with L3 Harris Technologies, a global defense company, to win orders for the Canadian submarine project. Hyundai recently received an order to build four ships for Peru’s Navy and is competing for additional projects.