HJSC moves to enter US MRO market

Midsized shipbuilder expands presence in naval ship market

By Park Jae-hyuk

HJ Shipbuilding & Construction (HJSC) has been drawing attention as another potential Korean participant in the market for the maintenance, repair and overhaul (MRO) of U.S. Navy vessels.

According to industry officials on Monday, HJSC recently organized a task force to sign a master ship repair agreement (MSRA) with the U.S. Naval Supply Systems Command.

The agreement is necessary for privately owned shipbuilders to enter the U.S. naval vessel MRO market. Both HD Hyundai Heavy Industries (HHI) and Hanwha Ocean signed MSRAs with the U.S. Navy last year.

Industry officials are paying keen attention to the midsized shipbuilder's move, analyzing whether its expansion will be a boon or a bane for HD HHI and Hanwha Ocean.

The two largest shipbuilders in Korea have already taken steps to capitalize on U.S. President Donald Trump's plan to rebuild his country's navy through cooperation with allies. Hanwha Ocean received two orders to maintain the U.S. naval ships last year, while HD HHI is set to win such orders this year.

"Based on our technologies and ability to handle naval vessel projects, we are preparing to enter the U.S. MRO market," HJSC said. "Trump's remarks of cooperation with the Korean shipbuilding industry are expected to give impetus to our push for the MRO business."

HJSC also seeks to appoint former Special Forces Korea Commander Chun In-bum as a nonexecutive director during its upcoming regular general meeting of shareholders slated for March 28.

Chun, who lived in New York for four years when he was a child, also served in 2013 as a deputy chief of staff of the ROK-U.S. Combined Forces Command and a senior member of the United Nations Command Military Armistice Commission.

After his retirement, he stayed in the United States as a visiting fellow of the Korea-U.S. Institute at Johns Hopkins School of Advanced International Studies, the Brookings Institution and the Georgia Institute of Technology.

HJSC currently lacks any military expert among its board members, as its incumbent outside directors have specialties in finance and corporate culture. The company's planned appointment of Chun as a new board member was therefore seen as an indication of its plan to expand its presence in the naval ship business.

HD HHI and Hanwha Ocean have also reinforced their respective naval ship divisions by hiring former admirals and experts in national security.

Amid expectations of their fierce competition, optimism remains that HJSC's expansion could be beneficial for the other two shipbuilders.

Industry officials noted that the U.S. government may focus more on Korea than Japan, if Korean shipyards increase their capacity to repair U.S. naval vessels.

"If HJSC signs an MSRA, Korean shipbuilders will gain a competitive edge in the U.S. market," a shipbuilding industry official said.

HJSC, which changed its name from Hanjin Heavy Industries & Construction in 2021, was designated as Korea's first naval ship constructor by the government in 1974.

The company has been under the control of a consortium led by Dongbu Corporation since 2021, as the shipbuilding industry slump in the mid-2010s and the bankruptcy of its shipyard in the Philippines led its previous owner to put the shipbuilder under the supervision of creditors led by the state-run Korea Development Bank in 2019.