Will South Korea Be the Answer to the US Navy's Large-Scale Fleet Expansion Plan?

According to the U.S. Navy's fleet expansion plan, 364 new vessels will be constructed or purchased over the next 30 years, with a total budget expected to reach $1.075 trillion (approximately 1,400 trillion KRW). However, the production capacity of shipyards within the United States has reached its limits. To prevent gaps in naval power, a large-scale production system is necessary, and the solution may be found outside the U.S. As a result, the possibility of cooperation with South Korea, a world-class shipbuilding powerhouse, is rapidly emerging.

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According to the "An Analysis of the Navy’s 2025 Shipbuilding Plan" prepared by the Congressional Budget Office (CBO) in January this year, the U.S. Navy plans to expand its current 295 combat ships to 364 by 2054.

The plan is to increase the number of ships at a rate of 13.5 ships per year from this year to 2034, 10.8 ships per year from 2035 to 2044, and 12.1 ships per year from 2045 to 2054. The total cost is estimated at about $1.075 trillion. Approximately $40 billion will be invested annually on average, which is nearly 1.5 times the average annual $27.5 billion invested over the past five years.

The core of the fleet expansion is nuclear-powered submarines and aircraft carriers. In particular, the production speed of Columbia-class SSBNs (strategic nuclear submarines) and Virginia-class SSNs (attack submarines) must be increased, but this is not easy with the current production capacity of U.S. shipyards. The U.S. Navy plans to build at least two nuclear submarines annually, but the CBO pointed out that delays are likely due to a shortage of skilled labor and production facilities in the shipbuilding industry.

The U.S. shipbuilding industry has lost competitiveness since the late 20th century. The capabilities of Huntington Ingalls Industries (HII) and General Dynamics, which mainly build U.S. Navy ships, are insufficient to support an aggressive shipbuilding plan. Especially as delays in the construction schedules of the Navy’s frigates (FFG) and destroyers (DDG) have increased recently, the possibility of cooperation with external shipyards is being raised.

In this situation, South Korea’s shipbuilding industry is emerging as a solution. South Korea possesses global competitiveness not only in commercial vessels but also in military shipbuilding. Both the Aegis destroyers (KDX-III) and the next-generation frigates (FFX) operated by the South Korean Navy were designed and built by Korean shipbuilders.

Hyundai Heavy Industries, Hanwha Ocean, and Samsung Heavy Industries have already been recognized for their technological capabilities in the global defense market. In particular, Hanwha Ocean acquired the Philly Shipyard in Philadelphia, USA, for about $100 million, establishing a shipbuilding business base within the United States.

However, there are legal barriers to building U.S. Navy ships overseas. A representative regulation is the Burns-Toomey Amendment, which mandates that U.S. Navy ships must be constructed within the United States.

Therefore, for Korean shipbuilding companies to participate in the ship expansion project, they must find exceptions to this rule. The first exception often cited is "in cases where urgent security needs are recognized." If the U.S. Navy needs to rapidly secure certain ships but the production capacity of U.S. shipyards is insufficient, causing significant delays, cooperation with overseas shipyards is permitted. This closely matches the current situation faced by the U.S. Navy.

The second exception is "when conducted as part of Foreign Military Sales (FMS) or joint defense projects." The U.S. has allowed certain weapon systems or ships to be produced overseas as part of strengthening defense cooperation with allied countries. For example, allies like Japan and Australia have expanded shipbuilding and defense cooperation by producing U.S. military equipment domestically in collaboration with U.S. defense contractors. Korean shipbuilders may also participate by cooperating with U.S. defense companies to build parts of ships or supply components.

If direct construction by Korean shipbuilders is difficult, utilizing Korean shipyards within the U.S. is another option. Hanwha Ocean’s acquisition of Philly Shipyard is interpreted as a strategic move to open this possibility. Additionally, Korean shipbuilders could participate in naval shipbuilding by transferring technology and supplying parts in cooperation with U.S. defense companies.

Republican Senators Mike Lee and John Curtis recently jointly introduced the "Navy Readiness Assurance Act" and the "Coast Guard Readiness Assurance Act." The Navy Readiness Assurance Act aims to allow Indo-Pacific countries with mutual defense treaties with the U.S. to build U.S. Navy ships or produce parts. The Coast Guard Readiness Assurance Act similarly permits Coast Guard vessels to be built at shipyards in allied countries.

Cooperation between the U.S. Navy and South Korea’s shipbuilding industry could become an important variable in future Korea-U.S. economic negotiations beyond simple defense collaboration. If Korean shipbuilders are likely to contribute to the U.S. Navy shipbuilding projects, the South Korean government could leverage this to gain a favorable position in tariff negotiations. For example, it could be used as a card to demand the removal of anti-dumping duties currently imposed by the U.S. on Korean companies.

If the South Korean government actively pursues this, the possibility of Korean shipbuilders officially participating in U.S. Navy projects will increase. From the perspective of strengthening the strategic partnership between the two countries, shipbuilding cooperation is a feasible scenario. An industry insider said, "The U.S. Navy’s shipbuilding plan is not just a defense project but is directly linked to the U.S.’s global naval power maintenance strategy. Since it is difficult for the U.S. to achieve its goals with existing shipbuilders alone, cooperation with South Korea’s shipbuilding industry could be an attractive option."

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