Representatives of Hanwha Ocean, the Ministry of Nationwide Protection, the Protection Acquisition Program Administration and the U.S. Navy’s Navy Sealift Command Far East pose at Hanwha Ocean’s shipyard on Geoje Island, South Gyeongsang Province, Monday, throughout a welcoming ceremony for the USNS Wally Schirra. Courtesy of Hanwha Ocean
HD Hyundai absent from bid for upkeep of US ammunition ship
By Park Jae-hyuk
Hanwha Ocean is dealing with hypothesis that it downplayed the low profitability of the U.S. Navy’s latest order to overtake a dry cargo and ammunition ship, in order to win the title of the primary Korean shipbuilder to enter the U.S. naval vessel upkeep, restore and overhaul (MRO) market.
The hypothesis arises as the corporate’s chief rival, HD Hyundai Heavy Industries (HHI), opted to not bid for the challenge, regardless that it had already signed a Grasp Ship Restore Settlement (MSRA) with the U.S. Naval Provide Methods Command on July 11. An MSRA is important for privately owned shipbuilders to enter the U.S. naval vessel MRO market.
Final Thursday, Hanwha Ocean introduced that it turned the primary Korean shipbuilder to win an MRO order from the U.S. Navy, based mostly on an MSRA signed on July 22.
Because of this, the USNS Wally Schirra, a 40,000-ton dry cargo and ammunition ship, arrived on the firm’s shipyard on Geoje Island, South Gyeongsang Province, Monday, for 3 months of overhaul.
Nevertheless, HD HHI beforehand pointed to the low profitability of tasks to keep up the U.S. Navy’s ammunition ships, in comparison with the tasks to keep up its combatant ships, that are anticipated to deliver extra income to Korean shipbuilders.
“We considered that it’s not affordable to push forward with MRO tasks at this second by emptying our docks stuffed with new naval ships beneath development,” Choi Tae-bok, director of HD HHI’s naval and particular ship enterprise unit, mentioned throughout a convention name on the corporate’s second-quarter earnings, July 25.
“The U.S. Navy is presently prepared to ship ammunition ships for upkeep.”
The shipbuilder mentioned that it plans to enter the U.S. naval vessel MRO market subsequent yr, contemplating the profitability of orders and the capability of its shipyard.
Hanwha Ocean denied the hypothesis, saying that it signed a worthwhile contract with the U.S. Navy.
“The U.S. Navy didn’t repair the utmost price for this challenge, so every shipyard was in a position to provide the value they need,” a Hanwha Ocean spokesman mentioned.
“It’s groundless that the challenge’s low profitability was the explanation behind the absence of a bid from our competitor.”
Hanwha Ocean declined to reveal the scale of the order, however the challenge is estimated to price round 20 billion gained ($15 million). It is usually unsure whether or not the Korean agency competed with international shipyards to win the order.
“The U.S. Navy didn’t inform us of the specifics about different bidders,” the Hanwha Ocean spokesman mentioned.
The shipbuilder emphasised that its latest entry to the U.S. naval vessel MRO market has paved the way in which for the corporate to broaden its presence within the world naval vessel MRO market, which is estimated to succeed in $57.7 billion this yr.
“We’re very proud to be the primary Korean shipyard to undertake an MRO operation for a U.S. Navy vessel,” the Hanwha Ocean spokesman mentioned.
“We are going to proceed to uphold the popularity of the Korean maritime protection business with well timed and high-quality MRO providers.”
