OPINION:
It might have been the best $1 investment in South Korea’s history.
In the mid-1980s, just as the country was embarking on its 40-year rise to global economic superpower status, the Seoul government targeted steel production and shipbuilding as “strategically important” sectors to develop. When a struggling Swedish shipyard filed for bankruptcy in 1987, the emerging conglomerate Hyundai swooped in and acquired the firm’s nearly 500-foot Goliath crane for the nominal sum of $1.
That crane towers to this day over Hyundai’s giant shipyard in the southeastern port of Ulsan, a symbol of the stunning success of South Korea’s shipbuilding sector in the global markets. In the succeeding decades, companies such as Hyundai Heavy Industries, Hanwha Ocean and Samsung Heavy Industries — aided by substantial government support — have become market leaders.
While China remains the clear leader in shipbuilding productions and services, vastly outpacing U.S. and European rivals, South Korea is a strong second, with nearly 18% of the global market share for “compensated gross tonnage” in 2024, according to Marineinsight.com.
And while they can’t match China for sheer tonnage, South Korean shipbuilders have carved out a lucrative niche in several high-end specialized sectors, notably large crude oil and LNG carriers and offshore drilling platforms.
According to Reuters, South Korea’s shippers accounted for 4% of the nation’s exports and employ some 120,000 workers, with massive economic spin-offs for production centers such as Ulsan.
“Among U.S. allies, Korea stands out as the most capable partner” in shipbuilding, Lee Eun-chang, a researcher at the Korea Institute for Industrial Economics told a policy forum in Seoul this month.
South Korea’s shipbuilding prowess was very much in the spotlight as the new Trump administration demanded a re-balancing of trade relations with Seoul and dozens of other countries around the globe.
President Donald Trump has contended that Washington enjoys significant leverage in the bilateral talks given the size and attractiveness of the American market, but South Korea’s shipbuilding expertise and success in challenging the Chinese juggernaut provided Seoul a valuable bargaining chip as the trade talks neared the Aug. 1 deadline this summer.
Although major details of the pact struck by U.S. and South Korean negotiators July 31 remain in flux, South Korea’s shipbuilding industry proved a major asset in the talks. Under the deal, South Korea pledged to invest some $350 billion to help bolster the American shipbuilding industry, a pledge that could also prove lucrative to some of South Korea’s biggest players.
Mr. Trump, who signed an executive order in April calling for a “restoration” of America’s “maritime dominance,” has himself conceded that America’s lagging domestic shipbuilding infrastructure will need help.
“We don’t build ships anymore,” Mr. Trump observed in January. “We want to get that started. And maybe we’ll use allies.”
Anxious to avoid punishing U.S. tariffs, the government of South Korean President Lee Jae Myung and South Korean business leaders openly played up the possibility of greater cooperation, technology transfer and investment by South Korean shipbuilders in the U.S. as one way to address the large and growing U.S. trade deficit with South Korea.
“The United States feels a sense of crisis that China’s market share in the shipbuilding sector is growing and is tapping Korea as a strategic partner,” Trade Ministry official Chang Sung-gil said at a recent forum hosted by lawmakers.
Deals are already being struck: Hanwha Group last year paid $100 million to acquire the Pennsylvania-based Philly Shipyard and this month announced an order for a new liquefied natural gas carrier that will be jointly built in the U.S. and in Hanwha’s Geoje shipyard.
And HD Hyundai in recent days signed a preliminary accord with Los Angeles-based Edison Chouest Offshore, which operates 18 U.S. shipyards, to build new container ships.
Top ministers of the Lee government openly strategized as the U.S. trade negotiations went down to the wire, hinting strongly that shipbuilding would be a key piece of a new U.S.-South Korea trade pact.
“We confirmed a high level of interest from the U.S. in shipbuilding, so we decided to come up with proposals that the two sides can reach a deal about, including cooperation in shipbuilding,” Mr. Lee’s presidential office said in a statement after the gathering, according to the Korea Times.
Said presidential chief of staff for policy Kim Yong-beom: “Both sides reaffirmed the importance of cooperation in strategic manufacturing sectors, including shipbuilding and semiconductors, and agreed to work out concrete plans for such collaboration going forward.”
Please read our comment policy before commenting.