Shipbuilding and the Future of U.S. Sea Power: The Role of South Korea and Japan in the Rejuvenation of the American Fleet
The MOC
By
Julian Guevara
April 17, 2025
Whoever rules the waves rules the world — Alfred Thayer Mahan, The Influence of Sea Power Upon History, 1890
As global geopolitical instability intensifies, the United States’ ability to project sea power and safeguard critical maritime interests faces mounting pressure. The recent focus on revitalizing the American shipbuilding industry in Washington reflects a need to counter China’s dominance in the global maritime industry and the growing power of the People’s Liberation Army Navy. These developments raise significant concerns about the U.S.’s capacity to maintain sea control, especially as China continues to expand its naval capabilities and assert influence over vital global maritime routes.
Long-term capacity to secure sea lines of communication (SLOCs) and maritime chokepoints—alongside the ability to field both competitive commercial and naval fleets—holds significant strategic implications for United States interests in both peace and wartime. The shipbuilding sector plays a pivotal role, not only in projecting military power but also in ensuring economic stability and maintaining global competitiveness. Without a robust domestic shipbuilding industry, the U.S. risks undermining its ability to secure vital strategic objectives, such as securing freedom of navigation and maintaining credible strategic deterrence. Furthermore, reliance on foreign vessels to carry trade exposes the U.S. to the risks of economic exploitation and coercion, potentially compromising both national security and economic prosperity in an increasingly volatile environment.
Despite a significant decline in shipyard output following the end of World War II, the United States produced a robust 5 percent share of the world’s tonnage well into the 1970s. However, in 1981, a dramatic shift occurred in the commercial shipbuilding landscape with the termination of critical subsidies for the construction, operation, and financing of international-trade ships built in U.S. shipyards. These subsidies were part of Titles V, VI, and XI of the Merchant Marine Act of 1920 (also known as the Jones Act), which had long supported the industry. Once removed, the U.S. commercial shipbuilding sector collapsed, leaving a landscape dominated by a single customer: the U.S. government. This decline not only diminished the U.S. commercial shipbuilding capacity but also triggered a long-term erosion of industrial capability that has directly impacted the naval sector. The result is an ill-equipped shipbuilding industry that has struggled to meet both current and future strategic demands. With restrictions on foreign shipyards for the construction of U.S.-flagged vessels imposed by both the Jones Act and 10 U.S.C. § 8679, the United States today finds itself dependent on an inward-looking, globally uncompetitive industry.
To confront these challenges, the United States must leverage its industrial partnerships with key allies while operating under restrictive federal codes. That is, unless the Jones Act and or 10 U.S.C. § 8679 get waived or repealed, in which case subsequent measures must follow to ensure that the domestic shipbuilding industry, still reliant on their provisions, continues to exist. South Korea and Japan, with their advanced and highly competitive shipbuilding sectors, are critical partners in helping the U.S. reestablish a balanced shipbuilding industrial base. Both nations possess the technological expertise, production capacity, and industrial experience necessary to make a significant impact on the revitalization of this crucial industry. Together, South Korea and Japan account for 43.66%of the global shipbuilding market, with 28.28% for South Korea and 15.38% for Japan. By capitalizing on these partnerships, the U.S. can work towards strengthening its maritime industry, with the aim of creating a stable environment essential for revitalizing a competitive domestic sector that meets both current strategic needs and long-term national security objectives.
Former Secretary of the Navy Carlos Del Toro advocated for a new Maritime Statecraft that embraced a “whole-of-government” approach, complemented by foreign investment and strategic partnerships, to restore American maritime dominance. This strategy aimed to strengthen both the commercial and naval sectors of American shipbuilding, emphasizing the need for global partnerships to counter the rising power of the People’s Republic of China. In this context, integrating South Korean and Japanese shipbuilding firms into the American industrial base is crucial for the success of the nation’s maritime resurgence. Although current U.S. law prohibits the construction of naval vessels abroad, the two countries could play critical roles as key partners in the revitalization of U.S. shipbuilding. By boosting both capacity and global competitiveness, South Korea and Japan would not only enhance the U.S.’s ability to maintain sea control but also potentially draw closer to meeting their burden-sharing requirements.
As home to some of the most technologically-advanced and efficient shipyards in the world, the modern South Korean and Japanese shipbuilding industries were built on the principles of large-scale production, workforce integration, and innovation—originally introduced by American industrialist Henry J. Kaiser—and bolstered by government subsidies. The South Korean and Japanese industries adopted this high-efficiency, high-output model and then refined the established principles with remarkable success, allowing them to dominate the global market through industry giants like HD Hyundai Heavy Industries, Hanwha Ocean, Mitsubishi Heavy Industries, Kawasaki Heavy Industries, and Japan Marine United. While the United States may have forgotten the principles set by the Kaiser shipyards, through foreign investment, South Korean and Japanese expertise can help reintroduce large-scale efficiency and dual-use capacity.
This past December, Hanwha Systems and Hanwha Ocean finalized the joint acquisition of Philly Shipyard. Top executive Mike Smith has pledged to restore the shipyard to the level of prominence it had enjoyed in the 1940s. The joint acquisition of the domestic shipyard garnered widespread praise from government officials and defense experts alike. For an industry that has suffered a dramatic decline, reaching the brink of virtual non-existence over the past generation, this investment is a crucial step forward in the revitalization of the American maritime industry. Already operating one of the world’s largest shipyards on Goeje Island, Hanwha Ocean will be able to leverage sophisticated, cutting-edge technology to expand both commercial and naval shipbuilding capacity at Philly Shipyard. Additionally, with Hanwha Systems’ role as the leader in the production of Korean naval systems and proficiency in developing and implementing advanced technologies, there is great potential for the firm to create synergies between the naval and commercial sectors.
Further investment from South Korean and Japanese companies into U.S. shipbuilding depends on the success of Hanwha Philly Shipyard and the government’s ability to effectively incentivize the industry through appropriate measures, such as regulatory reform. HD Hyundai Heavy, which has been hesitant to directly invest in U.S. shipyards in hopes of potential revisions to U.S. shipbuilding codes, may view the success of Hanwha as a signal to proceed with investments in domestic shipyards. Huntington Ingalls and HD Hyundai Heavy have since signed a Memorandum of Understanding (MOU) “to collaborate on accelerating ship production in support of defense and commercial shipbuilding projects” as it further positions itself to be a beneficiary of U.S. industrial revitalization. Since 2000, Philly Shipyard has delivered approximately 50% of all large oceangoing, commercial, Jones Act-compliant vessels. With its history of delivering naval systems and ships, Hanwha will seek to position itself to compete for both commercial and naval contracts. While Hanwha has proven its success in South Korea, cautionary tales regarding foreign investment in the United States shipbuilding industry, such as Singaporean ST Engineering’s experience, highlight the risks involved. It is essential for Washington to provide a robust framework for domestic shipyards that supports long-term foreign investment in the American shipbuilding sector. Strategic measures, such as the SHIPS for America Act, can help establish a healthy investment environment by offering the right incentives and ensuring the regulatory stability needed for sustained growth and cooperation between foreign investors and U.S. shipyards.
Outside of direct investments into the domestic shipbuilding industry, South Korea and Japan shipyards offer valuable maintenance, repair, and overhaul (MRO) alternatives that can alleviate the strain on U.S. shipyards, particularly in managing extensive maintenance backlogs impacting naval vessels and auxiliaries. In the past, Mitsubishi Heavy Industries has performed maintenance work on U.S. naval vessels at its Yokohama shipyard, and it could continue to do so through future agreements. Over the past year, Hanwha Ocean and HD Hyundai Heavy have secured Master Ship Repair Agreement (MSRA) certification with the U.S. Navy, with Hanwha Ocean successfully winning bids to provide MRO services for the USNS Wally Schirra and USNS Yukon. HD Hyundai Heavy, which has recently designated 4-5 dock spots for MRO contracts, is set to compete for additional work this year. Additionally, midsized shipbuilder HJ Shipbuilding & Construction has formed a task force, led by former Special Forces Korea Commander Chun In-Bum to secure MRSA licensing. With Arizona Senator Mark Kelly declaring South Korea to be the “strongest partner for the U.S.,” these partnerships would enable the U.S. Navy to maintain fleet readiness while alleviating pressure on domestic shipyards. This collaboration would ensure a more responsive and effective naval presence in the Indo-Pacific region, leading to immediate improvements in regional capacity and enhancing the overall operational strength of the U.S. Navy.
The strategic importance of revitalizing the American shipbuilding industry is clear and urgent. By fostering key partnerships with South Korea and Japan—two of the world’s most advanced shipbuilding nations—the United States can strengthen its commercial and naval capabilities, further ensuring the security of strategic maritime interests. U.S. shipbuilding initiatives, including the establishment of the White House Maritime Industrial Base Office and the introduction of the SHIPS for America Act in both houses of Congress, present a unique opportunity to reinvigorate American shipbuilding while incentivizing essential foreign investment. By ensuring a robust, competitive, and strategically integrated shipbuilding sector, the United States can better position itself to maintain sea control by safeguarding SLOCs and maritime chokepoints, ensure the stability of U.S. trade, and reaffirm its status as a global maritime power. These efforts, with South Korea and Japan playing an essential role—whether through foreign direct investment or MRO contracts—will ultimately help the United States meet both its present and future strategic demands, ensuring a resilient and effective commercial and naval force capable of safeguarding U.S. global strategic interests and restoring American sea power.
Julian Guevara is a student at the University of Washington, Seattle and a Henry M. Jackson School of International Studies IPI Cybersecurity Fellow.
The views expressed in this piece are the sole opinions of the author and do not necessarily reflect those of the Center for Maritime Strategy or other institutions listed.
Center for Maritime Strategy
By Julian Guevara
Whoever rules the waves rules the world — Alfred Thayer Mahan, The Influence of Sea Power Upon History, 1890
As global geopolitical instability intensifies, the United States’ ability to project sea power and safeguard critical maritime interests faces mounting pressure. The recent focus on revitalizing the American shipbuilding industry in Washington reflects a need to counter China’s dominance in the global maritime industry and the growing power of the People’s Liberation Army Navy. These developments raise significant concerns about the U.S.’s capacity to maintain sea control, especially as China continues to expand its naval capabilities and assert influence over vital global maritime routes.
Long-term capacity to secure sea lines of communication (SLOCs) and maritime chokepoints—alongside the ability to field both competitive commercial and naval fleets—holds significant strategic implications for United States interests in both peace and wartime. The shipbuilding sector plays a pivotal role, not only in projecting military power but also in ensuring economic stability and maintaining global competitiveness. Without a robust domestic shipbuilding industry, the U.S. risks undermining its ability to secure vital strategic objectives, such as securing freedom of navigation and maintaining credible strategic deterrence. Furthermore, reliance on foreign vessels to carry trade exposes the U.S. to the risks of economic exploitation and coercion, potentially compromising both national security and economic prosperity in an increasingly volatile environment.
Despite a significant decline in shipyard output following the end of World War II, the United States produced a robust 5 percent share of the world’s tonnage well into the 1970s. However, in 1981, a dramatic shift occurred in the commercial shipbuilding landscape with the termination of critical subsidies for the construction, operation, and financing of international-trade ships built in U.S. shipyards. These subsidies were part of Titles V, VI, and XI of the Merchant Marine Act of 1920 (also known as the Jones Act), which had long supported the industry. Once removed, the U.S. commercial shipbuilding sector collapsed, leaving a landscape dominated by a single customer: the U.S. government. This decline not only diminished the U.S. commercial shipbuilding capacity but also triggered a long-term erosion of industrial capability that has directly impacted the naval sector. The result is an ill-equipped shipbuilding industry that has struggled to meet both current and future strategic demands. With restrictions on foreign shipyards for the construction of U.S.-flagged vessels imposed by both the Jones Act and 10 U.S.C. § 8679, the United States today finds itself dependent on an inward-looking, globally uncompetitive industry.
To confront these challenges, the United States must leverage its industrial partnerships with key allies while operating under restrictive federal codes. That is, unless the Jones Act and or 10 U.S.C. § 8679 get waived or repealed, in which case subsequent measures must follow to ensure that the domestic shipbuilding industry, still reliant on their provisions, continues to exist. South Korea and Japan, with their advanced and highly competitive shipbuilding sectors, are critical partners in helping the U.S. reestablish a balanced shipbuilding industrial base. Both nations possess the technological expertise, production capacity, and industrial experience necessary to make a significant impact on the revitalization of this crucial industry. Together, South Korea and Japan account for 43.66%of the global shipbuilding market, with 28.28% for South Korea and 15.38% for Japan. By capitalizing on these partnerships, the U.S. can work towards strengthening its maritime industry, with the aim of creating a stable environment essential for revitalizing a competitive domestic sector that meets both current strategic needs and long-term national security objectives.
Former Secretary of the Navy Carlos Del Toro advocated for a new Maritime Statecraft that embraced a “whole-of-government” approach, complemented by foreign investment and strategic partnerships, to restore American maritime dominance. This strategy aimed to strengthen both the commercial and naval sectors of American shipbuilding, emphasizing the need for global partnerships to counter the rising power of the People’s Republic of China. In this context, integrating South Korean and Japanese shipbuilding firms into the American industrial base is crucial for the success of the nation’s maritime resurgence. Although current U.S. law prohibits the construction of naval vessels abroad, the two countries could play critical roles as key partners in the revitalization of U.S. shipbuilding. By boosting both capacity and global competitiveness, South Korea and Japan would not only enhance the U.S.’s ability to maintain sea control but also potentially draw closer to meeting their burden-sharing requirements.
As home to some of the most technologically-advanced and efficient shipyards in the world, the modern South Korean and Japanese shipbuilding industries were built on the principles of large-scale production, workforce integration, and innovation—originally introduced by American industrialist Henry J. Kaiser—and bolstered by government subsidies. The South Korean and Japanese industries adopted this high-efficiency, high-output model and then refined the established principles with remarkable success, allowing them to dominate the global market through industry giants like HD Hyundai Heavy Industries, Hanwha Ocean, Mitsubishi Heavy Industries, Kawasaki Heavy Industries, and Japan Marine United. While the United States may have forgotten the principles set by the Kaiser shipyards, through foreign investment, South Korean and Japanese expertise can help reintroduce large-scale efficiency and dual-use capacity.
This past December, Hanwha Systems and Hanwha Ocean finalized the joint acquisition of Philly Shipyard. Top executive Mike Smith has pledged to restore the shipyard to the level of prominence it had enjoyed in the 1940s. The joint acquisition of the domestic shipyard garnered widespread praise from government officials and defense experts alike. For an industry that has suffered a dramatic decline, reaching the brink of virtual non-existence over the past generation, this investment is a crucial step forward in the revitalization of the American maritime industry. Already operating one of the world’s largest shipyards on Goeje Island, Hanwha Ocean will be able to leverage sophisticated, cutting-edge technology to expand both commercial and naval shipbuilding capacity at Philly Shipyard. Additionally, with Hanwha Systems’ role as the leader in the production of Korean naval systems and proficiency in developing and implementing advanced technologies, there is great potential for the firm to create synergies between the naval and commercial sectors.
Further investment from South Korean and Japanese companies into U.S. shipbuilding depends on the success of Hanwha Philly Shipyard and the government’s ability to effectively incentivize the industry through appropriate measures, such as regulatory reform. HD Hyundai Heavy, which has been hesitant to directly invest in U.S. shipyards in hopes of potential revisions to U.S. shipbuilding codes, may view the success of Hanwha as a signal to proceed with investments in domestic shipyards. Huntington Ingalls and HD Hyundai Heavy have since signed a Memorandum of Understanding (MOU) “to collaborate on accelerating ship production in support of defense and commercial shipbuilding projects” as it further positions itself to be a beneficiary of U.S. industrial revitalization. Since 2000, Philly Shipyard has delivered approximately 50% of all large oceangoing, commercial, Jones Act-compliant vessels. With its history of delivering naval systems and ships, Hanwha will seek to position itself to compete for both commercial and naval contracts. While Hanwha has proven its success in South Korea, cautionary tales regarding foreign investment in the United States shipbuilding industry, such as Singaporean ST Engineering’s experience, highlight the risks involved. It is essential for Washington to provide a robust framework for domestic shipyards that supports long-term foreign investment in the American shipbuilding sector. Strategic measures, such as the SHIPS for America Act, can help establish a healthy investment environment by offering the right incentives and ensuring the regulatory stability needed for sustained growth and cooperation between foreign investors and U.S. shipyards.
Outside of direct investments into the domestic shipbuilding industry, South Korea and Japan shipyards offer valuable maintenance, repair, and overhaul (MRO) alternatives that can alleviate the strain on U.S. shipyards, particularly in managing extensive maintenance backlogs impacting naval vessels and auxiliaries. In the past, Mitsubishi Heavy Industries has performed maintenance work on U.S. naval vessels at its Yokohama shipyard, and it could continue to do so through future agreements. Over the past year, Hanwha Ocean and HD Hyundai Heavy have secured Master Ship Repair Agreement (MSRA) certification with the U.S. Navy, with Hanwha Ocean successfully winning bids to provide MRO services for the USNS Wally Schirra and USNS Yukon. HD Hyundai Heavy, which has recently designated 4-5 dock spots for MRO contracts, is set to compete for additional work this year. Additionally, midsized shipbuilder HJ Shipbuilding & Construction has formed a task force, led by former Special Forces Korea Commander Chun In-Bum to secure MRSA licensing. With Arizona Senator Mark Kelly declaring South Korea to be the “strongest partner for the U.S.,” these partnerships would enable the U.S. Navy to maintain fleet readiness while alleviating pressure on domestic shipyards. This collaboration would ensure a more responsive and effective naval presence in the Indo-Pacific region, leading to immediate improvements in regional capacity and enhancing the overall operational strength of the U.S. Navy.
The strategic importance of revitalizing the American shipbuilding industry is clear and urgent. By fostering key partnerships with South Korea and Japan—two of the world’s most advanced shipbuilding nations—the United States can strengthen its commercial and naval capabilities, further ensuring the security of strategic maritime interests. U.S. shipbuilding initiatives, including the establishment of the White House Maritime Industrial Base Office and the introduction of the SHIPS for America Act in both houses of Congress, present a unique opportunity to reinvigorate American shipbuilding while incentivizing essential foreign investment. By ensuring a robust, competitive, and strategically integrated shipbuilding sector, the United States can better position itself to maintain sea control by safeguarding SLOCs and maritime chokepoints, ensure the stability of U.S. trade, and reaffirm its status as a global maritime power. These efforts, with South Korea and Japan playing an essential role—whether through foreign direct investment or MRO contracts—will ultimately help the United States meet both its present and future strategic demands, ensuring a resilient and effective commercial and naval force capable of safeguarding U.S. global strategic interests and restoring American sea power.
Julian Guevara is a student at the University of Washington, Seattle and a Henry M. Jackson School of International Studies IPI Cybersecurity Fellow.
The views expressed in this piece are the sole opinions of the author and do not necessarily reflect those of the Center for Maritime Strategy or other institutions listed.