HD Hyundai (267250.KS) is building a shipyard in the United States with Kiewit, a U.S. infrastructure company. HD Hyundai has presented the construction of a new yard as what sets it apart from Hanwha Group, which acquired the Philly Shipyard, but analysts say the move is in fact the result of a failed attempt to buy an existing yard. The investment site and size remain undecided, leading some to view the announcement as still largely symbolic.
HD Hyundai said on the 23rd that it signed a contract with Kiewit, the largest U.S. construction and engineering infrastructure firm, on the 22nd to establish a shipbuilding joint venture. The two companies formed a strategic partnership in July and have since pursued cooperation on jointly building vessels in the United States and producing ship blocks and modules.
The joint venture is named HD KIEWIT SHIPBUILDING. An HD Hyundai official said the name "reflects our determination to build the finest shipyard, one that sets a new standard for U.S. shipbuilding by combining HD Hyundai's world-class technology and shipyard operating expertise with Kiewit's large-scale fabrication and construction capabilities."
HD Hyundai is placing particular emphasis on the fact that this is a new shipyard project rather than the acquisition and restart of an aging yard. The company expects a new yard to accelerate the expansion of shipbuilding capacity in the United States and the creation of a shipbuilding ecosystem, while supporting the rebuilding and strengthening of the U.S. shipbuilding industry. HD Hyundai projects local employment of about 3,000 people once the new yard is operating.
Some interpret the decision to build a new yard as a last resort chosen after the company failed to acquire an existing one. HD Hyundai had been reviewing the purchase of a U.S. shipyard in line with MASGA, the Korea-U.S. cooperation project for rebuilding American shipbuilding under the Trump administration. Asked last October about acquiring a U.S. shipyard, HD Hyundai Chairman Chung Ki-sun said the company was "reviewing various options" and that acquiring a shipyard was "among them."
In August last year, HD Hyundai signed a memorandum of understanding with Cerberus Capital Management and the Korea Development Bank to create a Korea-U.S. joint investment program for the shipbuilding industry, including the acquisition of a U.S. shipyard. The company was reported to have narrowed its candidates to two or three U.S. yards and to be in acquisition talks through August of this year. Sites under consideration included locations around San Diego, home of the U.S. Navy's Pacific Fleet, and along the Gulf of Mexico in Texas.
HD Hyundai's decision to abandon an acquisition is seen as a result of prices it could not meet. Shipyard prices in the United States soared on the strength of the U.S. government's push behind the MASGA project and investment demand from Korean companies. The need for additional spending on modernizing facilities and improving productivity after buying aging assets may also have been a factor.
HD Hyundai ultimately chose to build a smart shipyard tailored to its own production system. The new yard will apply the "future shipyard" model the company is pursuing, along with digital production technology. The plan is to build a yard where every stage from design to production is run on data, using advanced technologies such as digital twins, automated production systems and robotic welding. This can improve productivity, quality and safety while easing a shortage of skilled workers.
Still, the announcement may remain largely symbolic for now. HD Hyundai set a target of breaking ground next year and beginning full operations in 2029, but did not disclose the investment site or size. Given that U.S. President Donald Trump's term ends in January 2029, operations within his term would be difficult. An HD Hyundai official said the company is "at a stage where the specific location cannot be disclosed, as procedures such as discussions with state governments and industrial complexes remain."