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International Cooperation Department
Tel.: (+86-21) 65853850-8034
Fax: (+86-21) 65373125
E-mail: ICDept@sisi-smu.org
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International Shipping |
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| S. Korea Shipyards Soar as U.S. Bill Eyes Navy, USCG Ship Construction Options |
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Date:2025-02-12 Readers:
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Shares in South Korean shipbuilders HD Hyundai Heavy Industries and Hanwha Ocean rose more than 15% and 16%, respectively, today, after two U.S. senators debuted a bill to allow the U.S. Navy to build naval vessels in a shipyard located in a U.S. allied country.
Senators Mike Lee (R-UT) and John Curtis (R-UT) have introduced two new bills aimed at enhancing the readiness and capabilities of the United States Navy and Coast Guard. The "Ensuring Naval Readiness Act" and the "Ensuring Coast Guard Readiness Act" seek to modernize shipbuilding processes and strengthen partnerships with allied nations to expedite maritime procurement.
“Both bills are about leveraging our diplomatic relationships and the comparative advantages of our allies to ensure America remains at the forefront of maritime security,” said Senator Lee. “By modernizing our approach to shipbuilding and repair, we can enhance our readiness and maintain our military edge, all while ensuring fiscal responsibility.”
The "Ensuring Naval Readiness Act" addresses the Navy's goal of expanding to a 355-ship fleet, as recommended by the Force Structure Assessment. The legislation proposes allowing ship construction and component manufacturing in shipyards of NATO member countries and Indo-Pacific allies, aiming to reduce costs and accelerate delivery times.
Meanwhile, the "Ensuring Coast Guard Readiness Act" focuses on improving the procurement of Coast Guard vessels. The bill permits partnerships with allied shipyards to expedite vessel construction cost-effectively, while ensuring that critical components are sourced from countries not influenced by adversarial powers, notably excluding China.
“These common-sense measures will strengthen America’s Navy and Coast Guard while reinforcing alliances with trusted partners,” added Senator Curtis. “This legislation ensures we remain prepared to meet national security threats efficiently and effectively.”
The bills underscore a strategic shift in U.S. maritime policy, emphasizing global collaboration to enhance national security while maintaining cost-efficiency.
The full test of the Bills are found below:
Ensuring Naval Readiness Act
Since 2016, the Force Structure Assessment for the United States Navy has projected a force of 355 ships will be minimally necessary to ensure a ready and capable Navy.1 Currently the U.S. Navy operates with 291 ships, with shipbuilding plans now extending into the 2050s.2
Controlling acquisition and construction costs while ensuring timely delivery of a quality product is essential for the United States Navy’s ability to protect and defend the United States. The Navy currently has three options for procurement of ships: 1) Build new ships domestically, 2) Refurbish old ships, or 3) Purchase a limited number of used foreign-built ships with authorization from Congress.
Repairing older ships in the fleet, often beyond a 60-year lifecycle, not only puts the U.S. at a disadvantage against high-tech adversaries, but the Navy found repairing ships beyond lifecycle is three times more expensive and takes double the projected time to complete.3 The cost to build a new ship domestically is even more expensive. Former Transportation Command General Steve Lyons stated, “used ships vary, $20 million-$60 million depending on the age, and a new ship is 26 times that.”4
Congress must provide a path for long-term, fiscally responsible naval vessel procurement.
One option is to allow some or all construction of a vessel in the shipyards of trusted allies. This would mitigate security risks that could be raised by building some or all of a vessel in a foreign shipyard. This does not mean that the Navy would have to build a vessel (or a component) in a foreign shipyard, rather it would give the Navy the option to procure valuable equipment at lower rates, increasing readiness and ensuring security of our nation’s naval systems.
Bill Specifics
• Allows the U.S. Navy to construct a vessel or a major component of the hull or superstructure
in a foreign shipyard if:
o The shipyard is located in a NATO member country or in an Indo-Pacific country with which the U.S. has a current mutual defense agreement AND
o The cost is cheaper in such shipyard than it would otherwise be in a domestic shipyard
• Ensures shipyard security by requiring the Secretary of the Navy to certify, prior to construction of a U.S. vessel, that the foreign shipyard is not owned or operated by a Chinese company or multinational domiciled in China
Ensuring Coast Guard Readiness Act
U.S. Coast Guard vessels support a variety of mission demands, including maritime border security, enabling U.S. economic activity, defending U.S. sovereignty in the Arctic, maintaining open waterways in the Great Lakes, monitoring coastal traffic, and supporting scientific research.
Current law prohibits the U.S. Coast Guard from constructing a vessel or a major component of the hull or superstructure in a foreign shipyard, leaving the construction to the small and inexperienced domestic shipyards. To enhance our maritime capabilities, the United States should consider partnering with NATO allies and benefitting from these countries’ comparative advantage in shipbuilding.1
In addition, these shipyards have the ability to deliver particular vessels much faster than domestic shipyards – which can take three to four years to complete. New ships are incredibly expensive to build domestically, with icebreaker construction estimated at $1.2 B. Finland, the world leader in ice breaker construction, can build an ice breaker for $150 M in under 2 years. Foreign shipyards can build icebreakers for a fraction of the cost, in half the time.
Allowing the Coast Guard and Navy to partner with allied NATO shipyards would help get Coast Guard ships into American waters quicker to fulfill mission demands without generating security concerns, while making the U.S. more economically competitive.2
Senator Lee’s Ensuring Coast Guard Readiness Act allows the Coast Guard to construct a vessel or a major component of the hull or superstructure in a foreign shipyard if:
• The shipyard is located in a NATO country or in an Indo-Pacific country with which the U.S. has a current mutual defense agreement;
• The cost is cheaper in such shipyard than would otherwise be in a domestic shipyard;
• The Commandant of the Coast Guard to certifies, prior to construction of a U.S. vessel, that the foreign shipyard is not owned or operated by a Chinese company or multinational domiciled in China
https://www.marinelink.com/news/s-korea-shipyards-soar-us-bill-eyes-navy-522217
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