"Korea views South Korea-U.S. shipbuilding cooperation as an area that elevates the alliance," Daisy Draut-Behares, a researcher at the Carnegie Endowment for International Peace, said on Oct. 26 local time at a Stimson Center seminar in Washington, D.C., on "South Korea-U.S. Shipbuilding Cooperation." "The United States, by contrast, may see it as a matter of controlled risk management," she said. "It has identified a strategic sector where it has fallen behind and found a very important and powerful ally that can help manage certain risks."
"The biggest issue for us right now is how to manage these expectations and how to handle the disappointment that could arise on both sides," Behares said. Her remarks suggest that while South Korea seeks to use shipbuilding cooperation to expand the longstanding "security alliance" into a shipbuilding, industrial and economic alliance, the United States views it simply as a means of rebuilding its shipbuilding industry. The difference in perspective could eventually become a problem, meaning both sides need to consider how to narrow it.
South Korean shipbuilding executives attending the event agreed that, from a medium- to long-term perspective, stable U.S. vessel orders are essential to bilateral shipbuilding cooperation and additional investment in the United States. "The apprenticeship program at Hanwha Philly Shipyard is drawing more applicants than available slots. There is plenty of manpower," said Lawrence Larry Ryder, senior vice president at Hanwha Defense USA. "The challenge is that sustained demand must be maintained."
Hong Seok-hwan, head of HD Hyundai's U.S. unit, which recently announced plans to build a new shipyard in the United States, also stressed: "For more investment in the U.S. and faster South Korea-U.S. shipbuilding cooperation, visibility on long-term demand must improve." He added: "Shipbuilding is a highly capital-intensive, long-term business. We need sufficient confidence that predictable and sustainable policy and procurement systems are in place over a horizon of at least 30 years."
Eric Labs, a senior analyst at the Congressional Budget Office, said wryly, "I'm not sure how the U.S. can revive its commercial shipbuilding capacity without reintroducing subsidy policies similar to those of the past." He noted that the shipbuilder subsidy program in place during the 1960s and 1970s was abolished under the Ronald Reagan administration.
