Park Jae-hyuk is a seasoned journalist who has provided comprehensive coverage of South Korea's corporate dynamics, economic policies, industry challenges and the global positioning of Korean companies. Based on the articles he has written since joining The Korea Times in 2016, his investigative approach has helped readers understand corporate governance, economic trends and business strategies shaping South Korea’s economy.
US labor shortage seen as obstacle to Philly Shipyard normalization
Philly Shipyard in Philadelphia / Courtesy of Hanwha Group
By Park Jae-hyuk
Analysts share hopes and fears over Hanwha's revival plan
Hanwha Ocean's recent invitation of domestic securities analysts to its Philly Shipyard has sparked both optimism and skepticism over the Korean shipbuilder's efforts to revive the money-losing facility in Philadelphia.
While analysts anticipate Hanwha will benefit from a surge in orders driven by U.S. President Donald Trump's push to counter China's maritime rise by bolstering the American shipbuilding sector, they also questioned whether it will be feasible to secure enough labor in one of the world's highest-paying countries.
Shinyoung Securities analyst Eom Kyung-ah pointed out that securing the workforce will be key for Hanwha to meet its goal of increasing Philly Shipyard's revenue to $4 billion by 2035 from $368 million in 2024 by expanding annual capacity to up to 10 vessels from the current 1 to 1.5.
"In Korea, shipbuilders and their suppliers are concentrated in South Gyeongsang Province, making it easier for workers to transfer to rival companies," she said. "However, Philly Shipyard may have difficulty securing a sufficient workforce."
Lee Han-gyeol, an analyst at Kiwoom Securities, also highlighted the need for additional workforce to support the shipyard's planned tenfold capacity increase.
As the shipyard has already experienced operational delays due to staffing shortages, Hanwha aims to double the workforce at Philly Shipyard to 3,000 by 2035, up from the current 1,500.
"Philly Shipyard's productivity and profitability depend substantially on its ability to attract and retain skilled workers at forecasted rates," the U.S. shipyard said in its third-quarter earnings report last November. "Due to COVID-driven labor shortages, the shipyard has experienced schedule impacts, productivity loss and increased costs."
Both Eom and Lee noted that Philly Shipyard may seek to recruit workers from nearby populous areas such as Philadelphia and New Jersey.
"Its apprenticeship program is expected to help the shipyard recruit approximately 180 to 200 new local workers every year," Lee said.
It remains unclear whether the shipyard will be able to rely on low-paid migrant labor, as Korean shipyards have done in response to a trend of younger domestic jobseekers shunning physically demanding and hazardous roles.
In response to ongoing labor concerns, Hanwha also plans to automate certain operations at Philly Shipyard to improve efficiency. Industry officials estimate the Korean company will invest at least 100 billion won ($73 million) to meet this objective.