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US unions urge SHIPS Act, boosting prospects for Korean shipbuilders
Ships are under construction at HD Hyundai Heavy Industries' shipyard in Ulsan in this undated photo. Courtesy of HD Hyundai
By Park Jae-hyuk
HD Hyundai expected to secure more orders for US commercial, naval vessels
Cautious optimism is growing that Korean shipbuilders may win orders from the United States for commercial and naval vessels in the near future, as U.S. unions once again urged their country's lawmakers to pass a bill that would allow certain foreign-built ships to be treated as U.S.-built vessels.
Industry officials view HD Hyundai as the top beneficiary of the proposed bill, given its operations of multiple shipyards across the globe and the planned merger of its two shipbuilding subsidiaries.
Multiple U.S. news outlets reported that five U.S. labor unions, including the United Steelworkers and the International Brotherhood of Electrical Workers, sent a letter to U.S. lawmakers Tuesday (local time), as there has yet to be any major action to pass the Shipbuilding and Harbor Infrastructure for Prosperity and Security (SHIPS) for America Act, despite strong bipartisan support.
"We urge you to support the SHIPS for America Act and to schedule action," the unions said in the letter, according to reports.
In June, six U.S. unions sent a similar letter to U.S. senators and representatives.
"We support the SHIPS for America Act and will work for its swift passage. This legislation is vital to the future of the industry and the workers we represent," they said in the letter sent on June 25. "We believe that with the right policies in place, U.S. shipbuilding and maritime capabilities can thrive and the American people can benefit from a newly restored position of American maritime leadership."
The SHIPS for America Act allows for the temporary inclusion of foreign-built vessels in the U.S. commercial fleet to meet strategic sealift needs, with the goal of replacing them with U.S.-built vessels over time. Under the law, foreign shipbuilders can circumvent the Jones Act, a federal law requiring that all goods transported by water between two U.S. ports must be carried on vessels that are U.S.-built, U.S.-owned, U.S.-flagged and U.S.-crewed.
With projections that it will take time to renovate obsolete U.S. shipyards before they can resume commercial vessel construction, the U.S. is likely to rely on shipyards in Korea and other allied nations for a period in order to revitalize its shipbuilding industry.
"The SHIPS for America Act can allow world-class Korean shipbuilders to secure more orders," a shipbuilding industry official said. "Considering [the] U.S. move to depend on [the] shipyards of its allies, Korean firms are also likely to enjoy benefits."
If U.S. lawmakers also find routes for allied foreign shipyards to circumvent the Byrnes-Tollefson Amendment, Korean shipbuilders could even build U.S. naval vessels, going beyond the current maintenance, repair and overhaul services.
Citing the upcoming merger of HD Hyundai Heavy Industries (HHI) and HD Hyundai Mipo, industry officials said HD Hyundai would enjoy major benefits in that case.
Last month, HD Hyundai announced plans to merge the two Ulsan-based shipbuilding subsidiaries.
With HD HHI's proven record in naval exports and HD Hyundai Mipo's docks and facilities suited for warship construction, the combined entity is expected to boost its capacity for maintaining U.S. naval vessels while constructing warships for various nations.