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.
Can Korean shipbuilders end disappointing streak with bid for Canadian subs?
Prime Minister Kim Min-seok, right, shakes hands with Canadian Prime Minister Mark Carney after inspecting the ROKS Jang Yeong-sil submarine at Hanwha Ocean's shipyard on Geoje Island, South Gyeongsang Province, Oct. 30. Yonhap
By Park Jae-hyuk
Korea continues to lose bids for major warship projects
Uncertainty is growing over Korea’s ambition to become a powerhouse in naval vessel exports, as the nation’s shipbuilders have repeatedly failed to win significant warship contracts from Western nations.
Amid heightened entry barriers to NATO countries and other key U.S. allies, Korean shipbuilders are now pinning their hopes on Canada’s upcoming order for 12 submarines worth 60 billion Canadian dollars ($43 billion), expected next year.
On Wednesday (local time), Poland announced that Sweden’s Saab was selected for the Orka Project to supply three new 3,000-ton submarines aimed at strengthening its defenses in the Baltic Sea. The project is valued at up to 20 billion Polish zloty, including maintenance, repair and overhaul work.
Despite Seoul’s offer to transfer the 1,200-ton ROKS Jang Bogo submarine to Warsaw free of charge once it is decommissioned later this year, Hanwha Ocean and HD Hyundai Heavy Industries were eliminated from the competition.
“We respect Poland’s decision,” the presidential office said. “We will continue to strengthen cooperation with Poland in the defense sector.”
Models of naval vessels are displayed at Hanwha's exhibition booth for the International Defence Industry Exhibition in Kielce, Poland, Sept. 2. Courtesy of Hanwha Aerospace
Before the two Korean shipbuilders agreed earlier this year to let Hanwha take the lead in the Orka Project, they participated separately in the bidding process.
After their rivalry was cited as a key reason for their loss to Japan’s Mitsubishi Heavy Industries for an Australian Navy frigate project last year, the Defense Acquisition Program Administration recommended closer cooperation on naval exports. As a result, Hanwha was assigned to lead submarine exports, while HD Hyundai took charge of surface ship exports.
Moon Keun-sik, a professor at Hanyang University’s Graduate School of Public Policy and a former Republic of Korea Navy submarine commander, said Korea may face difficulty competing with Germany in the Canadian Patrol Submarine Project (CPSP).
Germany’s TKMS, which was also unexpectedly eliminated from the Orka Project, made the shortlist for the CPSP along with the Hanwha-HD Hyundai consortium. TKMS has reportedly proposed a “gap-filler” approach, offering Canada an existing, ready-made submarine for early delivery to bridge the gap between its aging Victoria-class fleet and future vessels.
“Although Korea and Germany’s submarines are superior to Sweden’s, Poland likely prioritized industrial and military cooperation with Sweden, given its proximity to Russia,” Moon said. “Germany may have an edge over Korea in the Canadian bid as NATO members tighten defense collaboration.”
Moon advised the Korean government and shipbuilders to appeal to Canada by offering investments in Canadian industries. He added that Korea’s operational submarines could serve as another competitive advantage.
“The submarine proposed by Germany is only on paper. They have not built one over 2,000 tons since World War II,” Moon said. “Korea could surpass Germany since it already operates tested and proven submarines.”