New Hanwha Defense USA exec sets sights on Navy contracts for Philly Shipyard

WASHINGTON — The new chief executive of the US unit of South Korean industrial conglomerate Hanwha Group wants to restore naval shipbuilding at Philly Shipyard, once the acquisition of that business is finalized this fall.

Mike Smith, who took the top job at Hanwha Defense USA in August, acknowledged that winning US Navy shipbuilding contracts is “going to be challenging” for the shipyard, which currently builds ships for the Department of Transportation’s Maritime Administration as well as commercial customers.

“I don’t see us building destroyers in Philadelphia,” he said during a briefing with reporters today. “I do see us building the fleet the Navy needs next.”

That could include constructing large or medium-sized unmanned surface vessels, as well as “specialty ships” like icebreakers, replenishment oilers, naval training vessels and other auxiliary ships, Smith said.

Beyond the construction of new ships, the company could also pursue opportunities to build modules — essentially a smaller section of a ship — that would be incorporated into a Navy vessel during final assembly at a prime contractor’s shipyard, he said.

Smith said the company isn’t focused on one specific shipbuilding program, noting that many programs need “relief valves.”

“I think the smartest thing for us would be to be flexible and support where the need is greatest,” he said. “So it could be Columbia [class ballistic missile submarines], it could be Virginia [class attack submarines], it could be Ford [class aircraft carriers], could be the [Arleigh Burke-class] destroyer program.

“I don’t know about the [Constellation-class] frigate. I know they’re still looking for a second source, or second production yard. You want to be positioned to give the Navy as many options as possible,” he said.

The bigger issue, Smith said, is ensuring Philly Shipyard has the necessary facilities and infrastructure to take on work as it becomes available.

“We have a couple consultants who are saying the opportunities are a lot closer than we might be ready for,” he added.

Another near-term opportunity is the maintenance, overhaul and repair of existing ships, which Smith said could help “relieve some of the under-capacity that you have throughout the East Coast.”

Hanwha Systems and its shipbuilding arm Hanwha Ocean announced plans to buy Norwegian-owned Philly Shipyard in June in a $100 million deal, which is set to close by the end of 2024, pending regulatory approvals.

At the time, Navy Secretary Carlos Del Toro called the agreement a “game-changing milestone in our new Maritime Statecraft” that could shake up the competitive landscape among US shipbuilders.

Bryan Clark, a fellow at the Hudson Institute, told Breaking Defense in July that Philly Shipyard belongs to a group of commercial shipbuilders that constructs what he called the “Jones Act fleet,” named for the US law stating that goods shipped between American ports must be transported on US-built vessels and operated by American crews.

Because work on these ships comes in waves, Clark predicted that Hanwha would position Philly Shipyard to take on work building Navy ships during an upcoming dearth of contracts for Jones Act ships. Specifically, he pointed to the Ready Reserve Fleet, a group of auxiliary ships the Navy and other government agencies rely upon for non-combat tasks, as a ripe opportunity for the shipbuilder.

Justin Katz contributed to this report.