Korea’s Hanwha is buying Philly Shipyard from Europe’s Aker for $100 million
Deal clinched as U.S. prepares to buy more ships from American yards, seeks investors from allies
The South Korea-based Hanwha industrial group says it has agreed to pay $100 million to acquire Philly Shipyard from the Norway-based Aker Group and other shareholders.
Hanwha and Aker had been reported in talks since at least last fall to sell the yard, a partly state-financed commercial facility on the site of a historic U.S. Navy shipbuilding center that closed in 1996. The Navy still employs more than 4,000 engineers and other professionals in other areas of the former Philadelphia Naval Base.
“The union looks forward to a good relationship with the new owners,” said Lou Agre, head of the labor union group that represents around 1,000 workers at the shipyard. He noted that the yard has been busy and is trying to interest apprentices in a shipbuilding career.
The U.S. shipbuilding industry, which is higher cost compared to East Asian rivals, remains precarious: The neighboring Philadelphia Ship Repair closed down in April, laying off members of the Machinists union, shortly after completing work on the museum battleship USS New Jersey.
Port sources have said they expect Joseph Rhoads Co., which operates a neighboring dry dock, to take over the ship repair site, but Rhoads has not confirmed its plans.
Another Korean company, HD Hyundai Heavy Industries Inc., in April signed a deal to cooperate with the Philly Shipyard in seeking U.S. Navy and other government contracts.
The U.S. has appealed to South Korea and other allies to invest in rebuilding strategic U.S. industries such as shipbuilding, as China upgrades its rival navy and builds more ships, said Susan Howland, a Philadelphia port consultant. “The secretary of the Navy has told everybody in shipbuilding they need to collaborate” with investors from allied countries, she noted.
Hours after the announcement Thursday, U.S. Secretary of the Navy Carlos Del Toro congratulated Hanwha on buying Philly Shipbuilding, predicting the new owner “will change the competitive U.S. shipbuilding landscape.”
In recent years, the Philly Shipyard has been kept busy building tankers, container ships and other commercial vessels for use between U.S. ports as required under the federal Jones Act.
Howland said the Philadelphia yard is “one of the most advanced in the country,” thanks to federal, military, and state investments in the Philadelphia Shipyard Development Corp., which oversaw redevelopment of the yard. “The fact the Philly shipyard has recently delivered vessels for the U.S. Maritime Administration,” which is expected to order a range of updated logistics and support vessels in the near future, made the yard especially attractive.
Two Hanwha companies are jointly acquiring the yard: Hanwha Systems, which focuses on military electronics and information technology, and Hanwha Ocean, which builds commercial vessels. The Hanwha group seeks “to expand their global defense and shipbuilding activities,” it said in a statement.
“We look forward to leveraging our shipbuilding and manufacturing knowhow in continuing the success of Philly Shipyard as it meets the expanding needs of the U.S. for decades to come,” Hyek-woong Kwon, chief executive of Hanwha Ocean, said in a statement.
Hanwha Systems looks forward to deploying its “state of the art naval systems” and technologies at the Philadelphia yard, added Charlie S.C. Eoh, Hanwha Systems chairman.
Hanwha Systems is developing naval drones and supporting radar and sensor systems and plans to also automate surface and underwater craft for the commercial markets. Hanwha Ocean says it makes ships “ranging from ammonia and LNG carriers, to destroyers, submarines and frigates.”
“After two decades of stewardship, it is with great honor that we transition the ownership from Aker to Hanwha,” said Kristian Røkke, chairman of Philly Shipyard ASA, in a statement. Hanwha’s resources, he added, “will enable Philly Shipyard to realize a grander vision for its employees and customers.”