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Philly Shipyard, bought last year by South Korean naval giant Hanwha Ocean, was already central to Trump’s bold plans to revitalize American shipbuilding and narrow a yawning maritime gap with China. Now, the prospect of also building a nuclear-powered submarine in Philadelphia has ratcheted up the ambition—and difficulty—even further. When Hanwha bought Philly Shipyard for $100 million, the U.S. site was losing money. Today, it is central to South Korea’s $150 billion pledge to help Trump revive American shipbuilding—one of the most ambitious industrial turnaround projects in the U.S. in decades. Hanwha plans to pump $5 billion into the site, hoping to rebuild a shipbuilding workforce and supply ecosystem that has largely shriveled away. America currently makes less than 1% of the world’s ships. China is by far the world’s largest producer, with more than 230 times the shipping capacity and far more merchant ships than the U.S. Trump’s dream of resuscitating American shipbuilding relies heavily on South Korean help. As China’s most formidable rival in shipbuilding, South Korea, a close Washington ally, saw potential maritime partnerships as decisive during trade talks with the U.S. During the negotiations, Seoul officials even gave their U.S. counterparts red hats with the slogan: Make America Shipbuilding Great Again. The joint U.S.-Korean projects so far include repairing U.S. military vessels, helping design Navy supply ships and assisting American firms to expand capacity, train workers and make their production more efficient. But Philly Shipyard is the most crucial element. If successful, it could serve as a model for other struggling American shipyards. But that will require political staying power, a big influx of workers and deep pockets. Philly Shipyard sits on a site that can trace its origins to before the Declaration of Independence and was integral to the creation of the U.S. Navy. But in recent decades, Philadelphia lost its former glory, as the U.S. built fewer vessels for itself and foreign countries muscled into the ship market with lower costs and eventually better technology. Now, Philly Shipyard churns out a single commercial vessel a year—roughly what Hanwha produces in a week in Korea. Hanwha wants to increase Philly Shipyard’s annual production up to 20 ships a year, expand the workforce by thousands and add new heavy cranes, robotics and training sites. The goal is to bring some of the South Korean approach to Philadelphia, said David Kim, a Texan who moved over from Hanwha’s defense affiliate to become Philly Shipyard’s new chief executive. “We’ve got to change," he said. “We can’t continue to do things the way we’ve been doing them." Helping hand Hanwha has never built a nuclear-powered submarine, and the U.S. has closely guarded such nuclear technology, even from allies. In the days since Trump’s announcement, top Seoul officials and lawmakers have questioned if Philly Shipyard is up to the task—and suggested the submarine could be built more quickly in South Korea. For a nuclear-powered sub, which is destined for South Korea’s navy, the Philly Shipyard is seen as having “significant shortcomings in terms of technological capabilities, workforce and facilities," Defense Minister Ahn Gyu-back said. He called localized production a reasonable option. “With new technologies, investment in American workers, and deep partnership with Korea, Philly Shipyard can again become a center for advanced commercial and naval construction," said Alex Wong, the company’s chief strategy officer. American law forbids the construction of U.S. military or commercial vessels outside the U.S. Relaxing some of those impediments for trusted partners like South Korea or Japan was part of a House bill proposed in August. “Why shouldn’t we help each other?" said Rep. Ed Case, a Democrat from Hawaii, one of the bill’s sponsors. On a recent morning at Philly Shipyard, a hulking “Goliath" crane towered over the site, sporting a fresh coat of Hanwha orange paint. A U.S. flag flapped on a pole just above a Hanwha company flag. Roughly 100 of the shipyard’s employees, or less than 10% of the total workforce, is from Korea. To crank up production, both of Philly Shipyard’s dry docks will be used for new builds, rather than reserving one for final outfitting and commissioning. Hanwha will add more paint and blast shops and will expand the training site to handle the influx of new recruits. To ensure capacity for new projects, Hanwha is exploring opportunities to expand operations in the area around Philly Shipyard, according to a person familiar with the matter. The company has an internal target, within a decade, of making two to three nuclear-powered submarines annually in the U.S., the person added. Philly Shipyard got a big assist over the summer when the shipping subsidiary of Hanwha placed an order for a dozen medium-range tankers and liquefied-natural-gas vessels—the biggest single purchase in the U.S. in decades. The first ship has a target delivery of 2028. “The only way we can build ships fast enough is to partner with a leading shipbuilding nation like Korea," said Illinois Sen. Tammy Duckworth, a Democrat, who met President Lee Jae Myung and shipbuilding officials in South Korea earlier this year. More opportunity The U.S. shipbuilding rebound will depend on young Americans like Eion Phillips, a 26-year-old from Williamstown, N.J. Phillips has shipbuilding in his blood—his great-grandfather worked at the Philadelphia Naval Shipyard starting from the 1950s and later rose to foreman. But until a friend mentioned Hanwha’s hiring spree this spring, Phillips had never considered a future in the industry, having previously worked as a mailman and a commercial landscaper. He recently joined the company—and encouraged two of his friends to apply for jobs there as well. “It’s exciting to know there’s going to be more to do, more opportunity, more places to expand and even grow," Phillips said. This year, following the Hanwha acquisition, applicants for the company’s multiyear apprenticeship program have tripled. Hundreds of people now seek one of the 25 available slots for each incoming group. The roles lead to union-scale jobs and have a starting annual salary of roughly $48,000. More than 120 apprentices like Phillips will enter Hanwha this year, rising up to 500 annually in future years, said Megan Heileman, who oversees Hanwha’s Philly Shipyard apprenticeship program. “A lot of these candidates have bachelor’s or master’s degrees," she said. “They’re just looking for something different." At his inaugural address in January inside a large warehouse, Kim, the Philly Shipyard CEO, told employees, “We are looking to invest in the facilities, as well as the people." As a Texan, Kim told the more than 1,000 gathered that day, he rooted for the Dallas Cowboys football team, a divisional rival of the hometown Philadelphia Eagles—a remark that drew some good-natured boos from the crowd. He quickly explained that the mascot for the Hanwha baseball team in South Korea is also an eagle. The Philly Shipyard’s softball squad adopted the new name of Hanwha Eagles, and Kim sometimes sees employees walking around in their team T-shirts. His allegiance to the Cowboys, however, still draws the occasional joke. “They still hold that against me," he said. Write to Timothy W. Martin at Timothy.Martin@wsj.com
