November 21, 2024

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Hanwha Group Chairman Kim Seung-youn (left) and HD Hyundai Executive Vice Chairman Chung Ki-sun (Hanwha Group, HD Hyundai)

As Korean industries brace for a second nonconsecutive term of US President-elect Donald Trump, leaders of Korean defense and shipbuilding companies – namely Hanwha Group and HD Hyundai – are enhancing readiness to seize new growth opportunities.

Hanwha Group Chairman Kim Seung-youn, in the process of passing the leadership baton to his sons, took on the role of chairman of Hanwha Aerospace, a key defense subsidiary of the group, last week. The move solidifies Kim's leadership in five key Hanwha companies, including Hanwha Solution, Hanwha System and Hanwha Vision.

This strategic decision reflects Kim’s commitment to directly steering the defense sector, especially in light of Trump’s recent conversation with President Yoon Suk Yeol highlighting the need for further cooperation with South Korea’s marine and defense industries.

“Hanwha Aerospace is actively exploring entry into the US, particularly in supplying artillery weapons like the K-9 self-propelled howitzer, following its export deal with Poland,” said a source familiar with the matter, on condition of anonymity. "Kim's close ties with Trump are expected to expedite this US venture."

Kim’s close connections to Trump are partly attributed to his 40-year friendship with Edwin Feulner, founder of The Heritage Foundation, a vastly influential conservative think tank in the US. Notably, Kim was the only Korean chaebol leader invited to Trump's inauguration in January 2017. After Kim was not able to participate in the event due to health issues, Feulner made a personal visit to Hanwha headquarters in Seoul later that year.

Hanwha Ocean, the group’s shipbuilding arm, already has business agreements with the US, recently forging a deal for the maintenance of the US Navy Ship Yukon, part of the US Navy’s 7th Fleet. This marks a second milestone, after becoming the first Korean firm to secure a maintenance, repair and operations, or MRO, contract for the USNS Wally Schirra. The acquisition of the Philly Shipyard in Philadelphia in June further strengthened the strategic foothold in the US.

Chung Ki-sun, CEO of HD Hyundai, has recently been promoted to executive vice chairman of the Korean shipbuilding giant. As the eldest son of Chung Mong-joon, the largest shareholder of HD Hyundai, Chung doubles as CEO of HD Korea Shipbuilding & Offshore Engineering, the intermediary for the company’s shipbuilding operations.

Chung’s promotion signifies a strategic shift toward an owner-managed business model to navigate global challenges in Trump’s second term. HD Hyundai is currently led by Chair Kwon Oh-gap.

Expanding its footprint in the US MRO market, HD Hyundai signed its first maintenance agreement in July this year with the US Navy, securing participation in upcoming MRO bids for naval auxiliary and combat ships over the next five years.

In addition, HD Korea Shipbuilding & Offshore Engineering is laying the groundwork to make a foray into the US market through educational partnerships with Seoul National University and the University of Michigan. This initiative comes after the request of US Navy Secretary Carlos Del Toro, who visited the company’s Ulsan headquarters to observe its shipbuilding prowess.

“Unlike Korean electric vehicle and battery companies, defense and shipbuilding firms are well positioned to capitalize on emerging opportunities in the Trump era,” said Hwang Wong-sik, a business engineering professor at Sejong University. “In particular, Trump is committed to boosting competitiveness in shipbuilding and maintenance, with China dominating the industry.”

By Byun Hye-jin (hyejin2@heraldcorp.com)