How the World’s Largest Shipyard Is Challenging China’s Dominance | WSJ

(suspenseful music) - [Timothy] This is Jeongjo the Great, a next generation warship made in South Korea. (speaker speaking in foreign language) (cannon popping) (alarm buzzing) - It's one of the most powerful of its kind, and it cost only $600 million to build. A similar ship would cost almost a billion dollars more to construct in the US.

The cost of building a warship in the US has soared, while production times have slowed to a crawl after decades of de-industrialization left America with only a handful of shipyards. Meanwhile, its strategic rival, China, has turned out hundreds of new ships, now commanding the world's largest and fastest growing navy. Now, the US is looking to Asia's shipyards to help close that gap as the two superpowers move closer to a potential conflict.

(suspenseful music) In the 1970s, the US shipbuilding industry had 13 public shipyards operating across the country, building about 5% of the world's tonnage. Today, only four yards are still in operation. The Navy has prevented from buying or constructing new ships abroad by a 1965 amendment to federal law.

And that has allowed China to set a course to one day end US naval dominance. Beijing is now the top global ship maker by a wide margin. Giant Chinese firms that crank out merchant ships for the world are often the same ones building warships for China's navy.

Less than a decade ago, the US Navy held more battle force ships compared to China. Since then, China's fleet has rapidly overtaken the US Navy and is projected to have 435 military vessels by 2030, outsizing the US by over a third. Officials are now in a race against time to stop that from happening.

While the Navy can't buy ships from abroad, it can import expertise. And if there is one place that can rival China's shipbuilding prowess, it's South Korea. The country is a leader in shipbuilding specializing in high-end military vessels and large commercial ships.

Much of that work takes place here at the largest shipyard in the world, operated by Hyundai Heavy Industries. Each year, dozens of military and commercial ships are built here. And the US Navy sees this as one answer to a vexing problem, how to catch up with China.

Jeongjo the Great is the first of several new destroyers Hyundai is building. The US is prohibited from buying these vessels directly, but naval officials want to replicate how Hyundai makes them at a fraction of the cost. (suspenseful music) The ship measures more than 550 feet and can carry up to 300 crew.

It's fitted with a weapon system that has a detection range of about 500 miles and can track over 1,000 targets at once. The ship has a vertical launch system capable of firing missiles at targets in the air or on land. Expanded sonar capabilities allow the vessel to detect submarines at a range far greater than older destroyers.

- We have a hexagon radar up there. That radar is very powerful. So once North Korea launched a missile, that radar can detect in less than seconds.

- America has a fleet of ships just like this. But what makes this one different being built here in Korea? - We can build a ship in a very cost-effective way.

We have a very healthy and reliable marine industry around us. We can control the cost, and we are adapting the very good shipbuilding and technology from our mainstream yard. - [Timothy] Hyundai's military ships are built in the same yard as the company's commercial vessels, where about 40 to 50 hulls are built each year.

It means the company can build a destroyer in just 18 months, significantly faster than the 28 months it would take in the US. - We are sharing all the shipbuilding technology from the commercial shipbuilding. We share all the new technology for the improving the productivity for the shipbuilding, so that also makes us very efficient.

- [Timothy] That efficiency is what US naval officials are hoping to replicate. Secretary of the US Navy, Carlos Del Toro, traveled to Asia as part of a pitch to shipbuilders to help revive American shipyards. - We shut down many shipyards in this country, thinking that we would not need them.

We became less competitive. Because of that, our building of our naval capabilities, of our naval ships, have become far more expensive, because there are far fewer shipyards that actually build our navy ships. - [Timothy] Once those vessels are built, analysts say that in a prolonged conflict, maintaining the fleet near the battle space is key.

(alarm buzzing) (missile exploding) Hyundai Heavy Industries recently signed an agreement to allow US naval hulls to be repaired in South Korea. This will allow US vessels in need of repair to stay in Asia instead of making the lengthy journey back to American shipyards. - You are looking at the Chinese having greater availability of ships.

That's also a geographical advantage that China faces of where they should maintain, repair, overhaul the ships. You don't want to have a battle out there in the Philippine Sea, and then you have retire all the way to Guam or even all the way to stateside. Then, you will leave a gap where you have no ships or too few ships to make any difference in the theater.

- [Timothy] Hyundai Heavy Industries will soon help start training shipbuilding engineers in the US. But these measures may not meet the need to revive the US Navy, and South Korea's prowess can't easily be replicated. - Mainly, the engineering, procurement, construction, and integration, so all has to be aligned and well balanced.

So we cannot build a ship just engineering is powerful, all has to harmonize together. - [Timothy] America's efforts to revitalize its shipbuilding capacity has taken on a new urgency as tensions rise over Taiwan. Beijing claims the self-ruled island as part of its territory, and is threatening to take control by force if necessary.

America's naval superiority is a deterrent to a Chinese invasion as long as it can be maintained. - Assuming that there's not just a Taiwan conflict, but assuming there is also conflict elsewhere. The ongoing availability issues for the US Navy to concentrate enough forces in the theater while having to take care of other regions, it will be a huge stretch.

It doesn't mean the US will not win a conflict over Taiwan, but then the question is, at what cost? - [Timothy] While the US Navy is technologically superior to its Chinese rival, naval strategists argue that fleet size also matters. The bigger the better.

The clock is ticking for the US to increase its number of warships, but the laws designed to protect America's shipbuilders have backed the Navy into a corner. The US will need to look beyond its shores if it is to avoid falling irreversibly behind in a new era of great power competition.