According to industry sources on Feb. 12, the governments of both countries are conducting behind-the-scenes negotiations to establish a local U.S. base for Korean shipbuilding companies’ investment in the U.S., local market entry, and personnel and technology exchanges.

The most likely plan is to complete the comprehensive center in Washington, U.S., which aims to materialize the MASGA project that served as a key element in Korea-U.S. tariff negotiations last year. The center, expected to be completed as early as June-July this year, will carry out work to materialize local construction of U.S. vessels, technology transfer, and workforce development.

First, the center will fully launch workforce development programs to improve the fundamentals of the U.S. shipbuilding industry. The government has allocated 6.644 billion won in this year’s Ministry of Trade, Industry and Energy budget for projects related to the “Korea-U.S. Shipbuilding and Maritime Industry Technology Cooperation Center.” This is aimed at training shipbuilding workers who will collaborate with Korean skilled workers and engineers. Half of the total budget, 3.45 billion won, will be invested in the MASGA Academy operation project to conduct technical education programs including practical training in U.S. vessel design, yard production consulting, and expert dispatch. Korea’s three major shipbuilders—HD Korea Shipbuilding & Offshore Engineering, Hanwha Ocean, and Samsung Heavy Industries—are also expected to join this program and lend their support.

Joint research and development (R&D) projects will also be carried out to introduce ship process automation systems and establish production lines to improve the fundamentals of the U.S. shipbuilding industry. Major government-funded shipbuilding and maritime research institutes, public institutions, and associations are expected to participate in this project.

However, obstacles remain to be overcome. First, procedures such as FCL must ultimately be followed to build U.S. naval vessels. FCL is a certification essential for participating in U.S. naval vessel construction and Maintenance, Repair, and Overhaul (MRO) projects, and is granted by the U.S. Defense Counterintelligence and Security Agency (DCSA) after evaluating a company’s or facility’s capability to handle classified information. In addition, ITAR (International Traffic in Arms Regulations), which controls munitions and defense technology, must be relaxed for joint construction and design of naval vessels to be possible.

An industry insider said, “The shipbuilding industry has a structure where production is customized according to customers’ demands based on orders, making it difficult for companies to proactively determine the scale of local U.S. investment or specific schedules,” adding, “We are considering areas where inter-company negotiations can take place even before the government-to-government negotiation process or the passage of related laws.”

Source: BusinessKorea