With long-term technology accumulation in the field of ship maintenance, repair and overhaul (MRO), HJ Heavy Industries is expected to receive orders from the U.S. Navy.
HJ Heavy Industries is close to signing a Ship Maintenance Services Agreement (MSRA) with the US Naval Supply Systems Command, sources said. MSRA is an agreement signed between the U.S. government and private shipyards and is a prerequisite for shipyards to participate in U.S. warships MRO services. HJ Heavy Industries has established a special working group to advance audit procedures such as technical capability verification, on-site due diligence and security assessment.
The industry expects that HJ Heavy Industries will soon sign an MSRA with the U.S. Navy Supply Systems Command. Once the contract is officially signed, HJ Heavy Industries will become the third Korean shipbuilder to enter the U.S. MRO market after Hanwha Ocean and HD Hyundai Heavy Industries. HD Hyundai Heavy Industries expects to receive 2 to 3 orders in the U.S. MRO market this year, while Hanwha Ocean expects to receive 5 to 6 orders. With the entry of HJ Heavy Industries, the competition is expected to become more intense.
HJ Heavy Industries plans to formally enter the U.S. market by signing the MSRA, and in the long run, expand its business into newbuilding. To this end, HJ Heavy Industries has made a comprehensive adjustment to its organizational structure and recently appointed Jeon In-beom, a former special operations commander in South Korea, as an independent director of the company. Jeon In-beom graduated from the Korea Military Academy and has served as deputy chief of staff for operations of the U.S.-ROK Combined Forces Command, senior representative of the Military Armistice Commission of the United Nations Command, and commander of special operations forces.
For HJ Heavy Industries, this year is the year of revival for the company’s entry into the U.S. MRO market. In 2024, HJ Heavy Industries’ shipbuilding business achieved operating income of 824.5 billion won, a year-on-year increase of 43.7%, and achieved operating profit of 29.1 billion won, turning losses into profits; a total of 1.75 trillion won in ship orders were received, setting a record high. As of December 31, 2024, HJ Heavy Industries’ backlog of orders reached 2.651 trillion won.
For the U.S. market, in order to update the old fleet and enhance the naval strength, the U.S. Navy is expected to have a large number of ship orders, and plans to expand its fleet size from the current 296 to 381 ships by 2054, with an estimated annual investment of about US$30 billion. With the increase in the number of old ships, the U.S. MRO market is also quite promising, and the U.S. Navy spends US$6 billion to US$7.4 billion on the MRO market each year.
It is reported that HJ Heavy Industries became the first defense contractor in Korea in 1974 and has been working closely with the Korea Defense Acquisition Program Administration (KDPA) ever since. HJ Heavy Industries has advantages in building large ships such as transport ships and landing ships, as well as special ships such as missile yachts, next-generation high-speed yachts, and patrol ships. In the MRO field, it has demonstrated its technical capabilities by extending the service life of ships and improving their operating efficiency through retrofitting projects.