Samsung Heavy Industries Goes Beyond "MASGA" With Vietnamese Venture

Korean shipbuilder Samsung Heavy Industries is a big player in the "Make American Shipbuilding Great Again" initiative, Seoul's successful plan to secure lower American tariffs by pledging investments in U.S. shipyards. But at the same time, SHI is also playing a key role in revitalizing Vietnamese shipbuilding, and could be poised to do the same in India.

SHI's own yard capacity in Korea is largely booked out, thanks to the ordering boom of the last several years. The Korean shipbuilder is still taking in new business, but appears to be splitting it into two streams: simpler ships to be subcontracted out to foreign shipyards, like tankers, and high-tech ships to be built in-house, like LNG carriers and FSRUs.

This is a windfall for Vietnam's domestic shipbuilding industry. Vietnam has a ready and available labor pool, including many shipfitters and welders who trained in Korea, but the local yards are not in the business of building ultra-large tonnage. SHI is fixing that with a three-ship, $238 million Suezmax tanker contract linked to UK-domiciled Zodiac Maritime. The vessels will be built at a subcontracted shipyard in Vietnam under SHI's supervision, creating shipbuilding capacity and economic activity for Vietnamese industry.

The Vietnamese partner is Petrovietnam Marine Shipyard (PVSM), formerly known as Dung Quat Shipbuilding. PVSM is a subsidiary of state-owned PetroVietnam, and has the largest dry dock in the country. Its main line of work is in oil and gas offshore structure fabrication and repair. In May, PVSM announced that it would be getting new equipment and "advanced shipbuilding skillsets" from SHI through a cooperation agreement. For implementation, SHI said it would send a team of its own managers to work at PVSM to oversee quality management and provide training. In addition to overseas sales like the Zodiac deal, target markets for the SHI-PVSM partnership include "new modern ship models for the Vietnamese market."

Samsung Heavy has also signed a partnership with Swan Defense and Heavy Industries (SDHI), operator of the largest drydock in India. SDHI's infrastructure is large enough to handle VLCCs; the deal gives SHI access to underutilized production capacity in another country with a large available workforce, and gives Swan access to Korean technology.

In the United States, as part of the well-publicized trade deal between Seoul and the Trump administration, SHI has reached a partnership agreement with Vigor Industries centered on ship repair. It "may explore opportunities to support a U.S. shipbuilding renaissance," but for now the focus is a more modest initiative to provide maintenance, repair, and overhaul (MRO) capacity to the U.S. Navy. Vigor would serve as the prime contractor, but the work would be performed at Samsung's own yards in South Korea.