Hanwha, Fincantieri Shares Surge as Trump Opens US Navy Shipbuilding to Foreign Yards
Foreign Shipbuilders Gain Access to US Navy Contracts
By Mike Stone
WASHINGTON, Aug 14 (Reuters) - Shares of South Korea's Hanwha Group and Italy's Fincantieri rose on Friday after President Donald Trump's directive opening U.S. Navy shipbuilding to overseas yards.
The companies have the largest U.S. shipyard footprints. Hanwha Ocean Co stock climbed 5.6% while Fincantieri SpA gained 3.2%.
Trump’s National Security Memorandum
Trump signed a national security memorandum on Thursday that said foreign shipbuilders that make substantial investments in U.S. shipyards and train an American workforce for the jobs they create will be temporarily permitted to build up to two ships in their parent shipyards for quick delivery.
The memo allows foreign builders to construct three vessel types abroad: surface combatants, consolidated cargo replenishment tankers, and roll-on/roll-off vessels.
Hanwha’s Strategic Position
Financial Commitments and U.S. Expansion
Hanwha is the clear frontrunner, said Bryan Clark, a senior fellow at the Hudson Institute think tank, highlighting South Korea's broad financial commitments to U.S. shipbuilding as the deciding factor.
Hanwha, which acquired Philly Shipyard in 2024, has since escalated its bet on the U.S. market with a $5 billion pledge to expand the Pennsylvania yard. That investment is part of Seoul's broader commitments under a trade deal with Washington. A Hanwha Defense USA spokesperson said the company was reviewing details of Trump's memo.
Government Investment Advantage
Clark said that underlying South Korean government investment puts Hanwha ahead. "You got to make an investment in that shipyard to enable it to produce the things that they're asking for," he said.
Fincantieri’s U.S. Investments
Shipyard Expansion and Navy Contracts
Fincantieri, Europe's largest shipbuilder, has spent more than $800 million on its U.S. shipyards over the past decade, including Fincantieri Marinette Marine in Wisconsin and Fincantieri Bay Shipbuilding. It recently won a $30 million Navy contract for early work on Medium Landing Ship vessels, part of a program that could ultimately cover 35 vessels. Fincantieri did not immediately comment.
Implications for the Shipbuilding Industry
Initial Production Focus
Clark expects the policy shift to initially produce tankers and roll-on/roll-off vessels rather than warships, given the cost and complexity of redesigning such ships for the U.S. supply chain.
Impact on Austal and Australian Shipbuilding
The U.S. shift complicates Hanwha's non-binding bid for Austal's U.S. operations, since a sale could cost Austal's Australian parent a chance to build two ships domestically under the new rules. Austal rose 5.6% on Friday. Austal did not immediately respond to a request for comment.
Clark said Australia is unlikely to make the necessary investment to qualify, given its commitments under the AUKUS submarine pact.
Industry Reactions
Concerns from U.S. Shipbuilders
The Shipbuilders Council of America, which represents U.S. companies, warned that directing shipbuilding overseas undercuts U.S. industry.
Reporting and Editing
(Reporting by Mike Stone in WashingtonEditing by Rod Nickel)
