By Robbin Laird
The American debate about shipbuilding has hardened into a simple choice: build warships at home or buy them from allies abroad. That framing makes good politics. It is poor strategy. The more useful question is whether the industrial know-how of allied shipbuilders can be brought into American yards quickly enough to make a difference for the fleet.
A modest contract announced at the end of October suggests that this shift is already happening while Washington argues about something else.
A Small Contract with a Larger Meaning
Hanwha Defense USA, a subsidiary of South Korea’s Hanwha Aerospace, has won a $269 million contract to build a medium landing ship (LSM) for the U.S. Navy and Marine Corps at Hanwha Philly Shipyard in Philadelphia, with options for three more vessels. It is the company’s first U.S. Navy shipbuilding contract. The award came through a competitive process run by Tote Services, which manages vessel construction under a $2.2 billion contract supporting the planned 35-ship LSM fleet. Construction is scheduled to begin in the fourth quarter of 2027, and the program’s first vessel is expected in 2030 (The Korea Times).
Hanwha bought Philly Shipyard in 2024. “Since acquiring Philly Shipyard in 2024, Hanwha has made significant investments in its workforce and technology to pave the way to build ships for the U.S. Navy and other federal customers,” said Michael Coulter, the company’s president and CEO (The Korea Times).
On its own, one landing ship does not change the balance of naval power. What matters is the route by which the contract was won. A Korean-owned American yard competed for Navy work and won it, with American workers building the ship on American soil. No waiver was needed, and no warship is being built overseas. This is the result that both the administration and its congressional critics say they want, even though they disagree sharply about how to reach it.
The Administration’s Route: The “Finland Model”
The administration has pushed a more aggressive approach. Its FY 2027 budget rollout revealed plans to pursue foreign designs for Navy frigates and destroyers that could be built in shipyards abroad, with South Korea and Japan under consideration (USNI News).
Office of Management and Budget Director Russell Vought has been its most visible advocate. In June he defended building warships and auxiliary vessels in foreign facilities, arguing that overseas production should be tied to domestic investment. He pointed to the “Finland Model,” under which foreign shipbuilders produce icebreakers for the U.S. Coast Guard while preparing American companies to build follow-on ships, as a roadmap for future Navy programs (Inside Defense, Nick Wilson, June 24, 2026).
The approach was formalized in an August 13 presidential memorandum. It allows foreign shipbuilders that have invested in the United States to build up to two ships of designated types in their home countries. The types are surface combatants, roll-on/roll-off ships and replenishment oil tankers. To qualify, a company must have built a new U.S. shipyard or acquired ownership or a majority stake in an existing one (The Herald Business). A selected supplier would also have to transfer production technology, train an American workforce and move every later ship to U.S. construction (Ship Universe).
The ownership requirement matters for Hanwha. Because it owns Philly Shipyard, Hanwha could meet the memorandum’s condition (The Herald Business). In practice, the LSM contract makes the company’s Philadelphia investment a working shipbuilding operation rather than just a qualifying credential.
The Frigate Question
The most consequential test is the frigate. Acting Navy Secretary Hung Cao has directed an assessment of surface combatants, roll-on/roll-off vessels and replenishment oilers, due November 12. The surface-combatant candidates are South Korea’s Chungnam-class frigate, the export version of Japan’s upgraded Mogami-class frigate and Türkiye’s Istanbul-class frigate (The Herald Business). No frigate winner, overseas construction contract or formal three-country competition has yet been announced (Ship Universe).
The two Pacific candidates offer different strengths. In a recent overview, CNA estimated that delivery of a Chungnam-class ship from Hyundai Heavy Industries takes roughly 18 months from procurement. Japan, for its part, is already carrying out a frigate technology-transfer plan with Australia, which has contracted for a Mogami export variant with deliveries starting in 2029 (CNA). Japan is producing Mogami frigates at roughly two a year, while South Korea can spread naval construction across several very large yards (Navy Lookout). Construction of the six Chungnam-class frigates has itself been divided among HD Hyundai Heavy Industries, SK Ocean Plant and Hanwha Ocean (The Herald Business).
The operational logic is straightforward. The Navy now sends large Arleigh Burke-class destroyers on missions a frigate could handle. As Rear Adm. Brian Metcalf put it in July, frigates “can be used in less contested waters,” and “doing so allows destroyers to perform high-intensity missions” (The Herald Business).
Congress Pushes Back
Congress has moved to limit the executive’s freedom of action, but the two chambers have drawn the line in different places.
In the House, Rep. Jared Golden (D-Maine), whose district is near Bath Iron Works, won language providing that no funds authorized under the FY 2027 defense bill may be used to contract for a battle force ship built in a foreign yard (Rep. Jared Golden). House appropriators added language barring funds for building ships in “foreign facilities” and “foreign shipyards” (USNI News).
The Senate Armed Services Committee took a more selective approach. Its bill removes the presidential waiver that allows foreign warships to be bought under an undefined “national security interest” exception. At the same time, it would let the Pentagon acquire tankers, bulk fuel vessels and roll-on/roll-off ships from yards in treaty-ally countries. As one Senate Majority official explained, these “can follow the ICE Pact model where they’ll build up to two overseas, which would be concurrent with foreign direct investment into U.S. yards for subsequent ships.” Before awarding such contracts, the Defense Secretary would have to report which yards would build the ships, how classified information would be protected and how the foreign industrial base and supply chain would be brought back to the United States. The Secretary would also have to determine that the ships would be built faster abroad, unless readiness or force posture requires otherwise (USNI News).
The final bill is not yet law (NDAA.ai).
Why Speed Is the Real Issue
The pressure behind this debate is not ideological. A Congressional Budget Office assessment released in April found that destroyers and submarines that once took five to six years to build now take nine to ten years on average (UPI). A fleet that needs to grow cannot do so on those timelines.
This is where the Philadelphia contract should be read with caution as well as interest. Construction does not begin until late 2027, and the first LSM in the program is not expected until 2030. Foreign ownership of an American yard does not, by itself, produce Korean production speed in Pennsylvania. The real test is whether the methods, management practices and supply-chain discipline of a high-volume Korean shipbuilder can be transferred to an American workforce. That will be measured in delivered hulls, not announcements.
The Shape of a Likely Compromise
Taken together, these developments suggest where U.S. policy is heading, even if the details remain contested. Combatant ships are likely to stay in American yards, as both the House language and the Senate’s removal of the presidential waiver indicate. Auxiliaries and sealift ships may start abroad under strict conditions. Allied ownership of, and investment in, American yards is what connects the two.
This is a different model from the one either side usually describes. It is not “buy foreign,” and it is not a return to a purely national industrial base. It is an alliance-based industrial strategy in which allied partners bring capital, design maturity and production experience into the American system, and American yards become sites of allied capability.
For Seoul and Tokyo, this is also a test of what kind of industrial partner each wants to be. Korea brings scale and existing ownership of a U.S. yard. Japan brings a frigate design that it is already transferring to Australia. The Navy’s assessment due November 12, and how Congress settles the final bill, will show how much room Washington is prepared to give either of them.
For now, the most concrete evidence of what an allied shipbuilding partnership can look like is not in Geoje, Nagasaki or a congressional conference room. It is on the Delaware River in Philadelphia. Whether that yard can deliver ships on time will say more about the future of American shipbuilding than the legislative debate.