Hanwha Philly teams up with a partner to compete with a California shipyard for U.S. Navy oiler ship construction.

Media News Source reports that Hanwha Philly Shipyard has entered a significant partnership under a new contract with the U.S. Navy, collaborating with Italian-owned Vard Marine US Inc. to design and construct oiler ships for the naval fleet. This contract marks the first subcontract for Hanwha since the company, a subsidiary of South Korea’s Hanwha Group, acquired the Philadelphia shipyard nearly two years ago. The acquisition is part of Hanwha’s broader strategy to expand facilities previously used by the Navy until its closure in 1994.

The agreement entails a payment of .5 million from the government to facilitate design, construction, and cost plans for the Light Replenishment Oilers (LROs). Hanwha aims to leverage this contract to secure additional orders and intends to construct the vessels at its Philadelphia facility. Meanwhile, Vard’s operations are based in Houston.

In addition to Hanwha’s deal, the Navy awarded a separate contract worth .9 million to General Dynamics for a competing proposal at its NASSCO shipyard in San Diego. It is worth noting that NASSCO is already engaged in constructing larger oiler ships for the Navy, highlighting the competitive landscape in the U.S. shipbuilding sector.

The contracts are foundational to the Navy’s initiative to renew its fleet, which includes plans for hundreds of new and updated ships and support vessels. Consequently, Hanwha officials express optimism that these developments will lead to increased employment and production opportunities at the Philadelphia yard.

Currently, Hanwha employs about 2,100 people, up from approximately 1,700 before the acquisition. Since taking over, the company has invested over 0 million in upgrades at the facility, which is strategically located at the meeting point of the Delaware and Schuylkill rivers—a site called one of the best for shipbuilding by past Navy officials.

Despite concerns about competing with major shipyards in China, Korea, and Japan, Hanwha has ambitions to contribute significantly to the rebuilding of the U.S. commercial shipping industry. The company plans to advance its production capacity, aspiring to increase output from one ship every eight months to 20 ships annually.

Future projects may employ commercially available technologies to reduce costs and improve efficiency, aligning with military planners’ recommendations. This strategy is viewed as essential for maintaining competitiveness in a sector increasingly dominated by foreign shipbuilders.

Moreover, amid mounting industry pressure to attract skilled labor, the company has expanded its recruitment efforts. Recent initiatives have successfully enrolled numerous applicants in pre-apprenticeship programs that prepare candidates for union-backed positions within the shipyard. As the shipbuilding landscape evolves, both Hanwha and regional competitors anticipate significant growth and enhanced employment opportunities in the coming years.