Ensuring Naval Readiness Act: Addressing the U.S. Navy’s Fleet Shortage and Its Implications for South Korea’s Shipbuilding Industry

The Ensuring Naval Readiness Act is a legislative proposal aimed at exploring ways to maintain and enhance the U.S. Navy’s operational strength. It presents solutions to address the current shortage of naval vessels, a pressing issue faced by the U.S. Navy. According to the U.S. Navy’s Force Structure Assessment (FSA) report from 2016, a minimum of 355 ships is required to sustain essential combat capabilities and operational readiness. However, as of 2024, the U.S. Navy operates only 291 ships, and based on the current shipbuilding schedule, it is unlikely to reach the target even by the 2050s. To tackle this challenge, the U.S. Congress is seeking to improve ship procurement methods and explore more efficient and cost-effective approaches.

Existing Ship Procurement Methods and Their Limitations

Currently, the U.S. Navy procures vessels through three primary methods:

1. Building new ships at domestic shipyards
2. Refurbishing aging ships to extend their service life
3. Purchasing second-hand vessels from foreign sources with special congressional approval

However, each of these methods has notable limitations. First, refurbishing aging ships often proves to be far more expensive and time-consuming than initially anticipated. According to a study by the U.S. Navy, the cost of refurbishing ships that have been in operation for over 60 years can be more than three times higher than building new ones, and the process can take twice as long as expected. As a result, this method is not a viable solution for addressing fleet shortages efficiently.

Similarly, constructing new ships at domestic shipyards comes with high costs. According to U.S. Department of Defense officials, the cost of acquiring second-hand ships ranges between $20 million and $60 million per vessel, whereas building new ships can cost more than 26 times that amount. Given these constraints, the traditional procurement methods alone are insufficient to resolve the fleet shortage promptly.

Key Provisions of the Ensuring Naval Readiness Act

The Ensuring Naval Readiness Act introduces a new approach to address these issues. The bill includes provisions that allow the U.S. Navy to procure ships from reliable foreign shipyards, either partially or entirely, rather than relying solely on domestic shipbuilders. However, to mitigate potential national security risks, the bill specifies strict conditions for utilizing foreign shipyards.

According to the proposed legislation, foreign shipyards must meet two key criteria to be eligible:

1. The shipyard must be located in a NATO member country or an Indo-Pacific nation with a mutual defense agreement with the U.S.
2. The cost of construction at the foreign shipyard must be lower than that of domestic shipyards.

This provision is not merely aimed at cost reduction but also at enhancing procurement flexibility through collaboration with trusted allies.

Security Measures and Safeguards

To address potential security risks associated with foreign shipbuilding, the bill includes specific restrictions. The U.S. Navy must certify that any foreign shipyard involved in ship construction is neither owned by Chinese entities nor operated by multinational corporations headquartered in China. This provision is a safeguard to prevent strategic U.S. assets from being built under the technological influence of adversarial nations, thereby ensuring national security. Thus, the Ensuring Naval Readiness Act is not solely focused on cost efficiency but also seeks to balance rapid procurement, cost-effectiveness, and national security considerations.

Implications for South Korea’s Shipbuilding Industry

From South Korea’s perspective, this bill signals a shift in U.S. procurement policy toward actively utilizing the shipbuilding capabilities of trusted allied nations, potentially benefiting the South Korean shipbuilding industry. As one of the world’s leading shipbuilding nations, South Korea has a strong competitive edge in constructing large naval vessels and military ships. South Korea’s major shipbuilders are already expanding defense industry cooperation with the U.S. and other Western countries, and they have been actively participating in supplying warships to allied nations such as Australia. If this bill is enacted, South Korean shipbuilders could play a crucial role in the U.S. Navy’s new ship procurement strategy.

The bill’s provision allowing for partial or complete ship construction in allied shipyards presents an opportunity for South Korean shipbuilders to collaborate with the U.S. Navy in manufacturing key components or modular sections of naval vessels. South Korean shipbuilders possess advanced modular shipbuilding technology, which could contribute to the U.S. Navy’s efforts to acquire ships more quickly and efficiently.

However, as this policy shift is likely to attract competition from other major shipbuilding nations such as Japan and European countries, South Korea’s shipbuilding industry must enhance not only its technological capabilities but also its understanding of U.S. defense procurement processes and its diplomatic engagement with U.S. policymakers. Strengthening cooperation with the U.S. Navy and the U.S. Coast Guard as part of South Korea’s broader defense export strategy could allow South Korea to maximize the opportunities presented by the Ensuring Naval Readiness Act.

Conclusion

The Ensuring Naval Readiness Act seeks to address the U.S. Navy’s fleet shortage by allowing the use of foreign shipyards from NATO and key Indo-Pacific allies. This shift in procurement policy could provide new opportunities for South Korea’s globally competitive shipbuilding industry. To capitalize on these opportunities, South Korea should closely analyze U.S. naval procurement demands and adopt a strategic approach to deepening technological and industrial cooperation with the U.S. Navy.