South Korea’s domestic defense plans have been seriously set back by the KDDX project, Korean Next-Generation Destroyer KDDX, or KDDX for short. The root of the problem lies in the enormous competition between the two major shipbuilding industries in the country: HD Hyundai Heavy Industries and Hanwha Ocean.
A Critical Project: Six Advanced Destroyers by 2030
The KDDX project is during its initial phases, considering South Korea has set the target of completing these tasks by the year 2030. The project has a 7.8 trillion won or approximately 5.37 billion dollars, around budget. The destroyers are expected to be constructed according to the Aegis 6,000-ton standard and the purpose of the plans is to strengthen the military capabilities of South Korean naval forces. The funding of these warships is regarded as enhancing the power of naval competition in South Korea, meaning compared to the West. Post-completion funding will allow for the expansion of advanced weaponry and military technology alongside more resources and development of IT.
DAPA’s Attempts: Efforts to Bridge the Divide
The Defense Acquisition Program Administration (DAPA) has made attempts to cover the issues that arise from the internal conflict of the industry. In doing so, they were able to step in to mediate these disputes after the standstill of this project in aiming to address this issue. On October 2nd, 2023, a meeting was set with their respective companies, Hanwha Ocean and HD Hyundai, where collaboration was encouraged as a means to expedite target deadlines set for more crucial features of KDDX, like construction and the blueprints for the preliminary ship design.
Sticking Points: Contention on Role-Sharing
Both shipbuilding companies have agreed to “role-sharing” as one of the means to further the progress of the project, but they do not agree on the basic principles of how the collaboration should function. HD Hyundai is in favor of a sole contract approach where they would take full responsibility. On the other hand, Hanwha Ocean has been advocating for a joint, detailed, synergetic approach to constructing the two lead ships so that both companies can share their efforts more extensively.
A History of Tension: Legal Wars & Accusations
This conflict is not a new one. The conflict between HD Hyundai and Hanwha Ocean has its origins in last November, when the two clashed in court over the KDDX project bid. In November, the court ruled that HD Hyundai employees were found to be guilty of underhanded processes of obtaining concepts of design drawings for the KDDX from Hanwha Ocean’s workings in secret protected by military confidentiality laws. Subsequently, DAPA decided to impose what they called “guidance” administratively as punitive measures against HD Hyundai in punishment for lattice posting. This move by Hanwha Ocean was contested, which resulted in further litigation.
The Ripple Effect: Recommendations for Strategically Alleviating Delays
Even after all lawsuits were withdrawn in November, the tensions between the two competing shipbuilding companies continue to fester. The lack of resolution to these problems is worrisome, as there is a strong possibility that deployment of the KDDX warships may be further delayed. Such delays can escalate the strategic crisis for the country, which is already coping with the mounting security challenges emanating from North Korea, alongside other complex geopolitical shifts in the region.
International Rivalry: A Challenge for the Competitiveness of South Korean Shipbuilders
KDDX defense revolutions do not only affect national security priorities. Investing in military capabilities is imperative for South Korea, given that the global market for warships is expected to exceed $1 trillion by 2054, with plans to construct approximately 290 combat vessels in the next three decades. This places South Korea in a strategically important position in terms of international competition. However, the persistent conflicts within the domestic shipbuilding industry are likely to erode its competitiveness in securing overseas orders.
A Call for Resolution: Urgent Action Needed
DAPA’s efforts in trying to mediate the discussions between HD Hyundai and Hanwha Ocean make a lot of sense. The agency intends to conduct additional meetings to close the gaps. However, the source material emphasizes that without these efforts, agreements are implemented in the short term. Otherwise, the KDDX project is in danger of becoming even more delayed. This would place further strain not only on national security but also negatively impact the perception of South Korea as a leading power in the global defense domain.
