Collapse of U.S. shipbuilding poses national and economic security risks | 60 Minutes
In a Nutshell
U.S. shipbuilding has collapsed due to decades of neglect, producing just a few cargo ships annually versus China's 1,000, posing national security risks like vulnerability to China's merchant fleet blockade in conflicts. Hanwha Ocean, a South Korean firm, acquired the outdated Philadelphia Shipyard for $100 million, investing billions to modernize it with automation, robots, and Korean trainers amid labor shortages, aiming for 20 ships yearly and even U.S. Navy submarines. The Jones Act blocks domestic LNG transport on non-U.S.-built ships (none exist), inflating costs, while Trump tariffs on steel and immigration restrictions exacerbate the crisis despite White House revival efforts.
These notes were generated by AI and may contain inaccuracies.
The war in Iran highlights the importance of ships, including warships and cargo vessels like those carrying oil or gas trapped near the Strait of Hormuz. American shipbuilding is in shambles due to decades of short-sighted policies and neglect. The submarine building program is sluggish, and commercial shipbuilding is nearly extinct. China makes roughly a thousand cargo ships a year; the U.S. makes maybe three.
The Trump administration called this a national security crisis.
Philadelphia shipyard is one of only two left in the U.S. building large commercial cargo ships. Ships built here helped win American independence in the 18th century and World War II in the 20th.
$8 million worth of floating defense.
The shipyard has become a symbol of American industrial decline, a money loser falling decades behind global rivals. It still uses a crane from 1942.
A lot of times, people call it a dinosaur.
What else is a dinosaur?
Almost everything that you've seen out there.
David Kim, the new head of the Philly shipyard, works for Hanwha Ocean (Hana), a giant ship maker from South Korea, the country making most ships after China. Hanwha bought the yard in 2024 for $100 million, then poured in another $100 million, and tasked Kim, a Korean-American born and bred in Texas, to bring it into the 21st century.
How many ships do you actually make here?
Here at the Hanwha Philly shipyard, we deliver one to one and a half ships a year versus our yard in Korea where they deliver basically one a week.
What? One a year for delivery versus one a week.
That's correct.
Not building ships in the U.S. is considered a national security threat because if there's a conflict with China, Beijing could weaponize its substantial merchant fleet and cut the U.S. off from global goods.
Hanwha plans to spend $5 billion in Philly and has already sent 50 trainers from Korea to teach American workers.
Our aspiration is to get to up to 20 ships a year here at the shipyard.
In two years, the shipyard will have robots and automation equipment, and plans to grow the workforce by 7 to 10,000 people.
There's a huge shortage in the U.S. of skilled labor in shipbuilding, including welders and pipe fitters. The work is grueling: freezing in winter, scorching in summer, and dangerous. The yard has a training program that can only train 20 or so new hires at a time, and it takes 3 years.
Apprentices Justin, Jeff, and Meg say this beats their old jobs:
- Justin worked at Amazon as a grocery picker.
- Jeff was a cake decorator at a bakery.
- Meg was a nanny.
If you were to pitch this job and this place to a friend, what would you say?
I would tell my friend that instead of paying out of pocket to go to a trade school, you're getting paid while you learn here the entire time.
They pay you.
Yes. You know, and health care.
And health care, which is amazing.
But aren't the conditions really harsh?
Not the easiest work. Like I go home. Granted, I'm more tired, but it's more fulfilling to me. Makes you feel like you're something part of something bigger.
Workers are scarce, the yard is outdated, and the Philly shipyard has to bring key components to the U.S., such as propellers and even the engine. Ships that take 6 months to build in Korea or China can take twice as long here and cost five times as much.
There's no doubt that we have challenges and headwinds, but I also think we have a unique moment in time.
Michael Coulter, Hanwha's top executive in charge of U.S. operations, says the way to lower prices is to scale up production.
So you're saying if we build more ships, then the cost per ship will come down significantly.
At Hanwha shipyard in Korea, nine ships are being built at once. Four in a row like Lego sets the size of football fields. Steel chunks bigger than buildings hover over the ground, lifted above the water or gliding by. Rows and rows of robots. Even with automation, the human workforce keeps growing: over 26,000 workers on site, many getting around on low-tech because the place is so vast. The yard keeps hiring, training 400 workers at once using cutting-edge virtual reality. It builds military vessels, including submarines.
From a Hanwha perspective, we build great submarines here in Korea. We have told the U.S. government that if they so wish, we will build submarines for them in the United States and in Philadelphia just like we do in Korea.
Is the ultimate goal for your company to build nuclear submarines for the U.S. Navy?
Submarine program in the United States is heading in the wrong direction and we think we can help.
Hanwha wants to help the U.S. with transporting liquefied natural gas (LNG), hoping to build giant LNG tankers in Philly.
The United States is the largest producer of natural gas.
And yet we don't have any LNG ships that we make ourselves. Is that correct?
That's correct. Not a single one.
The U.S. exports LNG on foreign carriers to over 30 countries, but not to other parts of the United States. Colin Grabow, a trade expert at the libertarian Cato Institute, explains the century-old Jones Act: requires cargo shipped between U.S. ports (e.g., Baltimore to Boston or Seattle to Juneau) to be on an American-made ship. For LNG, it must be on an American-made LNG ship, but none are built.
That's right. There aren't any. And you might think, 'This seems like an easy problem to solve. Go build the ship, transport the gas.' Except the math doesn't work. If you want to build one of those ships in Asia, the cost is around $260 million. Here in the United States, about a billion dollars.
Parts of the country cannot get natural gas because of this law: New England in winters imports pricier natural gas from abroad, even though it's extracted only a few states away. Puerto Rico imported Russian natural gas the same month Russia invaded Ukraine.
So, we take a stance against Russia. On the other hand, we're importing their energy, something that we have in abundance. You can't make this stuff up.
Last year, President Trump made solving the ship crisis a national priority, signing an executive order creating a multi-agency action plan and a White House office of shipbuilding.
We're way, way, way behind. We used to build a ship a day and now we don't do a ship a year practically.
The White House has conflicting priorities: putting 50% tariffs on steel, the main component in a ship.
Yes, this is one of the paradoxes of the Trump administration. We're artificially increasing the cost of building ships in this country.
American-made steel has no tariffs, but heavy tariffs on imported steel drive up costs, and American steel is now roughly twice as expensive as steel in China.
What you're saying is when the price of steel goes up because of tariffs, then the American steel manufacturer hikes the price of steel.
These are profit-oriented enterprises.
Colin Grabow thinks the U.S. should buy ships from ally South Korea. He points to another conflicting priority: making it harder to grant skilled immigrants work visas.
Traditionally, a lot of immigrants have been willing to do this kind of work, and yet we are turning our back on immigration, adopting a more hostile stance.
The administration seems to be fighting its own policy. Yes.
Last September, ICE raided a Korean battery plant in Georgia, alleging visa violations, dragging off 300 Korean technicians and engineers in cuffs and chains despite them training American workers. This caused backlash in Korea.
Hanwha's Michael Coulter: Assured that visas for Philly team are correct and won't be impacted.
When President Trump threatened tariffs on Korean imports, Korea's president offered $150 billion to revive U.S. shipbuilding, with Philly as just the start.
There's a recognition that the United States has a problem that Korea may be uniquely positioned to help.
It's like aid for the United States.
Wouldn't it be more profitable and wiser if the United States just bought the ships from Korea?
That doesn't solve the problem. At the end of the day, shipbuilding is a national security necessity. The U.S. needs to be able to secure our own commerce. We need to be able to export our own energy.
The idea that we now rely on Korean expertise to help us build an industry that we need for national security reasons. Should we be ashamed of ourselves? Should we feel weak?
I don't think we should be fearful or feel weak. We are in a shipbuilding crisis in the United States and every American should be aware of that. But that doesn't mean that it's not solvable.
We once deployed ships to save South Korea; now forced to turn to South Korea to save us.
In a statement to 60 Minutes, the White House said: 'No president has done more to bolster American maritime power.' This past week, with gas prices soaring, the president suspended the Jones Act for 60 days to ease transport of oil and gas within the U.S.
Keep 60 Minutes in your library
Save the videos and channels worth coming back to, and find them again in one place.
