Capital, skill inflow following Hanwha's US shipyard acquisition 'very critical': Navy secretary nominee

U.S. President Donald Trump's pick for the Navy secretary said Thursday that the inflow of capital and skill sets into the United States following Korean conglomerate Hanwha Group's acquisition of a U.S. shipyard is "very critical."

Navy Secretary nominee John Phelan made the remarks during a Senate confirmation hearing as he responded to a question by Sen. Dan Sullivan (R-AL) about the need to work with U.S. allies to use their shipbuilding capacity amid an intensifying Sino-U.S. rivalry.

"I think that we have to definitely look at expertise and skill that foreign partners have. Whether that means they build components, we need to look at that," he said during the hearing at the Senate Arms Services Committee.

"Hanwha has recently bought the Philadelphia shipyard. So they are going to look at enhancing that and making that better. So bringing their capital and skill sets here, I think, would be important. I think this is a very critical thing," he added.

Late last year, Hanwha completed a $100 million acquisition of Philly Shipyard, a leading U.S. shipbuilder. It marked the first entry of a Korean firm into the U.S. shipbuilding industry.

The acquisition came amid growing expectations for shipbuilding industry cooperation between Korea and the U.S. at a time when America is falling way behind China's capacity. China is known to have over 230 times the shipbuilding capacity of the U.S.

Phelan said that the U.S. cannot fall behind China, stressing that "all options have to be on the table" to enhance the U.S.' shipbuilding capacity.

"We are already too far behind," he said.

The nominee highlighted Trump's focus on bolstering the nation's shipbuilding industry.

"I think this is a critical task," he said. "The president has been very consistent when he spoke with me — shipbuilding, shipbuilding, shipbuilding."

Optimism for shipbuilding cooperation has risen as Trump mentioned his intent to work with Korea in the shipbuilding industry during a call with President Yoon Suk Yeol in November. During a radio interview last month, Trump said that the U.S. may use allies in its efforts to build naval vessels.

In written answers to advance questions from the committee, the nominee stressed the importance of cooperation with allies and partners.

"In today's security environment, the United States will be more secure and prosperous if we work alongside Allies and partners who align with our objectives and work across the instruments of national power to advance the President's national security objectives," he said.

"If confirmed, I will ensure that our maritime forces work with not only our strongest Allies but also emerging partners in order to leverage their unique capabilities and regional expertise to grow our access, interoperability and combined lethality to deter potential adversaries, such as the (People's Republic of China), and limit malign influences that seek to challenge our security."

Phelan is the co-founder of Rugger Management, a Florida-based private investment firm. He is also a co-founding partner of MSD Capital, a private investment company. (Yonhap)