Ship part

Hyundai plans ship repair yard in Subic Bay for Philippine Navy

The Philippine Department of National Defense leased the North Yard to Subic and would provide space to Hyundai for the repair yard (Philippine Department of National Defense)

Published on June 29, 2022 15:43 by

The Maritime Executive

Philippine authorities report that South Korean shipbuilder Hyundai Heavy Industries plans to establish a repair facility at the former Subic Bay shipyard. The yard would be located on a part of the yard formerly operated by another South Korean shipbuilding company, Hanjin Heavy Industries, and would at least initially be dedicated to the repair and maintenance of ships that Hyundai builds for the armed forces of the United States. Philippines.

Secretary of the Department of National Defense of the Republic of the Philippines, Delfin Lorenzana, discussed the plans with reporters during his final meeting before retirement. “They plan to build a maintenance depot here for all the ships HHI orders,” Lorenzana said when meeting with reporters on Tuesday.

The development of the new ship repair yard would be the latest step in the Philippines’ efforts to restart operations at the site which closed due to financial problems more than three years ago. Hanjin had established a Philippine subsidiary, Hanjin Heavy Industries and Construction-Philippines, which operated the yard, but was hit hard by the downturn in international shipping in the mid-2010s. After struggling to find new employment, they laid off up to 7,000 workers in December 2018, and the following month HHIC-Phil filed for receivership. The Korean Development Bank and Filipino investors would be the main debtors of the collapse. In 2021, HHIC-Phil had a total of $1.3 billion in loans outstanding, including $400 million owed to Philippine banks and $900 million in loans from South Korean lenders.

After years of negotiations, the Philippines decided to split the facility into two operations, with the North Yard being converted to Naval Operating Base (NOB) Subic by the Department of National Defense. Opened last May, the facility is now a home port for Philippine Navy ships. The North Yard covers approximately 100 hectares of the site’s more than 280 hectares.

The activation NOB Subic officials said is in line with the Navy’s intensified maritime operations to support the necessary basic services of deep-draught vessels, including those built by Hyundai for the Philippines. The new base will house some of the fleet’s marine units, maintenance and resupply facilities that will enable the fleet to meet the operational needs of current and future naval vessels. According to defense officials, NOB Subic is a vital part of the Navy’s modernization effort to become a multi-purpose naval force.

Hyundai is the builder of the first two missile frigates for the Philippine Navy, and in December 2021 also won a contract for the two anti-submarine corvettes as well as an offshore patrol vessel. The South Korean shipyard has already completed a corvette, which is now in service with the Philippine Navy, and another should be delivered soon to the Philippines. Hyundai also has a lifetime support contract with the Philippine Navy for the guided missile frigates previously delivered to the navy.

In March 2022, the Philippines announced that it had selected US equity investment firm Cerberus Management Capital along with Agila Naval to exploit the southern part of the site as a commercial shipyard. Cerberus was to settle Hanjin’s outstanding debts and in turn assume the South Korean’s 50-year lease on the site.