The Strategic Shift in Korean Shipbuilding
HD Hyundai, one of South Korea’s premier shipbuilders and the constructor of the nation’s Aegis-equipped warships, has announced plans to begin phasing out its foreign immigrant workforce this year. As each guest worker’s visa expires, the company will replace them with Korean nationals, marking a significant reversal in an industry that has long relied on Southeast Asian labor to fill domestic shortages. This transition comes as South Korea positions itself to capture American shipbuilding orders under the Trump administration’s “Make American Shipbuilding Great Again” initiative, a partnership that requires allied nations to invest in U.S. capacity while maintaining robust domestic production.
The move aligns with a direct request from South Korean President Lee Jae-Myung to strengthen hiring of Korean nationals in domestic shipyards. The strategy addresses a critical vulnerability in the current system: guest workers must depart after gaining valuable experience due to temporary visa restrictions, creating a perpetual cycle of training new arrivals rather than retaining skilled labor. However, the initiative faces significant headwinds in attracting young Koreans to the physically demanding work of shipbuilding and convincing them to relocate to industrial factory towns like Ulsan, HD Hyundai’s home base, which rank low on the list of desirable locations for the new generation of workers.
HD Hyundai’s labor replacement strategy operates on a rolling basis tied to visa expiration dates. Rather than immediate mass layoffs, the company will gradually substitute Korean workers for foreign laborers as individual work permits lapse. These replacement workers may be new industry entrants or experienced yard workers recruited from other sectors. The approach offers a distinct operational advantage: domestic workers face no temporary visa restrictions, allowing the company to retain and develop expertise over years rather than months.
How U.S. Policy Is Driving Korean Labor Changes
The White House Maritime Action Plan (MAP), unveiled by the Trump administration earlier this year, calls for a sweeping government-wide overhaul of the U.S. commercial and military maritime sectors. According to draft documents obtained by USNI News, the administration seeks to counter China’s shipbuilding dominance, noting that Chinese yards currently possess over 200 times the capacity of American facilities. The plan establishes a new Office of Shipbuilding within the National Security Council and creates a Maritime Security Trust Fund that could finance shipbuilding incentives for the next nine years using tariff and tax revenues.
Under the MAP framework, allied nations like South Korea can build legally-American ships provided they simultaneously invest in American capacity and construct subsequent vessels in the United States. Only South Korea’s “Big Three” shipbuilding firms have publicly outlined strategies to meet these conditions. This arrangement creates a complex labor calculus for Korean companies: they must demonstrate robust domestic production capabilities while preparing to transfer expertise and expand American operations. The phaseout of foreign workers in Korean yards serves dual purposes, satisfying domestic political demands for local employment while signaling to Washington that Seoul possesses the stable, permanent workforce necessary to fulfill large-scale American contracts.
The executive order also directs the Department of Government Efficiency to review acquisition processes for the Departments of Defense and Homeland Security within three months, specifically evaluating what the fact sheet terms “unaccountable Navy requirement officers.” Additionally, the plan calls for increasing wages for nuclear shipyard workers through innovative contract changes, echoing the previously shelved Shipyard Accountability and Workforce Support (SAWS) proposal that sought to attach tradespeople’s wages directly to hull contracts.
Inside HD Hyundai’s Workforce Transition
The policy aligns with a recent request from President Lee Jae-Myung to strengthen hiring of Korean nationals in Korean shipyards. While the strategy promises greater workforce stability, the challenge lies in demographics and geography. South Korea’s shipbuilding centers, particularly Ulsan, represent aging industrial communities that hold limited appeal for young workers seeking urban amenities. The work itself remains physically demanding and technically complex, requiring skills in welding, pipefitting, and precision assembly that take years to master.
President Lee Jae-Myung’s administration faces the task of making these careers attractive through wage incentives, housing support, or career development programs, while HD Hyundai must compete with technology and service sector employers for a shrinking pool of young talent in a country with one of the world’s lowest birth rates. The company cannot simply mandate national service; it must convince a generation that largely prefers Seoul’s cosmopolitan opportunities to embrace heavy industry in southeastern coastal regions where shipbuilding infrastructure has stood for decades.
Navigating Global Shipbuilding Competition
The labor transition occurs amid intensifying competition with Chinese shipbuilders, who have captured nearly 30 percent of global LNG tanker orders this year, a sector traditionally dominated by South Korea. According to industry analysis, Chinese yards attracted these orders partly because Korean shipbuilders remain fully booked servicing Qatar’s massive North Field expansion project, which requires hundreds of specialized vessels through 2027. This capacity constraint makes labor efficiency in Korean yards a critical factor in maintaining market share against Chinese competitors who benefit from abundant domestic labor pools and state subsidies.
Historically, South Korea’s shipbuilding ascent relied heavily on government support under military leader Park Chung-hee during the 1960s and 1970s, who subsidized chaebol companies like Hyundai to build national industrial capacity. Documents from South Korea’s presidential archive reveal that military provocations from North Korea compelled the development of indigenous warship construction alongside commercial vessels, creating the dual-use infrastructure that persists today. The current shift away from foreign labor represents a new phase in this evolution, emphasizing workforce stability over the flexibility of rotating guest workers, even as global demand for Korean-built vessels reaches record levels.
China’s advance into LNG tanker construction, previously a Korean stronghold, demonstrates the stakes involved. LNG carriers require specialized membrane-type containment tanks built with paper-thin steel and extensive welding, certified by French engineering firm Gaztransport & Technigaz. With Chinese yards now certified for this work and offering competitive pricing, Korean builders cannot afford inefficiencies or labor disruptions in their domestic facilities if they hope to retain premium market segments.
Immigration Raids and Diplomatic Friction
The domestic labor initiative unfolds against a backdrop of tension in U.S.-South Korean industrial relations. In September, Immigration and Customs Enforcement (ICE) agents detained approximately 475 workers, many of them South Korean citizens, at a Hyundai battery plant construction site in Georgia. The raid included highly skilled technical experts like Park Sun-kyu, who had previously helped build electric vehicle battery facilities in Michigan and Ohio.
My main takeaway is that America is not a safe place to work. I do not think I would go there again to work.
The incident created diplomatic friction as Seoul seeks to fulfill a $350 billion investment commitment to the United States negotiated in July 2025. President Trump has sent mixed signals regarding the entry of foreign experts. In one Truth Social post, he wrote, “When foreign companies who are building extremely complex products… come into the United States with massive investments, I want them to bring their people of expertise for a period of time to teach and train our people.” Yet in a subsequent message, he warned, “Following the Immigration Enforcement Operation on the Hyundai Battery Plant in Georgia, I am hereby calling on all Foreign Companies investing in the United States to please respect our Nation’s Immigration Laws.” President Lee Jae-Myung expressed concern that such enforcement actions could make Korean companies “hesitant” about future American investments.
Overseas Holdings and Joint Ventures
Even as HD Hyundai phases out foreign workers from its domestic yards, the company retains access to international labor pools through strategic overseas investments. The shipbuilder has acquired a mega-shipyard in Subic Bay, Philippines, positioned near the abundant labor market of the Manila metropolitan area. This facility allows the company to continue utilizing Southeast Asian labor for certain projects without affecting the domestic Korean workforce composition required by the new national initiative.
Additionally, HD Hyundai has established a joint venture partnership with Cochin Shipyard in India, which recently secured a substantial containership order from French shipping giant CMA CGM using Korean technology transfer. These international arrangements provide flexibility in global production allocation, allowing Korean companies to reserve domestic capacity for valuable naval and advanced commercial vessels requiring specialized security clearances or proprietary technology, while utilizing foreign labor at overseas facilities for standard commercial construction. This bifurcated strategy enables compliance with President Lee’s domestic hiring preferences while maintaining competitive labor costs in international markets.
Key Points
- HD Hyundai will replace foreign workers with Korean nationals as visas expire, starting in 2025, to align with President Lee Jae-Myung’s domestic hiring initiative.
- The transition supports South Korea’s bid to win U.S. shipbuilding contracts under the White House Maritime Action Plan, which requires allied builders to invest in American capacity.
- Korean workers offer lasting retention advantages over guest workers, who must leave after gaining experience due to visa limitations.
- The policy faces challenges attracting young Koreans to demanding shipyard work in industrial cities like Ulsan, which are unpopular with younger workers.
- Recent ICE raids on Korean workers at a Georgia battery plant have created diplomatic tension and raised concerns about U.S. investment stability.
- HD Hyundai maintains access to foreign labor through overseas holdings including a Subic Bay shipyard and a joint venture with India’s Cochin Shipyard.
