The Japanese government is poised to unveil a significant new shipbuilding directive next month, an initiative designed to reinvigorate an industry that once dominated global markets. This move is closely tied to ongoing trade discussions with the United States, particularly under the Economic Security Promotion Act established in 2022, which aims to revive dormant shipbuilding and repair yards while also supporting the establishment of new facilities both domestically and abroad.
In tandem, Japan and the US are nearing the establishment of a Japan-US Shipbuilding Revitalization Fund. This fund is expected to attract investment in Japanese shipyards, focusing on the construction of car carriers and LNG vessels, while also exploring opportunities to invest in US facilities. Furthermore, discussions are underway regarding the production of naval ships and icebreakers, which could significantly enhance the maritime supply chain between the two nations, reducing dependency on China. Currently, China commands a staggering 70% of global shipbuilding capacity and almost 90% of repair capacity, a stark contrast to Japan’s share, which has dwindled from approximately 50% in the early 1990s to around 10% today.
The push for revitalisation is not solely a matter of economic competitiveness. Amid increasing tensions in the Indo-Pacific region, South Korean and Japanese shipyards are finding fresh opportunities to collaborate with the US. For instance, the recent repair of the USNS Wally Schirra by South Korean shipyard Hanwha Ocean marks a notable first, demonstrating the growing reliance of the US on the shipbuilding expertise of its Asian allies to counterbalance rising Chinese naval capabilities. There is a palpable urgency; the US has begun to consider outsourcing naval vessel production, as articulated by President Donald Trump, to address ongoing shipbuilding delays and inefficiencies. Legislative measures are being proposed to facilitate this foreign involvement, potentially benefiting both South Korean and Japanese shipbuilders eager to secure further contracts.
This strategic pivot is complemented by Japan’s increasing military commitments. The US Ambassador to Japan, Rahm Emanuel, has recently emphasised the need for Japan’s support in replenishing US missile inventories and maintaining warships, amid ongoing global conflicts. This is a direct result of a partnership solidified between Japanese Prime Minister Fumio Kishida and US President Joe Biden, which included agreements to strengthen defence capabilities via shared production and maintenance efforts. Japan has already started to bolster its own defence industry, easing arms export restrictions and dispatching surface-to-air missile interceptors to the US.
Concurrently, Japan’s Ministry of Defense has requested a historic defence budget of $53 billion for Fiscal Year 2024. This increase reflects a broader strategy to enhance Japan’s defence capabilities, with significant allocations directed towards the construction of advanced vessels, notably two Aegis-equipped destroyers, and the acquisition of high-tech weaponry. Such investments signify Japan’s readiness to meet emerging security challenges, particularly pertinent as the nation adapts to a rapidly evolving geopolitical landscape marked by an assertive China.
As Japan ramps up its shipbuilding and defence initiatives, cooperation with US allies, particularly in areas of advanced naval technology and shipbuilding, will be crucial. This strengthened maritime collaboration not only serves to counter the Chinese maritime threat but also revitalizes an industry that has long been overshadowed, potentially heralding a new era of Japanese shipbuilding prowess on the global stage.
Reference Map:
Source: Noah Wire Services
Subscribe to Industry Updates
