Hanwha Restructures Aerospace and Defense Ops to Improve its Prospects
(Source: Forecast International; issued June 05, 2018)
by Richard Pettibone
With a number of aerospace- and defense-related acquisitions now in its portfolio, Hanwha has begun restructuring itself to better serve these markets. This latest effort marks the company’s return to its defense-related roots, echoing its formation during the Korean War as a gunpowder producer.

In the recent past the company added the defense operations of both Samsung and Doosan DST, in 2015 and 2016, respectively.

The acquisition added Samsung Techwin, maker of the K9 self-propelled howitzer, to the group’s portfolio. In addition, Samsung Techwin holds a 50 percent stake in the Samsung Thales joint venture, whose products include fire control systems; electro-optical tracking systems; command, control, and communications systems; radars; naval combat management systems; avionics; electronic warfare systems; and combat systems.

This deal was followed up by the purchase of Doosan DST, which added the K21 infantry fighting vehicle, as well as several other military vehicles to Hanwha’s product line.

Previously, Hanwha focused on energetic materials and precision-guided weapons. These latest additions further diversify the company’s defense portfolio to include anti-aircraft missiles, missile launching systems, and navigation systems.

Now that the acquisitions have had a chance to simmer, Hanwha has restructured its aerospace and defense sector operations into new business units.

In March 2018, Hanwha Aerospace changed its name from Hanwha Techwin after its security division was spun off into an independent entity. Hanwha Techwin is now focused exclusively on security imaging systems. As part of this change, Hanwha Aerospace moved its offices and facilities to Changwon City. The move was made to reinforce the company’s exclusive focus on the aircraft engine business and to strengthen its on-site management of the production line. The operation produces engines for airplanes and helicopters, as well as individual engine parts and modules.

The formation of Hanwha Aerospace aims to capitalize on the growing need to produce components for and service aviation gas turbines. Ideally, the company would like to expand via the acquisition of a U.S.-based supplier that would help broaden not only its capacity but also its geographic footprint. To broaden this part of its strategy, Hanwha has opened a new aerospace- and defense-related office in Washington, DC, in April 2018.

In the defense arena, Hanwha’s operations are now centered on three units:
--Hanwha Land Systems, which produces the K9 Thunder and EVO-105 self-propelled artillery systems, tactical unmanned ground vehicles, remote-controlled weapon stations, and the Korea Amphibious Assault Vehicle.

--Hanwha Systems, which focuses on optronic products and systems, military communications equipment, naval combat systems, and air defense missile systems.

--Hanwha Defense, the former Doosan DST operation, which produces armored vehicle systems such as the K21 infantry fighting vehicle and Barracuda and Black Fox wheeled armored vehicles. Other products include launch systems for missiles and torpedoes, and air defense systems such as the BIHO.

Overall, Hanwha, as well as South Korea, appears to be following the playbook of many major defense contractors – consolidating military manufacturers to take advantage of core synergies and reduce duplication in operations. Further, regional strife with North Korea, China, and even Japan mean that government defense spending will continue to climb. With its new focus on defense, Hanwha stands to capture a good portion of this growing market.

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