By Stephen Walsh
Tuesday, July 01, 2025
Business is booming at the Changxing Island shipbuilding
base. From 2020 to 2023, the Chinese island’s shipyards produced a total
of 15 warships, including the Fujian aircraft carrier and
five smaller but still plenty deadly frigates. Since then, China has launched
what the Center for Strategic and International Studies (CSIS) believes to be a
first-in-class drone-carrying
amphibious assault ship, and has begun construction on an aircraft carrier
that may be nuclear-powered.
China’s supercharged shipbuilding industry is cranking
out warships at a rate unprecedented since World War II. Their shipbuilding
output comprises 53.3
percent of total global tonnage—more than all other countries combined. The
People’s Liberation Army Navy (PLAN) fleet is now the largest in
the world, on track for 395 ships by the end of 2025 and around 430 by
2030. The Chinese shipbuilding industry and the PLAN, therefore, are forces to
be reckoned with.
The U.S. Navy, on the other hand, maintains just under
300 battle force ships—commissioned and deployable vessels that count toward
the official size of the U.S. fleet—and
will do so for the foreseeable future despite aspirations to reach 381
ships. U.S. commercial shipbuilding tonnage comprises just 0.1 percent of
global output, and several new classes of warship languish under prolonged
delays and budgetary dysfunction. As Ronald O’Rourke, a naval affairs
specialist for the Congressional Research Service (CRS) since 1984, recently
told members of Congress, “This combination of challenges is the most
significant I have seen in my aforementioned 41-year career at CRS.” In his
description of endemic problems with ship design and construction, he surmised,
“One might need to go back to the post-Vietnam war era of the 1970s to find a
time when the Navy faced a combination of challenges as daunting or more
daunting than the one it faces today.”
Still, while the PLAN has the wind in its sails, a
growing effort to reinvigorate the U.S. shipbuilding industry and capitalize on
a rapidly evolving defense technology sector may turn the tide. If these twin
attempts to reactivate the U.S. industrial base can take hold, America may be
able to regain strategic momentum in the long term.
***
Across the planet from Changxing Island, at the
Fincantieri Marinette Marine (FMM) shipyard in Wisconsin, sits the epitome of
recent U.S. shipbuilding failures. The process of building the USS Constellation
has been so fraught that Alistair MacDonald and Gordon Lubold, writing for the Wall
Street Journal in March 2025, described
it as “the warship that shows why the U.S. Navy is falling behind China.” Constellation
is nominally a slightly modified variant of the Italian-French Fregata Europea
Multi-Missione (FREMM), or multi-mission frigate, meant to enable an
“off-the-shelf”—and therefore streamlined—acquisition for the U.S. fleet.
Instead, constant changes to the ship’s design and
requirements have massively expanded costs and have set production back years.
Rather than a ready-made home run, Constellation now shares a mere 15
percent of its design with FREMM, and costs have ballooned: MacDonald and
Lubold report that the Constellation “is projected to cost at least $600
million more than its original estimate of $1.3 billion.” The frigate’s complexity
was particularly increased, at great expense, by adding systems that some
naval analysts claim will not benefit the small-scale combat and naval
diplomacy missions the Constellation is meant to perform.
The frigate is the latest in a stream of similarly
mismanaged and overly complex naval acquisitions. Initial deployment of the USS
Gerald R. Ford, the first of the newest class of aircraft carriers, was
delayed for several
years due to problems with weapons elevators and novel aircraft launch
and recovery systems. USS John F. Kennedy, the second of the planned
Ford-class ships, is delayed
as well. The stealthy Zumwalt-class guided missile destroyer was designed
around a unique “Advanced
Gun System” with ammunition valued at a staggering $800,000 per round—but
the gun system never achieved the extended ranges that designers had hoped for.
The Zumwalt class was curtailed over the years, from the originally
envisioned 32 ships down to just three, the guns of which are being
replaced at ever-increasing
cost with tubes for eventual hypersonic
weapons. Constellation looks poised to continue this losing streak.
In March 2025, O’Rourke testified
before the House Seapower and Projection Forces Subcommittee that the Navy had
also repeatedly failed to adequately document major shipbuilding program
problems. Records of failures have been discarded, O’Rourke said, without
“transmitting them to future shipbuilding program managers … only to have those
successors rediscover them the hard way years later in connection with
subsequent shipbuilding programs.” He also explained that post-COVID
inflationary pressures have decreased the purchasing power of some Navy
shipbuilding accounts by more than $5 billion. These factors, combined with
what O’Rourke characterizes as the Navy’s chronic tendency to underestimate
construction costs, reveal why Constellation’s price has exploded.
The various malfunctions of the traditional shipbuilding
process have inspired an onslaught of tech startups vying to usurp the “defense
primes” that have controlled the warfighting hardware industry for decades.
Many of these companies offer products engineered to solve emerging warfighting
challenges without being bogged down by military requirements and traditional
contracting. They are gaining
momentum and influence.
But shipbuilding presents an especially difficult market
for new companies to penetrate because ships are so complicated and expensive
to construct. Constellation would be tough to build at a competitive
pace, even if she were designed perfectly, because labor shortages have
hobbled the U.S. shipbuilding industry. No wonder then that Mark Vandroff,
a former CEO of FMM, told
a local reporter last year: “We’ve got lots of work to do, which is why
we’re hiring.”
***
Decision-makers know there is a problem and are taking
action to fix it. In April 2025, President Donald Trump signed Restoring
America’s Maritime Dominance, an executive order aimed at
jumpstarting the industry. The order is ambitious in its goals of improving
U.S. military readiness, reducing dependence on Chinese-built commercial
vessels, and reviving high-paying, maritime-related jobs for American workers.
This is a positive first step, but the executive branch cannot unilaterally
establish a cohesive strategy; restoring the shipbuilding industry will require
apportionment of a tremendous amount of money, which means that enduring change
must come from Congress.
Fortunately, the need for revitalized U.S. shipbuilding
is one of the few issues enjoying bipartisan congressional support. Republican
Sen. Todd Young of Indiana and Democratic Sen. Mark Kelly of Arizona, both Navy
veterans, have introduced the Shipbuilding and Harbor Infrastructure for
Prosperity and Security (SHIPS) for America Act to comprehensively overhaul the
shipbuilding industry. As Kelly explained
in April 2025, “some of the stuff in the [Restoring Maritime Dominance] EO came
from our bill, but the solution to the problem is actually to get this
legislation passed.”
Kelly has framed the legislation as a “three-legged
stool.” The first leg is the effort to increase shipbuilding capacity: $2.5
billion in federal funds over 10 years will support the expansion of active
shipyards and investment in new or dormant ones. FMM and legacy shipyards like
Huntington Ingalls Industries’ Newport
News Shipbuilding division in Virginia—the sole manufacturer of U.S.
aircraft carriers—are easy choices for augmented funding. But hard decisions
will have to be made to determine which smaller shipyards are worthy of
support: In California, the once-great Mare Island Shipyard is
vying for renewal against the prospect of a new and expansive site in
nearby Solano County.
The second leg of the bill aims to increase U.S. maritime
shipping by establishing conditions for more U.S.-flagged vessels to sail the
globe while crewed by American mariners. Per Hudson Institute scholars Michael
Roberts and Bryan Clark, “US shipping companies carry less than 1 percent
of global cargo; US commercial shipbuilders deliver less than 1 percent of the
vessels their Chinese counterparts deliver.” Thus, the U.S. Merchant Marine
fleet, which is responsible for the replenishment
of naval vessels with fuel, food, ammunition, mail, and other necessary
supplies, can barely keep up with the needs of the Navy. This strain produces a
national security weakness. Logistical sustainment would be even more difficult
in war.
Roberts and Clark attribute the frailty of the U.S.
commercial fleet to the tendency of shipping companies “to be based in
tax-friendly jurisdictions and use ships from the cheapest overseas builders.”
U.S. shipping companies often purchase foreign-built vessels but do not
register them as part of the U.S. merchant fleet because doing so would subject
the ship to U.S. laws and—more importantly—operating
costs. They often instead use “flags of convenience,” registering their
ships in countries with low labor and insurance costs, rather than with the
U.S. Today, fewer
than 90 commercial ships—out of an estimated 50,000—conduct
international trade under the U.S. flag.
A proposed Maritime Security Trust Fund—a key feature of
both the SHIPS Act and the Maritime Dominance EO—will, according
to the SHIPS Act’s sponsors, “create a dedicated source of funding for
critical maritime security programs.” Essentially, the fund will use revenue
derived from shipping-related usage fees and tariffs to fund financial
incentives and grants to improve shipyard capacity to domestically produce more
U.S.-flagged ships. But it will also supply funds to the U.S. Merchant Marine
Academy in New York and state maritime academies to facilitate recruitment and
training of a new and larger generation of professional mariners. Through these
measures, the SHIPS Act aims to grow a strategic commercial fleet of 250
vessels.
Supporting the specialized labor force necessary to
manufacture and assemble large ships is the third leg of the SHIPS Act. Nowhere
is the current shortage more pressing than at General Dynamics Electric Boat in
Groton, Connecticut. Here, a depleted workforce is struggling to build the Columbia-class ballistic
missile submarine, the Navy’s highest priority project and arguably
America’s most important strategic weapon. The first ship of the class, the USS
District of Columbia, is projected to arrive 12 to 16 months behind
schedule due to critically poor labor retention and slow replacement training.
The same problem has hindered the Constellation in Wisconsin and the
Ford-class carrier in Virginia. The SHIPS Act hopes to address
these shortages with a robust recruiting campaign and by offering loan
forgiveness, certification programs, and educational assistance to workers.
Beyond the SHIPS Act, $29
billion in additional funding for Navy-specific shipbuilding and worker
programs is tucked into the One Big
Beautiful Bill Act. But the proposed Navy budget for fiscal year 2026
features surprisingly small requests for shipbuilding and base infrastructure.
It also leaves out requests for new submarines and destroyers, as well as
funding for Constellation. Sen. Roger Wicker of Mississippi, who is
leading an effort to bolster the Navy, reacted
to the budget thusly: “I am deeply disappointed with the administration’s
fiscal year 2026 budget request for the Navy. In particular, I am disturbed
about the shipbuilding account, which plummeted to $20.8 billion from last
year’s $37 billion.” He has
posited that the low budget request is an attempt to “game” the system “in
anticipation of congressional reconciliation funds, which were intended as
supplemental—not a substitute.” But lawmakers have expressed intent to augment
the Navy’s budget, regardless of the Trump administration’s inputs.
***
The SHIPS Act and Maritime Dominance EO are long-term
strategic solutions, and it will take many years to significantly increase U.S.
shipbuilding output. Some argue that the keys to denying China’s hegemonic
ambitions are not traditional ships like frigates or carriers but new weapons
that can enter the inventory quickly, inexpensively, and in bulk. But is this
realistic?
Such a shift risks running aground of an aged defense
acquisition process. For example, stringent requirements to make the Constellation
more survivable in combat mean that the FREMM design has to be heavily
modified—and that ongoing process is, according to O’Rourke, one of the primary
reasons for the ship’s delay. Jarrett Lane and Michelle Johnson describe
in War on the Rocks how “as requirements creep out of
control, the time to delivery slips further and further.” The result of this
mission creep is late and overcost acquisitions of “capabilities that are often
unimaginative,
poorly conceived,
or simply obsolete before they are ever deployed.”
The Maritime Dominance EO is a companion to the similarly
directed Modernizing
Defense Acquisitions and Spurring Innovation in the Defense Industrial Base
executive order of April 9, 2025. This EO is aimed at incentivizing faster
contracting, simpler approval pathways, and a general decrease in the red tape
that suffocates creativity in the defense technology sector. It is a step in
the right direction—but now the private sector needs to deliver.
No company embodies the moment’s zeitgeist quite like
Anduril Industries. The brainchild of tech wunderkind Palmer Luckey has grown
in just a few years from a fledgling disruptor to a powerhouse with an
estimated valuation of $31
billion. Its Arsenal-1
“hyperscaling” project in Ohio is meant to overcome the aforementioned defense
acquisition hurdles and mass-produce new hardware designs that depart
dramatically from traditional ships and airplanes. Anduril is hedging that, as its website asserts, “The next
generation of military technology will depend less on advances in shipbuilding
and aircraft design than on advances in software engineering and computing.”
Still, naval missions are not just about
potential lethality. They are also very much about the visible presence of
large and imposing ships to frighten enemies and reassure friends. Indeed, the
messaging power of conventional naval vessels, from frigates to carriers, is
often their most important contribution to U.S. foreign policy. From destroyers
sailing through the Taiwan Strait to the constant, if wearisome, presence of
aircraft carriers in the Middle East, big gray ships signal U.S. intent.
Through this lens, conventional ships like Constellation cannot easily
be replaced by software-based, mass-produced drones or munitions.
Several maritime defense tech companies are vying to
provide autonomous vessels that can serve as complements rather than
competitors to legacy ships and contribute to the goal of achieving a
substantially larger fleet. Companies like Saronic
and Blue Water Autonomy propose drone ships
that can be produced and deployed in large numbers but have the resilience to
sail with the conventional Navy. Ships of this kind may become an evolution of
the drone tactics that have been so effective in
Ukraine. But no maritime startup has yet produced an operationally viable
warship, yielding skepticism from the industry.
Austin Gray, a co-founder of Blue Water Autonomy, explained
on June 17 that it is more difficult to revolutionize the shipbuilding industry
than some policymakers and entrepreneurs may have anticipated. Traditional
shipbuilders, he acknowledged, “know that when you go to build a ship, you
quickly run into the physics of bending steel and laying down a keel. Shipyards
already do this in the most efficient way they can.”
But even if autonomous drone manufacturers can’t yet
compete with the likes of Huntington Ingalls or General Dynamics, there is hope
that new technologies will stimulate the growth of smaller shipyards. Positive
effects for new shipyards stemming from a Navy investment in autonomous boats
is an aspiration consistent with the SHIPS Act and the Trump EOs. But like all
maritime industry changes, the process will be slow.
***
“To deter China, the U.S. must …” is assuredly the
most exhausting admonishment in the defense world in 2025. And Trump’s well-documented
unpredictability vis-à-vis China and Taiwan makes the development of and
adherence to a nuanced and comprehensive grand strategy seem unlikely.
Still, there have been two positive policies already
implemented. Section 129 of the 2025 National
Defense Authorization Act dictates that 95 percent of “all basic and
functional design drawings” for future Constellation-class frigates will
have to be approved before construction funds can be allocated. The Navy is
also moving
ahead with investments in unmanned surface ships.
There are two smaller-scale policy prescriptions that may
also be actionable. Scholars at RAND
and CSIS
suggest that building ships like Constellation in partnership with Japan
and South Korea—which maintain formidable production capabilities—might
accelerate frigate output. O’Rourke also advocates for the establishment of a
Navy shipbuilding “lessons learned center” as a means of documenting shipbuilding
failures and holding program managers accountable for repeated mistakes.
But by far the best solution seems to be to make the
SHIPS Act law. Investment in U.S. shipbuilding is a long-term effort that will
take years to meaningfully affect. But, to paraphrase Kelly, even if the U.S.
cannot match China’s massive shipbuilding output in total numbers, any
improvement is “a hell of a lot better” than what the U.S. has now.
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