The United States has just nine major shipyards that serve as the backbone of American naval defense and are able to undertake maritime construction. Four of those facilities are public shipyards owned by the United States Navy, with five other Tier-1 shipyards owned by major defense prime contractors.
Calls have been made for the United States Navy to expand considerably to address great-power competition, notably from China in the Indo-Pacific. Still, it is unlikely the current shipyards will be able to build, maintain, and repair the warships required – and certainly not on time and on budget. Although President Donald Trump and Secretary of War Pete Hegseth have proposed a Golden Fleet that could include a new class of battleships and other advanced warships, it remains unlikely that America’s defense industrial base could build such a fleet, and certainly not on the timeline the administration has called for.
Earlier this year, the Congressional Budget Office (CBO) warned that the U.S. Navy’s destroyers and attack submarines, which once took five to six years to build, now take nine to 10 years, resulting in a shortage of deployable vessels.
A Problem Years in the Making
The decline in U.S. shipyards stems from decades of policy shifts, high labor and material costs, and the loss of a competitive commercial shipbuilding ecosystem. Although the end of the Cold War and the dissolution of the Soviet Union are often cited as the start of the decline in U.S. military infrastructure, the current shipbuilding woes can be traced back even further.
In 1981, Washington ended the construction differential subsidies (CDS) that helped American yards bridge the cost gap with foreign builders. Without that support, U.S. commercial shipbuilding collapsed, and countries such as Japan, South Korea, and later China invested heavily in massive, state-backed industrial strategies, modernizing their facilities and undercutting U.S. pricing by a wide margin.
The collapse of commercial shipbuilding wiped out the domestic supply chain – including local steel mills, specialized component makers, pump and engine suppliers, and a deep pool of skilled tradespeople like welders and pipefitters. This attrition also crippled the U.S. Navy’s ability to build and maintain its warships efficiently.
Moreover, the remaining U.S. shipyards also rely on outdated facilities and, in many cases, World War II-era equipment. The other issue is that experienced shipbuilders are retiring, and the industry continues to struggle to recruit and retain a new generation of skilled workers.
As stated, today just nine shipyards must build, maintain, and overhaul all U.S. Navy nuclear submarines, aircraft carriers, destroyers, and major auxiliary vessels.
Foreign Shipyards Could Help
Last week, James Borton, a non-resident senior fellow at Johns Hopkins SAIS Foreign Policy Institute and author of the forthcoming book, Arsenal of the Seas: America, South Korea and the Fight to Restore U.S. Shipbuilding, writing for UPI, highlighted the role foreign partners can play in revitalizing America’s aging shipyards.
“The industrial shortfalls have renewed interest in South Korea, whose shipbuilders offer advanced manufacturing technology, production expertise and investment capital,” wrote Borton, adding, “South Korean shipbuilders are expanding their U.S. operations, bringing investment and advanced manufacturing technology to an industry struggling with production delays.”
South Korea’s Hanwha acquired the Philadelphia shipyard in 2024, and last month secured a $269 million U.S. Navy contract to build the first Medium Landing Ship (LSM), with options for up to three additional vessels. As part of its efforts to consolidate its operations in the United States, Hanwha Defense USA also announced plans to acquire a 60% controlling stake in the Hanwha Philly Shipyard, which has already doubled its workforce and undertaken a modernization effort.
U.S. maritime services company TOTE Services selected Hanwha Defense USA to build the initial LSM following a request for proposals (RFP) to qualified U.S. shipyards, citing competitive pricing and acceptance of TOTE Services’ subcontract terms and conditions. TOTE Services will issue the award under its Vessel Construction Manager (VCM) contract for the U.S. Navy and Marine Corps.
“This award shows the speed at which the VCM model can move from RFP to contract,” said Jeff Dixon, President of TOTE Services. “Through a competitive process, we secured strong terms that benefit the government, along with build positions that allow construction to start in the fourth quarter of 2027.”
Hanwha Defense USA isn’t the only foreign partner that could help get America’s shipyards back on track.
HD Hyundai is also exploring a potential venture with Kiewit that could include working with Huntington Ingalls Industries on the use of automated welding technology, Borton also explained.
“While these partnerships could improve U.S. shipbuilding efficiency, their impact on production delays remains uncertain,” Borton acknowledged.
Approximately 82% of new U.S. warships and submarines under construction are running behind schedule, driven by a combination of industrial decay, workforce shortages, design changes, and fragile supply chains.
The Finland Model
During the Biden Administration, the United States considered working with foreign shipyards in Japan and South Korea to service and maintain U.S. warships.
One effort is now underway – the Finland Model.
The naval acquisition and industrial strategy allows foreign allied shipyards to construct the first two vessels of an approved ship class overseas to speed up delivery times. In exchange, the foreign shipbuilder must transition all subsequent production to the United States.
The framework originated from U.S.-Finland/ICE Pact agreements to build Arctic icebreakers, notably the U.S. Coast Guard’s Arctic Security Cutter program, to quickly build polar capabilities. This past August, a Presidential Memorandum expanded the framework across broader naval and auxiliary categories, which included light surface combatants such as anti-submarine and escort warships, strategic sealift Roll-on/Roll-off (Ro-Ro) vessels, and fast-tracked replenishment tankers.
Design Creep Needs to be Addressed
Beyond these issues, the U.S. Navy faces another challenge: “Design Creep,” which has led to mid-build changes that slow production even more. Since the end of the Cold War, the United States Navy has canceled or scaled back several programs, leading to costly missteps.
This included the Seawolf-class fast attack submarine program, which was canceled amid severe budget constraints. The Zumwalt-class destroyer program was also impacted, initially scaled back from 32 ships to seven, and finally to just three. Because fixed research and development costs were split among only three ships instead of 32, the price per ship ballooned to roughly $7.5 billion to $8 billion.
The Advanced Gun System (AGS), which fired a specialized Long Range Land Attack Projectile (LRLAP) for coastal shore bombardment, became too expensive to operate as the cost of each round skyrocketed from an expected $35,000 to between $800,000 and $1 million per shell – comparable to the cost of a Tomahawk missile. The U.S. Navy has since spent millions to refit the three destroyers with even more expensive hypersonic weapons, turning vessels meant to be key to an amphibious assault in the Indo-Pacific into platforms that, at best, can serve as a deterrent.
But the issue of design creep is most notable in the Constellation-class frigate program, which was originally planned as a low-risk adaptation of an existing Franco-Italian design. Instead, the U.S. Navy opted to alter roughly 85% of the design after construction had begun on the lead vessel.
The U.S. Navy needs to have its plans in place, from finalized designs to how the shipyards domestically, and possibly overseas, can help build the fleet of tomorrow.
