U.S. shipbuilding crisis deepens as Navy expansion outpaces capacity
Nov. 5 (UPI) -- The United States is spending billions of dollars to expand its Navy, but American shipyards are taking nearly twice as long to build some warships as they did two decades ago, exposing an industrial crisis that threatens Washington's ambitions to restore its maritime power.
As China expands the world's largest navy by number of battle-force ships, the United States faces a growing mismatch between the vessels it plans to acquire and the capacity of its shipyards to build, repair and maintain them.
With less than 1% of global shipbuilding output, the United States is looking to South Korea, the world's second-largest shipbuilding nation after China, to help revive its maritime industry and strengthen economic and national security.
The challenge is formidable: Just nine major shipbuilders in China, South Korea and Japan account for roughly 75% of global shipbuilding capacity.
Despite building and maintaining one of the world's most advanced navies, the United States has relied largely on foreign-built and foreign-owned vessels for commercial shipping since World War II. Meanwhile, American naval shipbuilding capacity has declined from its mid-20th-century peak, apart from periodic increases in wartime production.
A Congressional Budget Office assessment released in April found that destroyers and submarines that once required five to six years to construct now take nine to 10 years on average.
Eric J. Labs, the Congressional Budget Office's senior analyst for naval forces and weapons, told two House subcommittees that construction delays would leave the Navy with an average of about 20 fewer ships between 2026 and 2030 than if shipyards maintained historical construction schedules.
"The Navy wants to build a larger fleet, but adding ships to a shipbuilding plan is easier than adding the industrial capacity to build them," Labs told UPI.
The shortfall is particularly significant for attack submarines and guided-missile destroyers, which are central to American naval operations in the Indo-Pacific.
The Navy's earlier long-term force-structure objective called for 381 manned ships, compared with a fleet of approximately 290 in 2026. The objective was a planning benchmark, not congressional authorization to procure every vessel.
Yet, expanding the fleet will require more than increased appropriations.
Mike Roberts, a senior fellow at the Hudson Institute, said America's shipbuilding crisis reflects decades of institutional inertia and an industry with little competitive pressure to improve.
"The core problems include a culture and procedures built up over decades of peace that have not adequately adapted" to growing geopolitical threats, Roberts told UPI.
He said the Navy's position as the dominant customer, coupled with limited competition among shipbuilders, has weakened incentives for reform. Reviving commercial shipbuilding, he added, would help strengthen national security.
Brian Hart, executive director of the China Power Project at the Center for Strategic and International Studies, said rebuilding America's commercial shipbuilding industry also could strengthen naval production by preserving skilled workers, industrial infrastructure and manufacturing expertise.
"The United States can strengthen its naval shipbuilding base without transforming its commercial shipbuilding industry," Hart told UPI. "But nurturing a more robust commercial industry could have significant spillover effects that can improve naval shipbuilding."
He said commercial shipyards help sustain the capital, skilled workforce and production knowledge that can support military shipbuilding over time.
The Navy's fiscal year 2026 shipbuilding funding totaled approximately $47.4 billion, including $26.5 billion provided through the 2025 reconciliation law and $20.8 billion in newly requested funding. The administration's procurement proposal covered 19 ships -- 16 supported by reconciliation funds and three by new fiscal 2026 funding.
Although the combined figure exceeded the previous year's shipbuilding budget, the amount of newly requested funding was substantially lower than the fiscal 2025 total.
The figures underscore the difficulty of translating increased spending into a sustained shipbuilding program.
An industrial base under strain
Decades of industry consolidation, workforce shortages, aging infrastructure and supply-chain bottlenecks have strained U.S. shipyards, compounded by design changes during construction.
The shortfall is particularly acute in submarine production. Although the Navy has generally purchased two Virginia-class attack submarines annually, shipyards produced an average of just 1.1 per year during the two-year period examined by CBO.
The production shortfall also threatens U.S. commitments under AUKUS , the security partnership with Australia and Britain that includes plans to supply Australia with nuclear-powered submarines.
In response to mounting industrial pressures, the White House recently announced Arsenal-2 , a software-driven manufacturing initiative backed by a $3.7 billion private investment from Anduril Industries to produce critical components for Virginia-class submarines at the former Bethlehem Steel site in Sparrows Point, Md.
Sen. Mark Kelly, D-Ariz., a former Navy combat pilot and co-sponsor of the SHIPS for America Act , warned during a September Hudson Institute discussion that America's shipbuilding crisis extends beyond aging shipyards to shortages of skilled workers needed to build and maintain the fleet.
"It's a national security problem for our country, and it's getting worse every single year," Kelly said.
Expanding submarine production not only will require more skilled workers, but also greater capacity among hundreds of specialized suppliers.
Matthew Paxton, president of the Shipbuilders Council of America , told UPI that American shipyards have the skilled workforce, advanced facilities and technology needed to reclaim the nation's maritime leadership. He said a coordinated push by industry, the Trump administration and Congress could drive a generational revival of American shipbuilding.
Navy shipbuilding faces persistent delays
The Government Accountability Office has repeatedly warned that rising costs and construction delays undermine the Navy's efforts to expand its fleet.
"Over the last two decades, we have consistently found that the Navy's shipbuilding acquisition practices result in cost growth and delivery delays," Shelby S. Oakley, director of contracting and national security acquisitions at GAO, told House lawmakers on April 22.
The findings raise questions about whether the Navy's planned procurement increases can be sustained without significant improvements in shipyard productivity and acquisition practices.
Keeping the existing fleet operational
Construction delays are only part of the Navy's industrial challenge. Maintaining the ships already in service is placing additional pressure on repair facilities and operational readiness.
The Congressional Budget Office reported that about one-third of the Navy's 48 nuclear-powered attack submarines were undergoing or awaiting maintenance, exceeding its 20% target. Although routine maintenance is necessary, prolonged repairs reduce operational availability.
The GAO also warned that insufficient dry dock capacity is delaying the decommissioning of aging attack submarines, potentially costing the Navy more than $3 billion over the next five years.
Together, the construction and maintenance challenges complicate the Navy's efforts to expand its fleet while keeping existing vessels operational.
South Korea enters the debate
The industrial shortfalls have renewed interest in South Korea, whose shipbuilders offer advanced manufacturing technology, production expertise and investment capital.
Those opportunities were examined during an Oct. 26 Stimson Center forum in Washington on U.S.-South Korean shipbuilding cooperation. The discussion brought together industry executives and policy analysts to examine workforce training, technology transfer and shipyard modernization.
South Korean shipbuilders are expanding their U.S. operations, bringing investment and advanced manufacturing technology to an industry struggling with production delays.
Hanwha, which acquired Philadelphia's shipyard in 2024, secured a $269 million Navy landing ship contract , with options for three additional vessels. The company has since doubled its workforce and invested $350 million, with another $400 million approved for modernization and expansion, Larry Ryder, Hanwha Defense USA's senior vice president for shipbuilding business development, told a Stimson Center forum.
In a further move to consolidate its U.S. operations, Hanwha Defense USA announced plans last week to acquire a 60% controlling stake in Hanwha Philly Shipyard.
Hanwha also named veteran shipbuilding executive Kim Hyuk as CEO of its Philadelphia shipyard, seeking to transfer production expertise from its Geoje operations in South Korea to strengthen U.S. commercial and naval shipbuilding.
Meanwhile, HD Hyundai is pursuing a U.S. shipbuilding venture with Kiewit and working with Huntington Ingalls Industries on automated welding technology.
While these partnerships could improve U.S. shipbuilding efficiency, their impact on production delays remains uncertain. SCA's Paxton said establishing Maritime Prosperity Zones could help revitalize the industry by attracting investment and skilled workers, strengthening regional shipyards and rebuilding domestic supply chains.
Beyond foreign investment
Despite the potential benefits, legal and political barriers continue to limit foreign participation in American shipbuilding.
The century-old Jones Act requires vessels transporting goods between U.S. ports to be American-built, owned and crewed, while separate federal restrictions generally prohibit construction of U.S. Navy warships in foreign shipyards.
Dongkeun Lee, a Japan Society for the Promotion of Science postdoctoral fellow at Keio University, said those restrictions pose significant obstacles to deeper U.S.-South Korean shipbuilding cooperation.
Lee told UPI that Washington may need to consider building some naval vessels in South Korea if demand exceeds the capacity of Korean-backed shipyards operating in the United States.
The Navy's May 2026 shipbuilding plan signaled greater openness to allied cooperation, stating that while domestic shipbuilding remains the priority, it would consider overseas options, including construction of auxiliary vessels and fabrication of warship components, subject to legal and congressional restrictions.
Unlike South Korea and China, where commercial shipbuilding sustains large-scale production, the United States relies heavily on a handful of yards building warships. Sustained government contracts, skilled workers and faster ship deliveries will be critical to the administration's Golden Fleet initiative, which seeks to expand and modernize the Navy to strengthen American maritime power.
James Borton is 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.
