A SHIPBUILDING STRATEGY FOR THE UNITED STATES: CHALLENGES

by Stas | Aug 6, 2025 | Uncategorized

National Steel & Shipbuilding Company (NASSCO) San Diego, CA displays an older and smaller shipyard lay-out than a new Chinese shipyard featured below (PHOTO: NASSCO)

“Commercial ships could carry merchant trade, but they could also carry logistical supplies for the military in wartime. Shipyards could build new ships for civilian fleets as well as the Navy, but they could also repair ships damaged in wartime operations. Shipyards also drove other portions of the economy. For every shipyard blue-collar job, five to seven well-paying positions were created in upstream parts and component suppliers.”—National Review[1]

By Stas Margaronis

The state of American shipbuilding and especially U.S. naval shipbuilding is not good, according to a March 2025 General Accounting Office (GAO) report:

“Although maritime threats have been growing, the Navy has not increased its fleet size as planned over the past 20 years. Over this period, GAO has found that the Navy’s shipbuilding acquisition practices consistently resulted in cost growth, delivery delays, and ships that do not perform as expected. For example, GAO identified schedule risks in 2024 for the Constellation class frigate program. Counter to leading ship design practices, construction for the lead ship started before the ship design work was complete, and delivery is expected to be delayed by at least 3 years.

The Navy’s recent practices with the frigate program are similar to its prior performance with its Littoral Combat Ship and Zumwalt Class Destroyer programs. Both programs were hampered by weak business cases that over-promised the capability that the Navy could deliver. Together, these two ship classes consumed tens of billions of dollars more to acquire than initially budgeted and ultimately delivered far less capability and capacity to fleet users than the Navy had promised. The Navy cannot expect to look within its existing playbook to find answers. Current challenges can provide the Navy leadership with the impetus to look for solutions outside of the existing defense acquisition paradigm. Specifically, the Navy can innovate by using effective, proven ship design practices and product development approaches that are rooted in the approaches of industry-leading companies worldwide.

GAO has previously identified leading ship design practices used by commercial ship buyers and builders that the Navy can use to achieve more timely, predictable outcomes for its shipbuilding programs.”[2]

There have been some recent positive developments:

On July 31^st South Korea announced that as part of a new tariff and trade deal with the United States that it would invest $150 billion to Make American Shipbuilding Great Again (MASGA). While this would be a huge shot in the arm for U.S. shipbuilding, there are many unanswered questions about this investment. The Korea Times reported: “Further details about the shipbuilding cooperation remain unknown. It is also unclear how Korea will raise the $150 billion,” and “The U.S. government has not commented on the shipbuilding cooperation. Saying that Korea will accept American vehicles and agricultural products, Washington only highlighted Seoul’s plan to invest $350 billion in the U.S. and import energy products including liquefied natural gas,” and “HD Hyundai said it will cooperate with the government for the MASGA project, once it is informed of further details.”[3] So many questions and so far, no answers
The Trump administration’s decision to approve Japan’s Nippon Steel take-over of U.S. Steel will generate new investment and technology into American steel manufacturing essential for the shipbuilding supply chain.
In June, South Korean shipbuilding giant HD Hyundai and Louisiana-based Edison Chouest Offshore (ECO) signed a strategic shipbuilding collaboration that will see the construction of medium-sized, LNG dual-fuel container ships built at ECO’s Tampa Ship shipyard. The joint venture will bring Korean best practices to the Florida shipyard. First deliveries are projected for 2028. As part of the collaboration, HD Hyundai will provide critical support to Tampa Ship in vessel design, procurement of specialized equipment and transfer of advanced shipbuilding technology. HD Hyundai will also participate in the fabrication of certain ship blocks and invest in key technical infrastructure to enhance the capability of Tampa Ship.[4]
In June, at the NATO summit in The Hague, President Trump confirmed that the U.S. was in negotiations with Finland to buy up to 15 icebreakers, including acquiring a used vessel currently available.[5] The U.S. Coast Guard estimates that it will need 8-9 polar icebreakers, including 4-5 heavy vessels to fulfill its mission in the Arctic. President Trump’s tax and spending bill “appropriates close to $9 billion for the expansion of the U.S. Coast Guard’s Arctic icebreaker fleet,” according to GCaptain.[6]
The President’s tax and spending tax bill contains $29 billion for shipbuilding most of which is directed to U.S. naval shipbuilding.[7] The problem is this money is unlikely to greatly improve naval shipbuilding, as the GAO report quoted above explained until structural problems are resolved. Other problems include: a severe labor shortage, an ageing workforce, and the high cost of domestic construction compared to foreign yards. Some critics argue that while the funding addresses naval needs, it may have limited direct impact on commercial shipbuilding capacity.[8] The best strategy, foreign experts argue, is to transfer commercial shipbuilding improvements to naval shipbuilding as China has successfully demonstrated. Finally, in 2023, Under Secretary of Defense Mike McCord, the Pentagon’s top budget officer, said U.S. naval shipyards do not have the capability to produce even two destroyers per year, placing them at a competitive disadvantage with China. He cited serious problems with U.S. infrastructure including shortfalls in the supply chain and skilled labor.[9]

REBUILDING U.S. SHIPBUILDING INFRATRUCTURE

The consensus is that the United States needs to invest at least $100 billion in new commercial shipbuilding that will benefit naval and commercial shipbuilding and help address infrastructural deficiencies and reduce the cost of construction. If any of the promised $150 billion from South Korea materializes, that, of course, would change the U.S. shipbuilding situation dramatically.

A widely cited appraisal of U.S. industrial decline and neglect was provided by China’s Global Times and bears repeating:

“The chasm between American and Chinese shipbuilding is fundamentally a gap in industrial infrastructure. The forces of globalization swept away America’s steel mills, machine shops and skilled labor force, leaving behind rusting supply chains and a hollowed-out manufacturing base.

Shipbuilding, a quintessential heavy industry, requires a robust industrial foundation. When that foundation crumbles, shipbuilding inevitably follows.

Rebuilding America’s shipbuilding industry isn’t as simple as creating a new government office or throwing money at the problem. It’s more akin to replanting a rainforest in the desert. You need to restore the soil (industrial infrastructure), introduce species (supply chains) and wait for the ecosystem to regenerate (skilled workforce development).

The Trump administration’s planned investment might plant a few trees in America’s shipbuilding industrial desert, but a forest will take at least 20-30 years to grow. Of course, America’s military shipbuilding sector remains a global leader in technology. However, expanding this expertise to the broader commercial shipbuilding industry is a challenge.” [10]

Jiangnan Shipyard, Shanghai, China illustrates mass-shipbuilding capability (Photo: Jiangnan)

2025 FEDERAL CUTBACKS HURT

In a July Splash critique, Sam Chambers writes that cutbacks in federal programs and elimination of key personnel are undermining shipbuilding and maritime revitalization:

*Suspension of the Food for Peace program, which previously provided essential cargo for US-flagged ships.

* Department of Government Efficiency’s closure of the U.S Agency for International Development (USAID) has effectively halted this program idling ships within the industry. Cutbacks to USAID funding can have a significant negative impact on US. agricultural exports and the domestic farming industry.[11]

* The newly established shipbuilding office within the National Security Council has experienced significant staff reductions, shrinking from seven to two members undermining the extensive Maritime Action Plan outlined in the President’s executive order signed in April to revitalize shipbuilding, expand the U.S.-flagged fleet, and counter China’s dominance in global shipping.[12]

USTR FEES ON SHIPS

Proposed fees assessed on Chinese and foreign-built ships entering U.S. ports by the U.S. Trade Representative (USTR) could generate some financing for shipbuilding.[13]

However, it is controversial with U.S. importers and exporters and U.S. ports.

Speaking on behalf of U.S. Agricultural exporters, at the Trans Pacific Maritime conference last March, Peter Friedmann, Executive Director, Agriculture Transportation Coalition (AGTC) argued that if the Trump administration is serious about shipbuilding, then it should invest directly in shipbuilding. He worried that the USTR proposals penalize importers, exporters, and U.S. ports and do not effectively support shipbuilders.

OFFSHORE WIND CUTBACKS IMPACT U.S. TUG, SHIPBUILDING, PORTS & NEW MARINER JOBS

Last December, Jennifer Carpenter, President & CEO of The American Waterways Operators (AWO), representing the U.S. inland and coastal tugboat, towboat, and barge industry and President of the American Maritime Partnership hailed bipartisan legislation proposed to reform the commercial maritime and shipbuilding sectors so the U.S. can better compete with China via ‘The Shipbuilding and Harbor Infrastructure for Prosperity and Security for America Act,’ also known as the SHIPS Act. She also said that offshore wind farms create new U.S. energy generation and new jobs for U.S. mariners including wind turbine installation, repair, and wind port operations.[14]

Here are some examples:

The Charybdis, the first U.S. flagged, Jones Act-compliant wind turbine installation vessel, was launched at the Seatrium AmFELS shipyard in Brownsville, Texas in 2024 for Virginia’s Dominion Energy.[15]
The Port of Long Beach’s Pier Wind project planned a new 400-acre floating wind turbine assembly and manufacturing complex, that would have included vessel construction, and was projected to create 3,000 new jobs.[16]
At the Port of Humboldt Bay (California), plans for floating offshore wind farms were projected to create new jobs for tug and barge operators, workers in new assembly yards, building and manning maintenance and repair of new vessels. “Estimates for job creation by 2030 range from 2,375 to 8,280 jobs — with differences largely driven by assumptions regarding project scale and level of state participation in the supply chain,” according to the Schatz Energy Research Center, California State Polytechnic University Humboldt.[17] One boatyard builder estimated that 8 brand new U.S. Jones Act ocean-going tugboats would need to be built to tow the projected 400-500 floating wind turbines into position at proposed wind farms off the coast of Northern and Central California.

Many offshore wind farm projects at ports around the United States were gearing up for building and assembly of offshore wind turbines along the Atlantic, Gulf and Pacific coasts.

Donald Trump’s opposition to offshore wind farms dates to 2012 when he began tweeting his opposition to offshore wind turbines being located near his new golf course, Trump International Golf Links, near Aberdeen, Scotland. He said the wind turbines would ruin views for golfers and residents. Trump took his opposition to the wind farm to the highest court in the United Kingdom, but lost.[18]

In 2025, Trump used the power of the federal government to shut down most offshore wind projects in the United States eliminating thousands of jobs, new maritime development, and vessel construction.

FOOTNOTES

[1] https://prospect.org/blogs-and-newsletters/tap/2025-01-17-how-china-dominates-global-shipbuilding/

[2] https://www.gao.gov/products/gao-25-108225

[3] https://www.koreatimes.co.kr/business/companies/20250731/make-american-shipbuilding-great-again-project-touted-as-key-contributor-to-tariff-deal

[4] https://www.prnewswire.com/news-releases/hd-hyundai-joins-forces-with-us-shipbuilder-for-vessel-construction-302487630.html

[5] https://gcaptain.com/u-s-in-talks-to-buy-15-icebreakers-from-finland-trump-says-at-nato-summit/

[6] https://gcaptain.com/trump-bill-secures-9-billion-for-u-s-arctic-surge-six-new-icebreakers-to-counter-russian-and-chinese-dominance/?subscriber=true&goal=0_f50174ef03-17c7e4f87b-169966254&mc_cid=17c7e4f87b&mc_eid=f4fd64d0a0

[7] https://splash247.com/trumps-signature-legislative-package-contains-significant-shipbuilding-provisions/

[8] https://splash247.com/trumps-signature-legislative-package-contains-significant-shipbuilding-provisions/

[9] https://rbtus.com/dod-says-u-s-naval-shipbuilders-cant-build-two-destroyers-per-year/

[10] https://www.globaltimes.cn/page/202503/1329798.shtml

[11] https://i4di.org/pubs/dismantling_usaid/