The U.S. Navy nearly a decade ago committed to rebuilding its battle force to a strength of at least 355 ships. This figure originated from a 2016 Force Structure Assessment. It considered geopolitical challenges, the growing needs of regional combatant commanders, and China’s progress in closing the gap between the People’s Liberation Army Navy and the U.S. Navy.
The call to increase the number of Navy ships persists, yet the battle force continues to shrink because of an aging fleet, workforce shortages, industrial limitations, and chronic budgetary and planning constraints. Even if procurement were on budget and on time, shipyard capacity and the Navy’s desired funding mean 355 manned battle-force ships would be achieved no earlier than the late 2030s. As things stand, the Navy is planning around a more austere, and more realistic, peak of 348 hulls in Fiscal Year 2042.
The experts are clear: The Navy needs more ships. The Navy agrees—the aspirational alternative to the austere plan mentioned above would see the service reach 381 ships. With a current force of just under 300 ships and set to decrease in the coming years, combatant commanders would strain to sustain a prolonged conflict. The inability for domestic production to meet naval demand on time, meanwhile, runs parallel to the growing risk of a peer war in the coming decade.
With only four remaining publicly owned naval shipyards and a handful of private shipyards that are near their capacity, the United States must consider turning to foreign shipbuilders. Turning to the shipyards of allies and partners would allow the U.S. Navy to replenish its battle force and revive its merchant marine to meet Washington’s national security objectives.
Sailing Into Decline
The United States ended World War II with 11 public naval shipyards and more than 60 private-sector shipyards combining to deliver an extraordinary record of naval production.1 The U.S. Maritime Commission, established in 1936, managed the production of more than 6,000 ships over five years. These included more than 2,600 Liberty Ships—some of them built in days. While the fleet scaled down after the war, the Bureau of Ships maintained 11 public shipyards until 1964, when Secretary of Defense Robert McNamara closed the New York Naval Shipyard; Boston followed in 1973.2 At the same time the Navy downsized its fleet, it was able to retain the bulk of its skilled workforce and shipyard infrastructure. By the time the sun set on the Cold War, the United States had a skilled workforce of more than 70,000 workers spread across eight naval shipyards, six of which were nuclear-capable.
During the 1990s, though, the Base Realignment and Closure Commissions (BRACs) closed half those shipyards and managed to retain only a third of the skilled ship workers.3 The four remaining shipyards—Pearl Harbor, Puget Sound, Portsmouth, and Norfolk—have grown to a workforce of just under 30,000. It is no surprise, after such a drastic reduction in specialized shipyards, that it is a challenge to rebuild capacity to the level naval planners knew under the Reagan administration’s drive to a 600-ship Navy. Today, the defense sector as a whole employs about one-third the number of workers it did in 1985.
Further, the withdrawal of federal shipbuilding subsidies made U.S. shipbuilders uncompetitive in a global market, with the exception of the coastal and inland-waterway trade protected by the Jones Act, as well as companies building warships and shielded by the Byrnes-Tollefson Amendment. Private shipyards were burdened with a relative lack of financial support, higher labor costs than their competitors, and a maintenance backlog of aging ships. The result was a drastic decrease in domestic shipbuilding and an increase in costs for the remaining sectors protected from competition by law. Shipbuilding is sustained with enough orders to keep the lights on, but not enough to lower costs. While China invested more than $132 billion dollars into its shipyard industry between 2010 and 2018, the U.S. invested a mere $77 million.
Running Out of Options
The war on terror drastically reshaped the Navy’s procurement and shipbuilding strategy. Depressed production of Virginia-class submarines has proved especially difficult to reverse. After two decades of producing one boat per year on average, attempts to scale production to two continue to run up against budgetary and capacity constraints.
Producing both littoral combat ship classes, while inefficient, had the benefit of keeping shipyards open and workforces employed at a time when the United States retained a fraction of its Cold War–era naval shipyard infrastructure. Optimistic investments into the LCS’s mission module capabilities, as well as the DDG-1000 program—which was terminated after the construction of just three warships—put significant pressure on the Navy’s more successful surface combatant programs: the reliable Arleigh Burke, the aging Ticonderoga, and the now-retired Oliver Hazard Perry classes. The LCS’s planned replacement, the Constellation-class frigate, should be a capable platform. But it is now three years behind its original goal of commissioning the first FFG-62 frigate in fiscal year 2026. With the sunset of the Ticonderoga class and production of the Arleigh Burke–class Flight IIIs capped at two per year, the Navy is running out of options to meet its procurement goals.
It is no surprise that many have advocated to make increasing domestic shipbuilding capability a national security priority. There is too wide a gap between what the Navy requires and what reality can deliver.4 The ships the service needs within the next 15 years cannot be expected to be produced without a sustained commitment from Congress and solutions to deep-rooted investment, workforce, and supply-chain issues. But Congress has used 135 continuing resolutions since 1998 just to keep the government open. Sequestration in 2013 and the threat of shutdowns make long-term planning impossible as budgets stagnate and industry partners receive mixed messages from the Navy and Congress.
The “Davidson Window” is open, and the danger of a Chinese invasion of Taiwan is no longer just a worry for the future. The Navy has correctly identified the investments the domestic shipbuilding industry needs, but these will not replenish the Navy’s battle force and sealift capabilities on time.5 The Navy must consider supplementing domestic production with efficient, affordable, and reliable allied shipyards that do not suffer from the same investment, supply-chain, and workforce challenges.
A Stopgap Run of Destroyers
The concept of engaging foreign shipyards is not farfetched. Two major U.S. allies produce modified Arleigh Burkes at affordable rates and in reasonable time. Both Japan’s Maya class and South Korea’s Sejong the Great class are Aegis-equipped, well-built, and dependable surface platforms. At $1.6 billion and $920 million per ship respectively—compared to the Arleigh Burke Flight III’s average production cost of $2.5 billion per ship—South Korea and Japan’s industries have demonstrated remarkable efficiency and capability. Not only would partnering with them bring the Navy closer to meeting its battle-force goals, but it could do so at a lower price and might gain leverage to negotiate lower costs on domestically built Arleigh Burkes. According to the Pentagon, production limitations have held the Navy back from ordering more than two DDGs per year despite possessing the resources and Congressional backing to do so. Allocating these existing resources to a stopgap run of Japanese- or Korean-built Arleigh Burke derivatives would provide needed relief to an increasingly stretched force while not reducing orders from U.S. shipyards.
Overseas shipyards could also supplement construction of Constellation-class FFG-62 frigates. The parent class of the FFG-62, the European Multi-Mission Frigate (FREMM), is currently in production at the Genoa-based Riva Trigoso shipyard, which was recently contracted to build two evolved FREMM designs for the Italian Navy. The French Naval Group shipyard in Lorient launched its final FREMM in 2020. While the Navy desires four FFG-62s per year, the lead ship Constellation will not deliver until 2029. Simultaneously, the Navy has increased the share of these frigates in the battle force, increasing from 24, to 32, and then nearly doubling to 58.6 In addition to repurposing shipyards currently dedicated to the Coast Guard’s National Security Cutter and Saudi Arabia’s Multi-Mission Surface Combatant, the Navy should consider the feasibility of ordering FREMMs from European builders. While the current configuration only maintains 15% commonality with its European predecessor, previous iterations shared more than 85% and could be delivered more quickly in a desire to acquire more ships in less time.
Making Best Use of AUKUS
The AUKUS agreement represented a landmark shift in allied naval procurement. Plans are first to sell Virginia-class submarines to the Australian Navy, as well as to establish nuclear-capable shipyards to build the future SSN-AUKUS. Currently, the Royal Australian Navy plans to acquire only five boats. This low number will artificially slow the production of each boat to keep the shipyard open at higher cost, as seen with France’s submarine programs.7 While making the submarines more expensive per boat, this change of pace keeps workforces employed and their nuclear-capable shipyards open. The Royal Australian Navy might do the same to justify the overhead investment required to build the SSN-AUKUS. The U.S. Navy could use these new shipyards to service U.S. submarines, taking pressure off U.S. submarine production. In the future, Osborne Naval Shipyard in South Australia could not only offer this support, but also potentially manufacture components of U.S. submarines.8
The United States’ sealift fleet could benefit greatly from affordable, foreign-sourced ships. John Lewis–class fleet oilers cost more than three times as much as comparable vessels procured by the Royal Navy and built in South Korea. Not only could the United States purchase foreign-built ships, but it also could use allied ports and merchant fleets for its logistics. It will cost more than $1.8 billion to produce two U.S. Coast Guard Polar Security Cutters, which are mandated to be built domestically. Yet a Finnish offer to build two cutters in two years for less than $700 million shows how shortsighted it is to exclude foreign competition. Allocating billions in finite budgets to container ships will not yield a resilient logistics fleet large enough to sustain a prolonged war in the Pacific.
Despite the cost benefits, and the evolving circumstances that demand more ships, significant political barriers exist to supplementing domestic with allied shipbuilding. The Byrnes-Tollefson Amendment prohibits foreign entities manufacturing major components such as the hull or superstructure on Navy vessels.
Critics may cite security concerns with procuring advanced naval warships, especially Aegis-equipped ones, overseas. But both the proposed shipyards producing Arleigh Burke–derived platforms are building variants with ballistic-missile-defense capability, and they have successfully tested them. Further, the Department of Defense already entrusts foreign partners with producing some of its most sensitive weapon platforms. The Final Assembly and Checkout facility in Cameri, Italy, is producing more than 850 F-35A wing sets, in addition to full-fledged F-35s for the Italian Air Force. Procuring ships built by proven allies is not significantly riskier than outsourcing the construction of fifth-generation fighters.
Further security measures could be introduced. For example, the vessels could be delivered to the Navy with basic capabilities and propulsion and subsequently fit out to Naval Sea Systems Common standards at a U.S. shipyard. Under the Byrnes-Tollefson Amendment, the President retains the authority to waive its provisions for national security. The Navy should consider asking the President to do so.
The Navy must act. Its surface fleet is set to retire a number of ships that are at the end of their service lives, with no ships ready to replace them. It struggles from two decades of investment in programs that failed to deliver promised, essential capabilities. Its shipyards struggle to recover from workforce shortages and to solve deep-rooted supply-chain issues. Simultaneously, it demands a fleet capable of maintaining freedom of the seas, able to deter aggression in the Pacific, and benefiting from the logistics needed to support a prolonged conflict. Without a lifeline of supplemental production in allied shipyards while domestic production recuperates, the Navy is unlikely to meet the goals it must achieve if it is to do its job.
1. Seacoast Shipyard Association, “The Saga of Naval Shipyards,” www.saveourshipyard.org (SSA, 2017), www.saveourshipyard.org/web-content/saga.html. Henry J. Kaiser’s Richmond shipyard built the SS Robert E. Peary in just under five days.
2. Seacoast Shipyard Association, Saga of Naval Shipyards, 1.
3. Seacoast Shipyard Association, 1.
4. Office of the Chief of Naval Operations, FY2025 30-Year Shipbuilding Plan, 20.
5. Office of the Chief of Naval Operations, FY2025 30-Year Shipbuilding Plan, 20.
6. Office of the Chief of Naval Operations, FY2025 30-Year Shipbuilding Plan, 20.
7. The French government alternates between producing its replacement SSNs and SSBNs over the course of decades— for example the Triomphant-class SSBN, which had a 24-year production run for only 4 boats.
8. At this point, the Virginia-class design would be more than 40 years old. Even if the United States does not order production from this Australian shipyard, allowing repairs at the Osborne Naval Shipyard would open up space domestically to increase shipyard output.