The U.S. Navy faces mounting pressure to modernize its shipbuilding infrastructure as global competitors, particularly China, continue to outpace American production capacity. Secretary of the Navy John Phelan emphasized the urgency during recent testimony before the Senate Armed Services Committee.
“We are still the dominant naval power, but our adversaries are closing the gap at a concerning, accelerating rate,” Phelan said. “We need to make important cultural and strategic changes in order to maintain our competitive advantage.”
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Phelan, who has served in the role for only a few months, has already visited three foreign and seven domestic shipyards to assess how the Navy can improve efficiency and output. His remarks came amid growing concern over the Navy’s top shipbuilding program, which is currently six months behind schedule and 50% over budget.
The challenge ahead
To better understand the path forward, Straight Arrow News spoke with Benjamin Plum, an associate partner at McKinsey & Company. The global consulting firm has been working with the Department of Defense to address the shipbuilding shortfall.
“Meeting this surge in demand is truly a daunting challenge,” Plum said. “It is going to require us to focus on aging infrastructure, attract and retain talent and bring new technology to bear on the business of shipbuilding in a way that has never been done.”
According to Marine Insight, the United States has 154 private shipyards across 29 states and the U.S. Virgin Islands. However, only 10 of those facilities are large enough to support the Navy’s ambitions. Many of them have not seen significant upgrades since World War II.
“That means bringing in new equipment, revitalizing facilities and even providing shelter for workers to operate efficiently,” Plum said. “Yard modernization is core to our challenge.”
Funding and China
Funding remains a critical issue. Sen. Roger Wicker, R-Miss., chair of the Senate Armed Services Committee, criticized the proposed 2026 defense budget, which would slash shipbuilding funds to $20.8 billion, down from $37 billion.
“I must say I am deeply disappointed,” Wicker said. “In particular, I am disappointed about the shipbuilding account.”
Meanwhile, China continues to dominate the global shipbuilding industry. A report in Foreign Affairs noted that China launches more tonnage annually than all other countries combined. The U.S. Office of Naval Intelligence estimated that China’s shipbuilding capacity is more than 200 times greater than that of the United States.
The issues of infrastructure and new talent
Plum pointed to the aging U.S. maritime infrastructure as a key factor in the disparity.
“Much of our infrastructure was built for the World War II production surge,” he said. “It is still serviceable, but it has not received the same level of investment as Asian shipyards in recent decades.”
The workforce also poses a significant challenge. Industry estimates suggest there are between 140,000 and 179,000 unfilled jobs in the U.S. maritime sector.
“We have failed to attract new talent to the profession of shipbuilding,” Plum said. “A lack of focus and veneration for shipbuilders over the last 30 or 40 years has contributed to that problem.”
What’s next for the shipbuilding industry?
Despite the obstacles, Plum expressed optimism about the industry’s adoption of advanced technologies.
“We are seeing shipbuilders begin to adopt cutting-edge technology,” he said. “That includes automated welding, digital twins to better understand production environments and generative AI for real-time scheduling.”
These innovations could help the Navy regain its competitive edge, but time remains a critical factor. As Secretary Phelan works to “fix what is broken,” the future of U.S. naval dominance may depend on how quickly the nation can modernize its shipbuilding enterprise.
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