When President Donald Trump announced Tuesday that he had created a new White House office to “resurrect” American military and commercial shipbuilding, he elevated long-standing calls to fix the struggling industry that he said is vital to national security. His clarion call to build more ships “very fast and very soon” comes at a time of rising strategic competition with China.
“Our shipbuilding industry is shrunk down to bare minimum right now,” Marine Corps Commandant General Eric Smith told VOA in an exclusive interview at the Pentagon late last year.
The anemic state of American shipbuilding and ship maintenance, and the risks they raise for the military, was shared with VOA through more than a dozen interviews with U.S. military and industry officials spanning several months and conducted ahead of Trump’s announcement.
The U.S. Navy is still considered the most powerful in the world when it comes to firepower and tonnage, but the number of Navy ships has fallen behind China’s. The United States has 296 ships in its fleet, while China’s is on pace to surpass 400 ships this year.
Shrinking fleet
Despite the U.S. Navy’s goal of increasing the size of its fleet, in recent years the number of ships has been shrinking. Last year’s budget funded just six new Navy ships, while decommissioning 15 from the fleet, for a net loss of nine. The fiscal 2025 budget plan funds six new ships while decommissioning 19, for a net loss of 13.
The lifeblood for maritime industry titans like British-based BAE, U.S.-based Huntington Ingalls Industries (HII) and Fairbanks Morse Defense runs almost exclusively through the U.S. military. Industry leaders say they have the space to build and repair more ships but that Navy contracts have been scarce.
“We’re operating at half-capacity,” said Brad Moyer, vice president of BAE Systems Ship Repair. Although the company is one of the largest for ship repair in the United States, when VOA toured BAE’s Norfolk yard in Virginia in November, most of the docking spaces for ships were empty.
Shipbuilding demand has fluctuated wildly based on Navy budgeting strategies, creating an industry atmosphere of feast or famine that is shrinking the supply chain.
“There’s thousands and thousands of suppliers that have gone out of business, and it’s a real risk,” George Whittier, the CEO of Fairbanks Morse Defense, told VOA. The company is the largest engine manufacturer in North and South America and the sole company supplying the biggest engines used in the military’s amphibious warfare ships. Each engine is about the size of a small school bus.
“We should have two engine suppliers. But the reality is, if the Navy is only going to build six ships a year, it’s a struggle to keep one engine supplier in business, let alone two. We’re going to have to grow our way out of this, and that’s the only way we’re going to do it,” Whittier said.
He is not alone. VOA found multiple examples of companies that were the only supplier of specific ship parts. The U.S. military and other industry leaders say they are worried there will not be a backup for parts should more industry businesses go under. And those suppliers who have survived say when business is not steady, it takes longer to provide the parts, and it costs more to procure the materials.
Acting Vice Chief of Naval Operations Admiral Jim Kilby, while advocating for a bigger fleet, says he has not had the budget to replace all of his aging ships and submarines, much less grow the force.
“When we get a new ship, we’ll replace an old ship, because that old ship is more expensive and harder to maintain,” he said in a recent interview.
Maintenance delays, layoffs
Military contracting delays and project cancellations have led to layoffs. Even though BAE is one the largest companies in the industry, its West Coast shipyard laid off nearly 300 employees in 2023 due to a shortage of work.
In the city of Norfolk, on America’s East Coast, the number of Navy ships available for repair work dropped from 44 ships about a decade ago to fewer than 30 today. About 60% of the workforce was furloughed in that time, officials said.
The result, General Smith says, is a hollowed-out workforce that is not centered on shipbuilding.
“There’s no one who grew up as a shipbuilder. There’s welders and steam fitters and electricians, but if there’s not steady work for them, they’ll go to work for Harley-Davidson or Ford Motor Company or Chevy or whoever,” he said.
Whittier and Moyer blame the budgeting process in Congress, along with the way the Navy structures its ship maintenance.
“The system is broken,” Whittier says.
Congress has not passed a budget on time since 2019. When continuing resolutions (CRs) are used to fund the government, new projects cannot be started. In the case of the fiscal 2024 budget, Congress funded government with CRs for half a year, which Whittier says gave companies six months to do 12 months of work.
“It ends up being not just a big challenge in how to run a company, but it’s a big challenge for the Navy in trying to figure out how are they getting their maintenance done. … It’s frustrating all around for everybody,” the Fairbanks Morse Defense CEO told VOA.
Senator Mark Kelly, a member of the Senate Armed Services Committee, agrees that CRs are bad, adding that the only thing worse would be shutting down the government.
“People are always going to try to blame somebody else, but I’d just say collectively, we’ve taken our eye off the ball here,” he added.
Shipbuilding struggles
There is also a shortage of skilled workers needed to keep the shipbuilding industry afloat.
Huntington Ingalls Industries’ shipyard in Pascagoula, Mississippi, along the coast of the Gulf of America is the only yard in the United States that builds the Navy’s two types of amphibious warfare ships: Landing Helicopter Assault ships (LHAs) that look like mini-aircraft carriers, and smaller landing platform docks (LPDs).
HII also builds Navy destroyers and Coast Guard cutters.
Kari Wilkinson, executive vice president at HII, says that keeping staffing levels around the more than 11,000 workers needed to build cutters, destroyers and amphibious ships is getting more difficult, particularly in the post-pandemic economy.
Just a few years ago, the shipyard was able to offer wages much higher than other jobs in the area that do not require a college degree. Now, Wilkinson says they are competing with everyone from coffee providers to fast food restaurants.
“The wage circumstance has changed. There is not that big gap anymore,” she told VOA.
As a result, Wilkinson says, HII now loses workers at roughly double the rate of its pre-pandemic levels.
To save money on materials, Congress authorized the military to buy four amphibs from HII at once, a move known as a multi-ship block buy. Buying them in bulk saved the Pentagon $900 million.
“That was a huge win for us,” General Smith said.
Now, HII must figure out how to better retain its workforce. To make the worksite more attractive, HII has invested in air conditioning and giant shades to shield workers from the elements like the hot Mississippi sun. The Pascagoula shipyard hired 7,000 people in the last two years, Wilkinson says, but it will need about 1,000-2,000 more hires each year to complete the new ship orders.
“We’ve got to find ways to pay people competitive wages that are in accordance with the type of work they’re doing,” Kelly told VOA.
Commercial shipping
Congress is expected to increase the military’s budget to surge resources for its shipbuilding shortfalls.
But Kelly tells VOA the U.S. commercial shipping is also in need of saving.
“We went from 10,000 ships during World War II to 85 today. So, in case of an emergency, in case of a conflict with a near peer adversary, we’re quite limited to getting all those supplies and equipment and troops across the ocean,” he said.
The United States builds about five commercial ships each year. China builds more than 1,000.
“They have one shipyard, just one shipyard, that’s bigger than all of our shipyards put together,” the senator told VOA.
Kelly in December introduced bipartisan legislation called the Ships for America Act. The bill aims to increase the U.S. commercial fleet by 250 ships in 10 years, which will also increase the supply chain for military ships.
“You wouldn’t really think those two things are connected. But they are very closely connected,” he said. “A lot of the parts that go into a U.S. aircraft carrier, some of those same parts for those systems go in merchant ships.”
The bill calls for tax incentives, along with fees on cargo coming into the country, to help shipbuilders increase their capacity.
The provisions of the bill are “fully paid for,” Kelly said, without adding to the annual deficit.
