Can America Recover From Its Shipbuilding Crisis?

Guided-missile cruiser USS Hue City (CG 66), the German navy frigate FGS Hamburd (F220), the aircraft carrier USS Dwight D. Eisenhower (CVN 69), and the Military Sealift Command fast combat support ship USNS Bridge (T-AOE 10) during a replenishment-at-sea, Arabian Sea, March 23, 2013. Image courtesy Ryan D. McLearnon/US Navy. (Photo via Smith Collection/Gado/Getty Images).

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Concerned experts, both civilian and military, have been warning for years about the dangers presented by the shocking decline in US shipbuilding capabilities, particularly in contrast to those of our rising geopolitical adversary, China. This week’s announcement by Secretary of the Navy John Phelan of the cancellation of the Constellation-class frigate-building program only added fuel to the fire.

“After decades of apathy and neglect, there are no easy nor cheap solutions to getting the Navy on course and in time to deter let alone persevere in a war with China,” Captain Brent Sadler (U.S. Navy, Retired), senior research fellow at The Heritage Foundation, told me via instant messaging. “Canceling the frigate program is far from adequate as it does not address the need for more shipbuilding capacity, more firepower in the western Pacific by 2027, and a needed frigate class ship to round out a perilously unbalanced fleet.”

A shipbuilding collapse

The frigate program is just one of many maritime canaries in the coal mine. American shipbuilding delivered nearly 90% of global output at its high-water mark during WWII. Today it has collapsed to just 0.2% of gross tonnage—essentially nonexistent. While China builds well in excess of 1,000 oceangoing ships per year, America makes fewer than five.

Sadler has been sounding the alarm about that for years, tying his beloved Navy’s needs to the equally urgent matter of commercial shipbuilding.

“We haven’t really done the due diligence, the hard work and commitment of resources to keep and maintain the Navy that we need,” he said during his recent appearance on my Manufacturing Talks web show and podcast. “And we’ve been for too long getting by on the backs of our sailors, many times—extra work, extra maintenance, extra everything on their backs. And this whole thing, the whole system, is starting to break.”

Sadler dove into the dire numbers for the Navy in a recent article for the U.S. Naval Institute. “Today, the U.S. fleet numbers 296 battle force ships, but it should have been at 321 to stay on pace with earlier plans to reach 355 ships by 2034. That 355-ship goal was based on a 2016 force structure assessment and has since been codified into law by Congress. What is most remarkable about the assessment is that, originally, the fleet need in 2016 was 459 ships and that was only lowered to 355 for fiscal reasons.”

However, he argued on my program that even the 2016 goal was far short of what’s really needed. “We know that we’re going to need more ships,” he said. “There’s no way around it for the size of the threat from China, and then add in the Russians moving around the world, and then understanding where, politically, the Navy is going to be called on to act, without putting at risk that deterring the Chinese, you’re going to need about 575 ships.”

Desperate needs

In a separate paper for Heritage earlier this year, Sadler laid out the details of how America can get from here to there, centered around legislation such as the SHIPS for America Act of 2025, and including such essentials as:

• Funding American shipbuilding (with a goal of 1,120-1,300 large U.S. commercial vessels vs. 187 today)
• Incentivizing American maritime investment for ports and shipping
• Developing the shipyard worker, merchant mariner and naval architect workforce of the future
• Deregulation and creation of maritime investment zones

Sadler also sees a big role for our nation’s allies.

“We’re going to have to leverage our overseas partners, our allies—Japan, South Korea—trusted, signed defense-treaty partners with a lot of common national interest,” he said. “That’s important, and they’re making strategic investments here to do that, but they’ve got ships. So do the Greeks in LNG.”

Good news in American shipbuilding is currently scant. But there are green shoots to build from toward Sadler’s goals. One important question to answer is where investment can go where we can move quickly to fulfill the country’s needs.

Port opportunities

The Port of Brownsville, Texas, offers a good example here. In addition to residing in a widely recognized business- and development-friendly state, the publicly owned port—despite dating back to 1937 as a WPA Depression-recovery project—is essentially a greenfield for developing what Sadler laid out.

“There’s tremendous value in a port like the Port of Brownsville,” I heard from William Dietrich, port director, in an interview. “We’ve got a 17-1/2 mile-long channel with a lot of green space for a company to come in and, for example, we’re talking about shipbuilding. It’s perfect.”

The port, right near the border of Mexico on the Gulf of America, is already home to companies such as All Star Metals, International Shipbreaking Ltd./EMR and SteelCoast, but has ample room for growth.

“The Port of Brownsville is the largest land-owning port in the United States,” Dietrich explained. ”We have 40,000 acres. Now, not all of it is buildable right now—it would take wetland mitigation and all that. But nevertheless, the land is there… We are already working on an MOU with a company that will start including our wetland mitigation as companies start coming in, so we’ll be able to front load that into projects into the future.”

Dietrich also sees the same urgency that Sadler called out. “We have to realize that right now, I believe, statistically, 60% of all vessels that are out in the ocean are Chinese,” he said. “If we don’t start working on this right now, by 2035, 80% of all commercial vessels are going to be Chinese vessels. You know, with that in mind, we’re going to have to ramp up this manufacturing and hybrid it in a way so that we can have long term sustainability, but it has to be done at the same speed that we did during WWII.”

Allied help

Another big positive is the existence of just the kind of partnership Sadler called for with our allied nations. Hanwha Philly Shipyard in Philadelphia, Pennsylvania, is an excellent example. The former Philly Shipyard Inc., on part of the site of the Philadephia Navy Shipyard, it was acquired by South Korea’s Hanwha Group last year for $100 million.

“We’re looking to grow the existing business,” David Kim, the company’s CEO, told me in an interview. “We’re starting at one and a half ships per year and are aiming to grow that to 20 ships per year.”

One huge advantage, beyond simply keeping the domestic operation viable, that Hanwha brings to the table is workforce development. “We’re bringing tech and expertise from Korea to train and educate the people here,” Kim explained. “That includes bringing experts from Korea here as instructors. We want to create and grow U.S. jobs. We can also provide development opportunities—for example, rotating people from here to Korea for advanced training.”

Kim doesn’t see the development piece as a one-way street, however. “We want to bring U.S. strength to South Korea,” he said. “AI is a good example, where we can come up with even better solutions and use our U.S. site as a test bed.”

The modernization Sadler called for is a key element of the partnership. “We’re expanding the manufacturing capacity here as well as the jobs,” Kim explained. “We’ll modernize our U.S. capabilities. The U.S. has the need, and Hanwha is helping to fulfill it.”

These green shoots are vital, because the need is tremendous, if not downright frightening.

“Nothing that they do today or tomorrow is going to change the fact that the Navy is reducing in size of ships,” said Sadler. “It’s unavoidable at this stage. To its nadir, its lowest point before things start to turn around, of about 282, 280 ships by January of 2027… So we’re waving our weaknesses like red bloody meat in front of a very hungry lion.”