Introduction
The U.S. Navy faces critical backlogs in the production, repair, and maintenance of warships because of issues facing the nation’s shipbuilding industry, which impact readiness and increase risk. At the same time, China is expanding its shipbuilding capacity by increasing the number of shipyards and making them dual use for commercial and military production. The result is a People’s Liberation Army Navy (PLAN) that is numerically superior to the U.S. Navy and is catching up in terms of technology and capability. Should tensions across INDOPACOM become a kinetic conflict, China’s shipyard model will provide significant advantages in the repair of damaged warships.
Comparison of U.S. and Chinese Naval Shipyard Infrastructure and Capacity.
Issues that hinder the U.S. Navy’s production, repair, and maintenance of warships are varied. They stem from a limited number of shipyards and contractors, each specializing in specific vessel classes. Some issues include limited competition and redundancy, inconsistent defense budgets and shifting U.S. Navy requirements, supply chain issues (including rising material costs due to inflation), lack of skilled labor force to meet production requirements and increasing costs of labor, reliance on raw materials and components from overseas, and lack of coordination among stakeholders.[1],[2],[3]
The result of limited contractors and shipyards affect nearly every class of U.S. Navy warship. The Block-IV Virginia Class attack submarine and Constellation Class guided missile frigate programs are approximately three (3) years behind schedule. The USS Enterprise, the Navy’s next Ford Class Aircraft Carrier, is between 18 to 26 months behind schedule. The first Columbia Class ballistic missile submarine is between 12 to 16 months behind the planned delivery date. Reports indicate that 40% of the 49 available U.S. Navy submarines were waiting shipyard level maintenance in 2023 due to lack of capacity. Such examples will only increase as the fleet continues to age.[1],[2],[3]
Chief of Naval Operations Admiral Lisa Franchetti stated that the U.S. Navy needs to be ready for the possibility of war with China by 2027, just two (2) years from now. There is no quick solution to the production, repair, and maintenance issues faced by the U.S. Navy. For the U.S. Navy to remain a credible strategic deterrent and remain prepared for peer-to-peer conflict, significant investments in shipyard capacity will be necessary. These investments include streamlining design and procurement processes, attracting and training a skilled workforce, ending reliance on overseas supply chains, and building new shipyards.[1],[2],[3]
Reports indicate that China has the largest Navy in the world and now has 370 ships and submarines operational in its Navy, which is up from the 340 ships estimated in 2022. While the U.S. Navy has plans to keep the fleet consistently greater than 300 ships, they have averaged 10 ships lower than procurement plans since 2017. Since 2003, the Navy has also sustained less than 300 warships. During this same time period, China has increased fleet capacity by 150 ships. China’s rapid naval growth is largely the result of extensive civil-military cooperation. Over the last few decades, China invested in shipbuilding infrastructure, becoming the number one shipbuilding nation in the world. Unlike U.S. shipyards, Chinese shipyards are dual use, producing both civilian and military vessels. China’s political and economic systems avoid the political budgetary infighting often associated with U.S. defense budgets. This allows China to plan the development and construction of new warships with little to no disruptions in the process. China’s Belt and Road Initiative (BRI) set conditions for China to better secure its supply chains including rare earth minerals necessary for advanced technological systems onboard modern warships. The result is a numerically superior Chinese Navy that is rapidly catching up to the U.S. Navy in advanced technology.[4],[5]
In July 2024, the National Defense Authorization Act (NDAA) amendment requested funding for the purpose of private and public shipyard investments. This funding is essential to maintaining the fleet and continuing with research and development efforts. The authorization bill, which includes the amendment, created a course of action for Congress and was signed into law in December 2024. Lawmakers have also worked to pass language to be used in legislation to surge production of amphibious ships. These actions work to continue production, along with keeping workers and factories active. As China expands its naval capacity, the U.S. must continue to pass legislation in order to be prepared in the upcoming years.[4],[5]
Lack of Skilled Labor Available to Support U.S. Naval Shipyards’ Needs
In order to increase American ship production, the Navy has looked toward reactivating idled facilities. However, a skilled labor force is needed. In order for a shipyard to succeed, human capital is essential, and adequate preparations must be considered. Modern shipyards do not offer a guarantee of work after current needs are met and force workers to find other employment once their work is over. This cycle fails to facilitate expansion efforts and impacts the overall U.S. shipbuilding industry.[3]
Considering the rapid growth of Chinese naval power and tensions over Taiwan, recent findings of substandard construction practices at the U.S. Navy’s largest shipyard are concerning. U.S. shipbuilding, which is segregated into civilian and military shipyards, does not have the capacity to compete with the number of Chinese shipyards that all serve a dual civilian-military use. Many U.S. Navy shipbuilding and maintenance programs are behind schedule because of supply chain issues and a lack of skilled labor since the COVID-19 pandemic. Quality control issues can lead to long-term maintenance issues and maritime mishaps, which only exacerbate the backlog in the U.S. Navy’s shipyards and diminish its readiness and credible deterrence to hostile nations.[6],[7],[8]
For example, the U.S. Navy and Department of Justice (DOJ) are investigating faulty welds onboard Virginia and Columbia class submarines, as well as Ford class aircraft carriers reported by the Newport News Shipyard. The House Armed Services Committee is conducting a separate investigation. While most of the substandard welds were identified on vessels under construction in the shipyard, a small number of in-service Virginia class submarines are also affected.[6],[7],[8]
Newport News Shipyard is owned by Huntington Ingalls Industries (HII), the largest U.S. Navy shipbuilding contractor. Quality assurance teams at the shipyard identified issues with welds that developed into a larger investigation, which found the same issues across multiple vessels. The initial investigation conducted by HII revealed that welders knowingly violated procedural standards, which prompted the company to notify the U.S. Navy and the DOJ. The investigation did not find evidence of malice.[6],[7],[8]
This is not the first issue with welding quality assurance at Newport News Shipyard. The Navy concluded that welders used the wrong filler material in non-nuclear pipping on Virginia class submarines in 2007. A shipyard inspector admitted to falsifying inspection reports in 2009, resulting in nine (9) submarines and four (4) aircraft carriers requiring reinspection by the Navy, which took years to complete.[6],[7],[8]
The lack of skilled labor at shipyards is attributed to various factors including a lack of access to training, undesirable working conditions, negative associations with the shipyard industry, reliance on private shipyards, COVID-19 impacts, and competition with other skilled trades. These factors all have an impact on each other and the lack of skilled shipyard labor as a whole. Moving forward, mitigations must be implemented including indirect actions, direct actions, and future research.[9]
Direct actions to address this issue include recruitment and training initiatives. Indirect actions include premium pay and industrial work mitigations. Future research should focus on the topics of business case analysis on the shipyard workforce, sustaining the shipyard industry, and business case analysis on private versus public shipyards. With the closure of public shipyards, the need for private employment increased. This privatized employment, while in a higher demand, is a less stable career option. With the closures, the number of federal employees decreased. More research is needed to explore the reliance on a contract workforce by the U.S. Navy and impacts of public shipyard closures. If these issues are addressed effectively, on-time naval asset delivery delays will be reduced, and national security measures will be supported.[9]
Supply Chain Issues Negatively Effecting U.S. Naval Shipyard Capacity
Since the COVID-19 pandemic, global supply chains have experienced severe disruptions due to lockdowns, border closures, and transportation restrictions. These interruptions have delayed the delivery of essential materials and components required for shipbuilding leading to significant setbacks in naval shipyard operations. The pandemic also caused a surge in demand for goods like electronics and household items, diverting resources away from other industries and increasing the strain of supply shortages. These challenges have collectively strained the shipbuilding industry, making it difficult to maintain production schedules and meet project deadlines.[10],[11]
The U.S. reliance on foreign sources for intermediate inputs and critical minerals has further exposed vulnerabilities within its supply chains. Countries such as China, Canada, and Mexico are major suppliers of these essential materials. Disruptions in these regions whether due to geopolitical tensions or trade disputes can significantly impact U.S. production capabilities. The dependence on foreign sources for critical minerals such as rare earth elements and industrial diamonds has been a particular concern as these materials are crucial for advanced manufacturing processes. The ongoing geopolitical landscape has heightened these risks, making it imperative for the U.S. to seek alternative and more resilient supply chains.[12],[13],[14]
Rising costs due to inflation have compounded the challenges faced by U.S. naval shipyards. High inflation rates driven by increased demand, supply chain disruptions, and rising energy costs have resulted in higher prices for raw materials and components needed for shipbuilding. Transportation costs have also surged due to higher fuel prices and logistical challenges, which further increase the overall cost of production for shipyards. Additionally, rising energy costs have impacted manufacturing and transportation expenses. These issues have led to delays in shipbuilding projects and increased operational costs. To address these challenges the Navy is working on stabilizing demand, investing in workforce development, and implementing multiyear procurement contracts to ensure more predictable workloads for shipbuilders. These measures aim to enhance the resilience of naval shipyards and ensure the timely completion of critical projects.[13],[14],[15]
Inconsistent U.S. Defense Budgets and Shifting U.S. Navy Requirements
The U.S. defense budgetary process, particularly the practice of continuing resolutions (CRs), creates significant challenges for defense contracts and project completion. CRs are stopgap measures that fund government operations at the previous fiscal year’s levels when a new budget hasn’t been approved leading to funding constraints and delays in initiating or continuing projects. This is particularly problematic for the Navy which needs to rapidly integrate new technologies to stay ahead of advancing Chinese naval capabilities. The uncertainty and instability caused by CRs make it difficult for defense contractors to plan and execute projects efficiently resulting in increased costs and project delays. According to the U.S. Government Accountability Office (GAO), the Department of Defense often postpones contracts and nonessential training early in the fiscal year during CRs, which leads to lost time and increased costs. These inefficiencies result in the hinderance of the Navy’s ability to modernize its fleet with the latest technologies.[16],[17]
Inflation increases these issues by driving up the cost of skilled labor. As the cost of living rises, workers demand higher wages to maintain their standard of living, which puts pressure on employers to offer competitive wages and benefits. This is particularly challenging for the defense industry which faces labor shortages and high demand for skilled workers with specialized expertise. Additionally, inflation affects the costs of health benefits, training, development, equipment, and supplies, further increasing the overall expenses of defense projects. These rising costs add to the difficulty of completing contracts on time and within budget. The combination of budgetary instability and rising labor costs creates a challenging environment for the Navy to keep pace with technological advancements and maintain its competitive edge against rapidly advancing Chinese naval capabilities.[18],[19]
Results of U.S. Naval Shipyard Difficulties
Should the U.S. become involved in its first major naval conflict since World War II, production and repair capacity likely will not meet requirements. For perspective, the U.S. Navy increased the number of ships eight-fold to 6,768 ships between the attack on Pearl Harbor and the end of WWII, all while repairing battle damaged vessels. The U.S. shipbuilding system is not prepared for such an increase, should a kinetic conflict occur.[1],[2],[3]
The challenges faced by U.S. naval shipyards have resulted in significant delays and cost overruns in shipbuilding programs. The construction of new guided-missile frigates at Marinette Marine, for example, has been delayed with the first frigate now scheduled for delivery in 2029, three (3) years later than planned. Similarly, the Columbia-class submarine program and the Virginia-class attack submarine program are experiencing delays and cost overruns. These setbacks, combined with an increase in vessels awaiting repairs and routine maintenance, have strained the Navy’s overall readiness as ships are not available for deployment when needed. Notable examples include the USS Boxer (LHD-4) and the USS James E. Williams (DDG-95) both of which are currently undergoing maintenance at General Dynamics NASSCO-Norfolk.[19],[20],[21],[22]
These delays and backlogs hinder the Navy’s ability to deter threats particularly from China’s rapidly advancing naval capabilities. China’s shipbuilding industry has outpaced the U.S. producing ships at a much faster rate. The U.S. Navy’s reduced readiness compounded by issues such as maintenance delays for the San Antonio-class amphibious transport docks and the Arleigh Burke-class destroyers means it may struggle to respond effectively to potential conflicts or threats in critical regions such as the Indo-Pacific. This situation underscores the urgent need for stable funding, efficient shipyard operations, and a skilled workforce to maintain a competitive edge and ensure national security.[20],[21],[22],[23],[24]
The combination of budgetary instability as highlighted by the reliance on continuing resolutions and rising labor costs due to inflation further increases these challenges. Skilled labor shortages and increased costs of living, health benefits, training, development, equipment, and supplies make it more difficult to complete contracts on time and within budget. The Navy’s ability to rapidly integrate new technologies is also hindered affecting its overall readiness and ability to deter emerging threats. Addressing these vulnerabilities is crucial to safeguarding national security and maintaining the U.S. Navy’s ability to project power and maintain international stability.[14],[16],[22],[23],[24]
[1] Panella, C. (2024, November 17). Weak shipbuilding could be the US Navy’s Achilles’ heel in a war with China. Business Insider. Retrieved from https://www.businessinsider.com/us-shipbuilding-problems-could-be-navys-achilles-heel-china-war-2024-11.
[2] Kim, J. (2024, September). The Case for a Fifth Naval Shipyard. U.S. Naval Institute. Retrieved from https://www.usni.org/magazines/proceedings/2024/september/case-fifth-naval-shipyard.
[3] Pitrof, T. (2024, September). The Shipyard Shortage Is a People Problem. U.S. Naval Institute. Retrieved from https://www.usni.org/magazines/proceedings/2024/september/shipyard-shortage-people-problem.
[4] Reuters. (2024, December 18). What is most significant in the Pentagon’s China military report?. Reuters. Retrieved from https://www.reuters.com/world/what-is-most-significant-pentagons-china-military-report-2023-10-21/.
[5] Roaten, M. (2023, January 26). ANALYSIS: Shipyard Capacity, China’s Naval Buildup Worries U.S. Military Leaders. National Defense Magazine. Retrieved from https://www.nationaldefensemagazine.org/articles/2023/1/26/analysis-shipyard-capacity-chinas-naval-buildup-worries-us-military-leaders.
[6] Lagrone, S. (2024, September 26). DoJ Notifies of Suspected Faulty Welds on Subs, Aircraft Carriers at Newport News Shipbuilding. U.S. Naval Institute. Retrieved from https://news.usni.org/2024/09/26/doj-notified-of-suspected-intentionally-faulty-welds-on-subs-aircraft-carriers-at-newport-news-shipbuilding.
[7] Lagrone, S. (2024, September 27). Lawmakers to Investigate Faulty Sub, Carrier Welding at Newport News Shipbuilding. U.S. Naval Institute. Retrieved from https://news.usni.org/2024/09/27/lawmakers-announce-investigation-into-faulty-submarine-carrier-welding-at-newport-news-shipbuilding-ships-affected-in-low-single-digits-officials-say.
[8] Ziezulewicz, G. (2024, September 27). Lawmakers demand answers over reports of faulty Navy ship welding. Navy Times. Retrieved from https://www.navytimes.com/news/your-navy/2024/09/27/lawmakers-demand-answers-over-reports-of-faulty-navy-ship-welding/.
[9] Cirone, A., Glaeser, N., Kadlec, C. (2023, March). Root Cause Analysis Of Labor Shortages In The Skilled Trades Supporting Navy Shipyard Maintenance And Modernization. Calhoun: The NPS Institutional Archive DSpace Repository. Retrieved from https://calhoun.nps.edu/server/api/core/bitstreams/9ca7083c-b6b5-46ba-a78f-19f3ec4c534b/content.
[10] Marine Insight. (2024, April 4). US Navy’s Biggest Shipbuilding Projects Delayed Due to Labour Shortages & Disrupted Supply Chains. MI Network. Retrieved from https://www.marineinsight.com/shipping-news/us-navys-biggest-shipbuilding-projects-delayed-due-to-labour-shortages-disrupted-supply-chains/
[11] Construction Week. (2022, December 20). Raw Materials Cost: Inflation From a Supply Chain Perspective. Retrieved from https://www.constructionweekonline.com/business/raw-material-costs-inflation-from-a-supply-chain-perspective.
[12] U.S. Geological Survey. (2017, April 12). Risk and Reliance: The U.S. Economy and Mineral Resources. USGS. Retrieved from https://www.usgs.gov/news/featured-story/risk-and-reliance-us-economy-and-mineral-resources
[13] Santacreu, A. (2021, May 13). Investigating the U.S. Reliance on Foreign Suppliers. Federal Reserve Bank of St. Louis. Retrieved from https://www.stlouisfed.org/on-the-economy/2021/may/investigating-us-reliance-foreign-suppliers
[14] Ricadela, A. (2023, December 8). Supply Chain and Inflation: Issues and Impacts. Oracle. Retrieved from https://www.oracle.com/scm/supply-chain-inflation/
[15] Luckenbaugh, J. (2025, January 16). SNA News: Navy Trying to Stabilize Shipbuilding Demand Signal. National Defense Magazine. Retrieved from https://www.nationaldefensemagazine.org/articles/2025/1/16/sna-news-navy-trying-to-stabilize-shipbuilding-demand-signal
[16] Young, S. and Gilmore M. (2019). Operating Under a Continuing Resolution: A Limited Assessment of Effects on Defense Procurement Contract Awards. Rand Corporation. Retrieved from https://apps.dtic.mil/sti/trecms/pdf/AD1086181.pdf
[17] U.S. Government Accountability Office. (2021, September 13). Defense Budget: DOD Has Adopted Practices to Manage Within the Constraints of Continuing Resolutions. GAO. Retrieved from https://www.gao.gov/products/gao-21-541.
[18] Industry Insights. (2025, January 5). Inflations Impact on Retaining Skilled Workers in Construction. Retrieved from https://ironcloudcreative.com/blog/inflations-impact-on-retaining-skilled-workers-in-construction/
[19] Marine Insight. (2024, August 12). U.S. Navy Faces Worst Shipbuilding Struggles in 25 Years Due to Labor Shortages and Rising Cost. MI News Network. Retrieved from https://www.marineinsight.com/shipping-news/u-s-navy-faces-worst-shipbuilding-struggles-in-25-years-due-to-labor-shortages-rising-costs/
[20] Grady, J. (2024, May 7). GAO Tells Senate Panel U.S. Shipyards Are Major Readiness Concern. U.S. Naval Institute. Retrieved from https://news.usni.org/2024/05/07/gao-tells-senate-panel-u-s-shipyards-are-major-readiness-concern
[21] Luckenbaugh, J. (2024, October 2). Navy Investing in Industrial Base to Fix Sub Schedule, Cost Overruns. National Defense Magazine. Retrieved from https://www.nationaldefensemagazine.org/articles/2024/10/2/navy-investing-in-industrial-base-to-fix-sub-programs-cost-schedule-challenges
[22] Eckstein, M. (2024, April 2). U.S. Navy Ship Program Faces Years-Long Delays amid Labor, Supply Woes. Defense News. Retrieved from https://www.defensenews.com/naval/2024/04/02/us-navy-ship-programs-face-years-long-delays-amid-labor-supply-woes/
[23] DredgeWire. (2024, November 20). Weak Shipbuilding could be the U.S. Navy’s Achilles’ Heel in a War with China. Retrieved from https://dredgewire.com/weak-shipbuilding-could-be-the-us-navys-achilles-heel-in-a-war-with-china/
[24] Slayton, N. (2023, February 5). The Navy’s Maintenance Troubles are Getting Worse. Task and Purpose. Retrieved from https://taskandpurpose.com/news/navys-maintenance-troubles-gao-report/
