The United States wants a bigger Navy, but its shipbuilding industry has repeatedly struggled to deliver vessels on time and at a reasonable cost, leaving Washington facing a widening shipbuilding gap with China.
Shortages of skilled workers, ageing shipyards, fragile supply chains, changing vessel designs and inconsistent Navy orders have combined to weaken an industry that once dominated global shipbuilding, according to an August 2026 report by the Center for Strategic and International Studies (CSIS).
The problems have contributed to recurring delays in construction and maintenance even as China has overtaken the US Navy in fleet size on the back of a much faster pace of shipbuilding. CSIS said the problem cannot be traced to any single failure, but to weaknesses across the government, shipyards and their suppliers.
Not enough workers, and ageing yards
One of the most immediate constraints is labour.
Italian shipbuilder Fincantieri tripled employment at its Marinette Marine yard in Wisconsin from roughly 1,000 workers to about 3,000 after acquiring the facility, but recruiting and retaining skilled tradespeople from the region’s limited labour pool has remained a challenge.
South Korea’s Hanwha faces a similar problem at Philly Shipyard, where it plans to increase annual production to 10-20 vessels by 2035 from roughly one to two when it acquired the facility and more than double the workforce to around 4,000. Skilled-worker shortages and high turnover, however, could complicate those plans.
The yards themselves also need investment. Fincantieri spent about $500 million upgrading Marinette, while Hanwha announced a $5 billion plan for Philly Shipyard in 2025 that includes new dry docks, automated welding technology and digital “smart-yard” systems.
Turning existing ship-repair facilities into construction yards is not an easy shortcut either. Different equipment, layouts and skills mean conversions could require extensive reconstruction and retraining and take several years.
The Navy keeps changing what it wants
Some of America’s shipbuilding problems begin before construction.
The Constellation-class frigate is one example. The vessel was based on the existing European FREMM frigate, but US Navy modifications added about 500 metric tons of additional outfitting to the baseline design. The programme subsequently suffered significant delays and cost overruns.
CSIS lists such design volatility and stringent naval requirements among the fundamental problems that even foreign investment cannot solve.
South Korea takes a different approach, typically fixing requirements and limiting changes once construction begins. Its adaptations of US naval designs have consequently been delivered more quickly and consistently than their American counterparts, according to the report.
US ships cost more too
The difference also shows up in prices.
CSIS estimates that buying existing South Korean designs comparable to some US vessels could yield ships 50%-70% cheaper, although differing American technical and operational requirements account for part of the gap.
South Korea says its Aegis-equipped Jeongjo the Great destroyer was built in about 38 months for around $1 billion. A US Flight III Arleigh Burke-class destroyer takes roughly four years and costs around $1.4 billion, according to figures cited by CSIS.
Japanese and South Korean yards also build commercial vessels, exposing them to intense competition that encourages investment in technology and more efficient production methods that can also be applied to naval construction.
Supply chains and uncertain orders
Expanding shipyards alone will not solve the problem.
US naval construction relies on specialised suppliers, with CSIS identifying brittle and sometimes single-source supply chains as another bottleneck.
Shipbuilders also need confidence that the Navy will keep ordering vessels before committing billions of dollars to additional capacity. But US procurement has historically been characterised by starts and stops and changing ship-class requirements.
CSIS argues that multiyear purchases, realistic budgets and credible production schedules could give companies greater confidence to invest.
Foreign expertise runs into US red tape
Washington has increasingly looked to foreign shipbuilders for help, but American regulations can make it difficult to transfer their expertise.
Fincantieri, for example, encountered International Traffic in Arms Regulations restrictions that complicated information sharing between its American and Italian operations, forcing it to maintain duplicative engineering capabilities.
That creates a paradox: the US can attract experienced foreign shipbuilders while making it harder for them to transfer some of the people, knowledge and processes that made them successful.
Why not just buy ships abroad?
If Washington’s priority is simply getting ships into the fleet quickly, CSIS said buying them from allied yards is likely the fastest and most economical option, particularly for auxiliary and support vessels.
But US law and politics make that difficult. Restrictions limit foreign construction of US naval vessels and the use of appropriated funds to buy foreign-built ships, while domestic shipbuilders and unions argue outsourcing would weaken America’s industrial base.
That leaves Washington with a dilemma: buying ships abroad could deliver vessels faster and more cheaply, but would do little by itself to rebuild America’s ability to make them at home.
The possible way out
CSIS therefore points towards a hybrid approach involving shipbuilding powers such as South Korea and Japan — combining foreign investment in US yards, technology transfers and coproduction with purchases of foreign-built ships where vessels are urgently needed.
The Coast Guard’s Arctic Security Cutter programme offers one model, combining Finnish-built ships with investment in US yards and the transfer of Finnish icebreaker expertise.
Allied cooperation, however, is not a cure-all. The US would still need to develop more skilled workers, stabilise ship designs, strengthen suppliers, provide shipyards with predictable orders and ease regulatory barriers. A hybrid strategy could nevertheless help Washington address its immediate need for ships while rebuilding the domestic industry over the longer term.
