Posted on September 22, 2025
A ship Austal USA didn’t get to build tells a story about the challenges facing the Mobile-based shipbuilder today.
Between 2017 and 2020, Austal was one of a half dozen builders competing to build a new class of Navy frigates. A lot was riding on it: Austal was an all-aluminum shipbuilder that desperately needed to line up work to follow the Independence-class Littoral Combat Ship program. Its proposed frigate was an aluminum trimaran much like the LCS, so winning the deal would have allowed it to carry on with business as usual for years to come.
In April 2020, the Navy awarded the initial contract to Fincantieri Marinette Marine. That was a letdown for Austal USA, but that June the Department of Defense steered a $50 million grant to Austal, whose parent company matched it and said the Mobile shipyard would use the money to develop steel shipbuilding capacity.
Fast-forward five years. Austal USA has three classes of steel ships in serial production and the contract for another in hand. It’s building two major expansion projects, which it says will allow its workforce to grow from around 3,000 to around 5,000.
In the same time period there’s been a lot of news about that frigate program, and it’s pretty much all been negative.
Steel is rising on Module Manufacturing Facility 3, one of two massive expansion projects at Austal USA. When MMF3 is operational, it’ll be used to build modules that will go into nuclear submarines. (Photo courtesy of Austal USA)Lawrence Specker | LSpecker@AL.com
Navy planners originally had called for proposals based on existing “parent designs,” the idea being that modifying a field-tested ship would be faster than starting from a clean sheet. Just as Austal’s frigate had been based on the LCS, the winner’s ship had been based on a European frigate. But having chosen that design, the Navy couldn’t stop adapting it. The planned frigate grew longer, wider and heavier, which in turn raised questions about its cost and performance.
As summed up in a Congressional Research Service report published earlier this year, “Delays in completing the ship design have created mounting construction delays,” and the lead ship in the Constellation class is likely to be delivered in 2029 rather than 2026.
Had Austal USA won the contract, it might well be facing the same headaches. And it’s not immune from such situations: it operates on the same military-industrial landscape as the frigate builders. For a decade, Pentagon and Congressional leaders have been saying more military ships are needed to maintain parity with China, and they’ve been pumping money at the problem. According to a Government Accountability Office report published in February, the Department of Defense “spent over $5.8 billion on the shipbuilding industrial base from fiscal years 2014 through 2023. [And] It plans to spend an additional $12.6 billion through fiscal year 2028.”
The Pentagon has dramatically increased shipbuilding investments. But as misfires like the frigate program show, the desired acceleration hasn’t necessarily followed.
Larry Ryder, Austal USA’s Austal USA’s Vice President of Business Development and External Affairs, is circumspect about the one that got away. There’s probably blame to go around, he said.
Austal USA held a groundbreaking ceremony on Tuesday, July 9, 2024, for its Final Assembly 2 facility. Shown are, from left: Larry Ryder, Austal USA’s vice president of business development and external affairs; Alabama Secretary of Commerce Ellen McNair; and Austal USA President Michelle Kruger.Lawrence Specker | LSpecker@AL.com
“When you make your source selection and say it’s going to be 85% common to the parent ship … and then you wind up having 15% commonality, you’re talking about a real extensive design effort that wasn’t planned for,” he said. “I think one of the things that has to improve on the Navy side is defining and locking in requirements and letting the shipbuilder go design to it and then go build it. There’s always a lot of pressure to continue to tweak the design because these ships are around for a long time. So I get it. But, you know, changing the design while you’re doing construction or finishing design while you’re doing construction is inefficient. And I think the frigate’s kind of a victim of that.
“Our T-ATS program, we had issues with that design not being complete,” said Ryder, referring to the Navajo-class salvage ships Austal is building. Austal is the second shipyard on the program but still found a few loose ends after starting construction.
The process involved “finding that there were changes that had to be made to the design because, [of] hatches opening into bulkheads and things just not working and you have to stop, and it costs money,” said Ryder. (Side note: A period of post-pandemic inflation made the terms of the T-ATS contract “onerous” for Austal; According to the 2025 annual report from Austal Ltd., which is Austal USA’s Australian parent, the company is still pursuing relief from the Navy for its losses and expects that discussion to continue into 2026.)
“If we have a design locked in and we go down our serial production line, we’re freaking killing it,” Ryder said. “But if we have to take planned work out of a station in the production line, go back and redesign and try to figure out how to do that later in the process, it’s called travel work. Now, instead of having an open space and completing that and then building on top of it, you’ve got to build around it and then go back later and try to fit that in around work that’s already done.”
“It’s not just Fincantieri, and it’s not just the Navy,” said Ryder. “That’s one of those areas where you don’t need more infrastructure to fix that. You need policy and process changes.”
Such issues aren’t the only source of uncertainty. The second Trump administration’s sweeping reorganization of military leadership and policies has generated weekly headlines about shifting policy priorities. An April executive order titled “Restoring America’s Maritime Dominance” lays out a sweeping re-evaluation of American shipbuilding, and President Trump also has called for the establishment of an Office of Shipbuilding, also known as the Maritime and Industrial Capacity Directorate.
There’s also been a steady stream of news about major shipbuilding investments. For example: Eastern Shipbuilding Group will construct structural units in Panama City, Fla., for destroyers that Huntington Ingalls Industries builds in Mississippi. A Canadian company has announced plans to invest $1 billion in a Galveston shipyard where it hopes to build Coast Guard icebreakers, and civic leaders have hinted that a Japanese company might also fuel the city’s development into a military shipbuilding hub.
Alongside the push for increased domestic output, there also has been talk about South Korean shipbuilders playing a rolein American military shipbuilding. Korean shipbuilder Hanwha already holds about 10% ownership of Austal Ltd. and is seeking to increase that to 20% or more.
And, as if all that wasn’t enough, Russia’s war in Ukraine has fueled rapid development of aerial drone warfare technology and tactics. That has been a loud and clear signal to military leaders and shipbuilders alike that the development of unmanned vessels is an urgent concern.
For a shipbuilder like Austal USA, it’s a lot to navigate. But Ryder said the uncertainty also brings opportunity, for shipbuilders that are nimble and focused on making the most of their strengths.
“I mean, there are elements of uncertainty,” he said. “There’s the positive of a lot of focus on shipbuilding. [Federal budget] reconciliation provided a lot of funding for not just ships, but infrastructure, training, technology insertion. [That’s] all very positive. I’m not worried about program cancellations. Here, I think we’re on solid ground. There is uncertainty over, you know, are some programs going to get canceled? There’s a little bit of uncertainty over, you know, what, what the focus on Korean shipbuilding is going to do. Is that going to have an impact on, you know, domestic production of Navy ships?
T-ATS 11, the ship that will be commissioned as the USNS Billy Frank Jr. is docked at Austal USA’s facility across the Mobile River from downtown Mobile on Sept. 8, 2025.Lawrence Specker | LSpecker@AL.com
“But all in all, I’d say the positive focus on shipbuilding, the funding going into shipbuilding far outweigh the uncertainty,” he said. “There’s a lot of support for shipbuilding in Congress,” said Ryder. “There’s a lot of focus from the administration. So it’s a pretty good time for shipbuilding.”
One way shipbuilders are trying to capitalize on that is by outsourcing work to each other. Austal USA’s work on modules that will go into Columbia- and Virginia-class submarines is a prime example of Austal serving as the contributor to work by larger yards. But Austal also recently celebrated a memorandum of understanding with Master Boat Builders, under which Austal will outsource work to the smaller Coden-based yard.
In announcing the deal, Austal said that “The agreement reflects a shared commitment to strengthening the domestic maritime industrial base and supporting the Trump Administration’s call for innovative approaches to accelerate delivery of essential platforms.” Austal also said that the deal provides “greater flexibility to meet evolving fleet requirements” and that “by distributing work across complementary facilities, Austal USA and Master Boat aim to reduce bottlenecks, shorten production schedules, and create surge capacity for future demand.”
“Shipyards like ours can and should be a force multiplier for the U.S. maritime defense industrial base,” Garrett Rice, president of Master Boat Builders, said in the Austal announcement. “Teaming up with Austal USA, we’ll add much-needed capacity and help get critical vessels delivered on time and on budget, contributing to a stronger, more resilient shipbuilding sector.”
Austal USA President Michelle Kruger said the partnership would allow Austal to “scale production, reduce schedule risk, strengthen supply chains, and deliver for the U.S. government while investing in American skilled workers and suppliers.”
As for autonomous ships, Austal USA is no newcomer. Along with partners L3Harris and General Dynamics Mission Systems, it rigged out one of its EPFs, the USNS Apalachicola, as an autonomous vessel for Navy evaluation. In January 2024 it launched the Vanguard, aka OUSV-3, a ship “purpose-built for autonomous operations from the keel-up.”
Ryder acknowledged that the Ukraine-Russia conflict has provided plenty of food for thought on autonomous warfare. One takeaway, he said, is that Austal USA is defining its lane. For now it’s not competing to develop small, expendable autonomous warcraft. “That’s just not a market we’re in right now,” he said.
“I think our core is we’re a good shipbuilder,” he said. “And the Navy, there’s more work than there are shipbuilders right now. So why not focus on what we’re damned good at?”
Austal USA will continue to work on larger autonomous vessels. Ryder said the company is doing some design work under one contract for the Navy’s Large Unmanned Surface Vehicle program and is competing for work on its Modular Autonomous Surface Craft program.
Autonomy is a multi-layered thing, Ryder said. Running a ship, getting it where it needs to be, and equipping it to carry out a mission when it gets there are three different challenges. The first one is the one that comes naturally to the shipbuilder, he said.
“Others are market leaders in the navigational autonomy and the mission autonomy,” he said. “So we’re focused on the autonomy that controls the ship and layers underneath the navigation autonomy that somebody provides that drives the ship and then the mission autonomy on top that actually performs whatever it is the Navy needs it to do.”
Part of a crew’s work is to make repairs and troubleshoot problems that arise while at sea. If there’s no crew, “you either have to have redundancy, or you have to have some combination of redundancy and increased reliability,” said Ryder. “And both of those cost money. But you get the savings by taking the people off. Just the cost of the people, the cost of designing for the people. And there’s also the issue of, you’re putting unmanned platforms in places you don’t want to put people. So it’s not just not economics, but [for example] clearing a minefield. It would be nice to be able to clear a minefield without putting people into it. So there’s that.”
There’s more going on at Austal than people in Mobile can see. It’s establishing a yard in San Diego to perform ongoing maintenance on the fleet of LCSs it built. It has an advanced technologies unit in Virginia that works on manufacturing technologies that could be implemented in Mobile. And the AUKUS security pact between the USA, the United Kingdom and Australia – which is under review by the Trump administration – could open the way for Austal USA and its parent company Austal Ltd. to cooperate more easily on issues such as autonomy.
“I’m in a pretty optimistic place right now in terms of where we’re going as a business both here and in Australia,” said Ryder.
“I’m optimistic about where we are and certainly where we’re headed,” he said. “We’ve got a good balanced portfolio. We’re not reliant on one or two big programs. The biggest program in production right now is the Offshore Patrol Cutter. I think that’s a very solid proven need. I think we’ve got a great relationship with the Coast Guard customer and with Congress in terms of that program.”
I think there is a lot of untapped capacity within the current yards building for the Navy,” he said. “I think there’s a lot that needs to be done on the process side on acquisition policies, on contract structures, design, you know, finalizing designs and letting it be. Structurally, there’s a lot of changes that can be made that will allow us to pump out more ships, Ingalls to pump out more ships. And if you look, the yards that we have now are investing. We’ve got $800 million of expansion going. Fincantieri is expanding. Ingalls is expanding. So it’s not just us.”
